EV battery makers all charged up

EV sales are revving up as India pivots to cleaner technology. But the mega-scale action is behind-the-scenes as a string of giants from Reliance and JSW to the Tatas pour billions into manufacturing EV battery cells and batteries. The stakes are high with India’s EV market at an inflection point.

While EVs now account for around 5 per cent of vehicle sales, consultancy Bain says EV penetration could hit over 40 per cent by 2030, driven by the two-and-three-wheeler segments. Key to growth, though, is a localised supply chain. In what’s obviously an undesirable situation, India relies on China to provide 60-70 per cent of key EV parts like battery cells, making us hugely vulnerable to supply shocks.

Among the companies poised to reduce this Chinese dependence and splurge are Maruti, which will even be exporting lithium-ion batteries, and Ola, which has built a lithium-battery-cell gigafab in Tamil Nadu. Cross to Telangana and Amara Raja will be launching a mega-battery pack assembly company in what the State government calls its Giga Corridor at Mahbubnagar. Amara Raja aims to invest ₹9,500 crore over the next decade in what will be one of the country’s largest plants.

Exide, another lead-acid battery giant, is building a lithium-ion plant in Bangaluru and will spend ₹4,000 crore in the first phase. Its unit, Exide Energy, has just struck a deal to supply EV batteries to auto-makers Hyundai and Kia. Then, there’s Gujarat Fluorochemicals which has made its first investments in GFCL EV that will make EV and energy-storage-system batteries. It has earmarked ₹6,000 crore for investment over the next four-to-five years. And Panasonic Energy is mulling a tie-up with IndianOil to make cylindrical lithium-ion batteries.

Predictably, Reliance has the most ambitious plans, aiming to build multi-purpose storage batteries to power both EVs and homes. It has already spent $61 million to buy Lithium Werks which makes cobalt-free LFP lithium-ion cells and also has a plant in China. It spent £100 million to buy UK sodium-ion technology leader Faradion. Initially, Reliance is focusing on two-wheeler batteries powered by LFP cells and has teamed up with online grocer Big Basket for trial runs in Bangaluru.

At a different level, Reliance is reportedly holding talks with Tesla to build an EV-manufacturing unit. Last year, in partnership with Ashok Leyland, it launched a heavy-duty hydrogen-powered truck-test vehicle. Meanwhile, JSW is looking at spending ₹40,000 crore to build an EV-manufacturing plant and also 50 GwH of batteries for automobiles and storage systems.

There are scores of smaller players already in the game like RACE Energy which makes swappable three-wheeler batteries. RACE started by buying batteries from China and then began making its own.

Policy support

All these companies are attracted by the huge growth prospects both on the road for EVs and also for storage systems, a crucial part of renewable energy systems. Duty exemptions and other government incentives are a huge draw. But that policy support must be sustained to drive EV adoption with tax breaks for charging infrastructure, policy support to reduce upfront EV costs and more production-linked incentives to accelerate EV-parts manufacturing.

And there are many uncertainties about how EV expansion will unfold. Will lithium-ion batteries be the main power source for all vehicles and storage systems being developed? With a large chunk of the world’s lithium-ion coming from China, that’s not ideal for countries like India and the US. Sodium-ion batteries, on the other hand, would be more environmentally friendly and the raw material is available in large quantities globally. Swedish company Northvolt is an industry leader in developing sodium-ion batteries.

At another level, EV makers in the Western world use nickel, manganese and cobalt batteries. Chinese manufacturers, by contrast, prefer LFP while Japanese companies like Toyota, have been sitting on the fence refusing to commit to lithium- or sodium-ion batteries. Toyota’s experimented with solid-state batteries which aren’t yet ready for the road. Solid-state batteries are more densely packed and could offer much better mileage for customers. They’re also considered safer than lithium-ion batteries which, incidentally, aren’t great when the mercury’s crosses 45C.

Other big doubts still loom about range and EV-battery recharge times. But these factors have come a long way from the early days with several top-end models now offering ranges of nearly 700 km and some able to be fully charged in slightly over an hour. This EV-sector crush means there’ll inevitably be battery winners and losers. It’s going to be an intense, fraught few years as the shakeout happens.

COMMENT NOW