Rising EV Penetration May Drive Rs. 70,000 Crore Investment In Battery Cell Manufacturing By 2030: ICRA

Electric Vehicles are believed to be the future of the automotive industry and almost every major automaker has been exploring this space and making investments. The key component driving these EVs is the battery pack which is likely to attract some significant investments as well by the end of this decade. Along with growing EV penetration, the demand for battery cells will also see an upturn and ICRA is estimating an investment of over $ 9 Billion or Rs. 70,000 crore in battery cell manufacturing by 2030.

Shamsher Dewan, Senior Vice President & Group Head - Corporate Ratings, ICRA, said, "In EVs, advance chemistry batteries remain the most critical and the costliest component, accounting for almost 35-40% of the vehicle price. At present, battery cells are not manufactured in India, and thus most OEMs rely on imports, and manufacturing operations in India are limited to the assembly of battery packs. However, to achieve mass scale penetration of EVs and a competitive cost structure, India will need to create its own eco-system of developing battery cells locally. Multiple challenges exist on the road to establishment of a cell manufacturing ecosystem, primary ones being technology complexity, high capital intensity and raw material availability. The ability of battery manufacturers to enter into agreements/alliances with players across the value chain to mitigate these risks, coupled with the creation of a robust framework for recycling would remain key."

According to the report, achieving economies of scale in battery manufacturing will remain critical in lowering the cost of an EV and helping achieve pricing parity. The report further mentions that locating cell manufacturers close to the original equipment manufacturers (OEM) or automakers would allow for the creation of a research and innovation ecosystem, which would aid the development of batteries with improved energy efficiency and which are better suited to Indian climatic conditions. In fact, the Government of India (GoI) recently signed agreements with three companies for incentives under its Production-Linked Incentive (PLI) Scheme for Advanced Chemistry Cell (ACC) Battery Storage. Even Suzuki is soon coming up with a battery plant in Gujarat which will be used to meet both local and global demand for lithium-ion batteries.