Lead acid batteries will live long

I would say that for more than a decade now, this is what has been keeping me up at night, in terms of how the Electric Vehicle (EV) market is going to shape up? How will it displace the existing market for Internal combustion engine vehicles? What does it mean for component suppliers like us? How can we benefit from these changes rather than suffering from them? I am not as worried anymore. The reason being that even with the advent of electric vehicles, there is still going to be a place for lead acid batteries. I am fairly confident of that now. Having said that, the huge opportunity with EVs cannot be ignored.

The potential is many multiples the size of the existing starter battery market. Cost of existing batteries is single digit in terms of the overall cost of a vehicle. The Lithium ion battery is going to be 40 per cent of the cost of a passenger car. That will throw up new challenges. Will vehicle makers allow 40 per cent of the cost to be outsourced? Would they get into manufacturing? Would they have strategic relationships and partnerships? The business models are not set in the emerging EV segment. Even the competitive landscape is completely different. Earlier, we had benign competitors. Today we have very aggressive and large competitors who are into everything. I am referring to the Robber Barons (businessmen who use exploitative practices) of the day. They should ideally be investing in sectors like silicon manufacturing where small players can’t even dream of. We will have to see now how we compete against such giants. At the same time, while Amara Raja may be new in the lithium ion batteries space, we have been supplying batteries to vehicle manufacturers for quite a long time. We have relationships with them and understand their needs. That should help.

We have established an R&D cell-making facility, which is a product R&D, not a process R&D. Here manual methods are being used to manufacture the cells and firm up the design. We are planning to also set up a mega factory which would be a commercial pilot to prove our manufacturing process. That should happen in the next couple of years.

We have made an investment in Log9 materials, a nanotechnology company. We are having discussions with a few more companies in Europe. We have not finalised anything. It is not just about technology but about how and where we can use it. Established players put in a lot of restrictions. We hope to finalise something soon.

We have been a debt-free company for most of our life. It is not that we are scared of loans. We take them and pay them back within a couple of years. It shouldn’t be difficult for us to raise a couple of billion dollars, through both debt and other options which we are exploring.

Where you don’t need to conserve space, weight and where recharge doesn’t have to be instantaneous, lead acid is any day a far better, more economical option and a trusted option. It is less likely to blow up in case of a malfunction. I don’t think any one battery chemistry will serve all the needs in the world. Everything is becoming electrified and unplugged. So some kind of a storage system is needed. Also, there is not enough lithium in the world if every storage device is going to be made only from that material. People will start looking at different technologies for different requirements. You don’t have to have the best technology powering everything under the sun

We will continue to invest in it. It has taken us 30 years to get to a point where we can compete globally. We have global ambitions and are looking at the Indian-Ocean rim mainly. We are looking at capacities in this region. It could be greenfield or acquisitions. We are currently exporting three million units a year. I could easily absorb another two million. So if I had another 5-6 million capacity in this region, I think we could sell it easily.