While the EV industry is growing at a brisk pace in India, will it eventually run out of fuel?
Seems like electric vehicle (EV) charging stations will soon become part of your daily commute. EV sales have been in the green every single month this year, with October recording the highest-ever sales at one lakh units. What adds to the optimism is the projected 49 per cent annual growth the industry is expected to witness between 2022 and 2030.
But is India prepared to sustain this growth?
Presently, India imports nearly 70 per cent of its Li-ion batteries, a core component and the primary fuel source of EVs. This is neither sustainable nor cost-efficient for EV manufacturers.
But they say if there's a will, there's a way. And in that spirit, Exide Industries and Amara Raja Batteries, India's two biggest battery manufacturers, have answered the call and laid out plans to keep the EV rally going.
Exide Industries, the larger of the two battery giants, has announced that it will invest Rs 6000 crore in a new Li-ion manufacturing plant. Since expertise is pivotal in the cutting-edge field of Li-ion manufacturing, the company has partnered with SVOLT Energy Technology, one of the global leaders in Li-ion technology. The proposed plant will be constructed in two phases, with a total capex of Rs 2,500 crore in phase one. Exide is expecting to generate around Rs 10,000 - 12,000 crore in revenue from its Li-ion business in the upcoming decade. Currently, the company's Gujarat plant, developed in a joint venture with Leclanche SA, is India's largest Li-ion battery pack plant.
Amara Raja Batteries, India's second-largest storage battery manufacturer behind Exide, was a little late to the party but has decided to make a grand entrance. After incorporating a wholly owned subsidiary last month, the company announced that it plans to invest Rs 9,500 crore to build a Li-ion gigafactory with a total capacity of 15 GWh and a battery pack assembly unit of 5 GWh.
Unlike Exide, the company hasn't partnered with any big names; however, it has made investments in multiple start-ups. Case in point, Amara has invested Rs 85 crore in a Norwegian EV company InoBat Auto AS.
A different ball game
While both Exide and Amara are veterans of lead-acid battery manufacturing, they would require all the assistance they can get in the Li-ion game. Unlike lead-acid batteries, which play a relatively minor role in automobiles, Li-ion is the most crucial component of an EV. Unsurprisingly, the tech and expertise required to manufacture Li-ion are in a league of their own.
However, while Li-ion and other similar advanced battery technology might be the way forward, lead-acid batteries are still not at a risk of becoming obsolete. Hence, battery manufacturers must tread cautiously and invest in this technology without impacting their operations.
Here is a quote by Jayadev Galla, the Chairman and Managing Director of Amara Raja batteries:
"And if we invest ahead of time, I think that would also be very wrong. So, I think the timing of the investment also needs to be carefully planned out. Especially the scaling up has to be carefully planned out where there should be a real demand coming up, we should be able to see the demand before scaling up to any huge scale, otherwise it becomes a non-performing asset."
The other players
While Exide and Amara are ahead, they are not the only heavy hitters in the Li-ion race. Both Tata Motors and Maruti Suzuki have been investing in Li-ion technology, and so has Hero Motocorp on the two-wheeler side.
Is lithium the only way forward?
While most EVs currently run on Li-ion batteries, the future might be quite different. Amara Raja's management has stated that the tech cycle in Li-ion is expected to be much shorter, and a move towards solid-state batteries may happen. On the other hand, Reliance Industries has been putting their bets on sodium-ion technology, which costs less and is comparatively a safer option.
While EVs are surely hitting Indian roads in larger numbers, without the batteries, they might just run out of spark.