Striking a deft balance between domestic production and
international partnerships is crucial to a robust EV battery supply
chain.
At the COP26 conference, in a bold commitment to environmental
sustainability, India's Prime Minister Narenda Modi pledged to
achieve net zero emissions by 2070. As the world's third largest
emitter of CO2, India is banking on electrification of the
transportation sector, and the shift towards electric vehicles
(EVs), to achieve this goal. This transition significantly
increases India's need for lithium-ion (Li-ion) batteries, which
power EVs.
S&P Global Mobility's AutoTechInsight forecasts demand for
lithium-ion batteries in India to surge from 4 gigawatt hours in
2023 to nearly 139 gigawatt hours (GWh) by 2035. A major share of
this demand is projected to come from the economically vital light
vehicle segment – the workhorses of Indian commutes and commerce.
The exponential growth in EV adoption will have implications for
the sourcing and production of battery components by OEMs,
suppliers and manufacturers in India.
Battery cell demand is driven mostly by B and A segment passenger
vehicles, which are characterized by their compact build and
affordability. In particular, smaller B segment SUVs like the Tata
Nexon are increasingly popular with Indian drivers. These vehicles
have a higher ground clearance and a wider wheelbase, providing
better control and protection over uneven terrain like potholed or
gravelly roads.
Thanks to their strong EV portfolio, Tata Motors remains the top
battery cell consumer in India. By comparison, Maruti Suzuki, the
country's largest carmaker, has a relatively small share of the EV
market. But with the automaker aiming to launch their first EV, the
eVX in 2025, Maruti Suzuki is expected to drive 20% of battery cell
demand in India by 2035, just behind Tata Motor at 22%.
While India continues to develop its production and technology,
the EV supply chain remains fragmented. Manufacturing EV batteries
involves installing individual cells into modules and arranging
said modules into packs capable of delivering the power needed to
operate a vehicle. These three distinct phases – cell, module, and
pack – represent key opportunities for India to localize EV and
battery production.
As local battery cell manufacturing capabilities are still
nascent, India has historically relied on importing cells from
Greater China, South Korea and Japan. This will likely change as
India aims to become more self-sufficient to satisfy demand.
S&P Global Mobility predicts that by 2030, 13% of total cell
demand will be sourced domestically, with the rest still outsourced
from other countries. Notwithstanding this forecast, original
equipment manufacturers (OEMs) in India are investing heavily into
local cell manufacturing facilities.
This is further spurred by the Indian government's proactive
stance on electrification. Policies such as the Production-Linked
Incentive (PLI) scheme for advanced chemistry cell (ACC) battery
storage and the Faster Adoption of Manufacturing Electric Vehicles
(FAME) scheme have encouraged investments and strategic
partnerships.
In 2024, Ola Electric started mass production of the NMV21700
cylindrical cell battery at its Chennai-based Gigafactory for its
two-wheelers. Major industry OEMs like Rajesh Exports, Amara Raja,
Reliance, and Adani also plan to build lithium-ion battery cell
factories and ramp up domestic production capacities.
Concurrently, OEMs and cell manufacturers in India are forming
joint ventures (JV) with international cell makers, module makers
and pack suppliers. Key alliances include Suzuki's JV with Toshiba
and Denso in 2017 to construct a cell manufacturing plant in
Gujarat. The facility started as an assembly plant for modules and
packs and is set to begin manufacturing cells in 2024 and 2025.
Overall, the increase in JVs and value chain integration reflects
the broader industry move towards securing supply chains and
fostering sustainability and efficiency. Outsourcing is expected to
decrease markedly, from 76% in 2022 to less than 52% by 2035.
Growing demand for cell production has also cast a spotlight on
battery chemistry trends in India. Not all li-ion batteries are
created the same. The choice of cathode material influences
performance, cost and environmental impact, making it a crucial
factor for manufacturers and policymakers. Currently, LFP (Lithium
Iron Phosphate) and LMFP (Lithium Manganese Iron Phosphate)
chemistries dominate in lower vehicle segments due to their thermal
stability and cost effectiveness, attributes that are critical in
price-sensitive markets like India.
By 2030, high nickel NCM (Nickel Cobalt Manganese) is expected
to capture greater market share in higher vehicle segments owing to
its higher energy density, making it suitable for longer range
travel. Mid Nickel NCM and NCMA (Nickel Cobalt Manganese Aluminum)
are also gaining traction, particularly in the mid-range vehicle
segments.
Cathode and anode active materials (CAM/AAM) used in the
construction of lithium ion batteries are crucial components that
determine performance and energy storage capabilities. Strategic
acquisitions and investments from India OEMs and manufacturers not
only help to expand production capacity but can also improve
domestic technological capabilities.
For instance, Himadri's investment in Sydney-based start-up,
Sicona Battery Technologies, which specializes in high capacity
silicon anode technology, is poised to revolutionize battery
capacities and charging speeds. Likewise, India's first CAM
supplier Altmin is ramping up its production of LFP cathode
materials, which will be essential to powering a wide range of
electric vehicles.
With the automotive industry exploring cost-effective
alternatives to lithium-ion batteries, sodium-ion technology has
emerged as a promising candidate. Albeit with a lower energy
density, sodium-ion batteries are low cost, abundant in supply, and
safer, making them suitable for two and three-wheelers with smaller
battery packs. Commercialization of sodium-ion technology, which is
still maturing, may not be fully underway till 2030, but companies
like Reliance New Energy Solar – which acquired UK-based sodium-ion
technology company Faradion – are gearing up to lead in this
nascent market.
The ethical sourcing of battery minerals is becoming a paramount
concern as the industry scales. Narratives around lithium, nickel,
and cobalt are increasingly scrutinized under the lens of ESG
principles, forcing suppliers and corporations to balance cost
efficiency with ethical responsibility. While an estimated 5.9
million tons of lithium reserves in Jammu and Kashmir offers
potential to localize mineral supply, it also highlights
complexities of extraction and their environmental impact in these
mountainous regions. Like with cell manufacturing, it will take
strategic partnerships with Bolivia, Argentina, Indonesia,
Australia and other nations to procure the necessary Lithium,
Nickel and Cobalt supplies.
As the industry continues to evolve, the integration of advanced
technologies and strategic partnerships will be key to sustaining
growth and achieving the electrification goals set forth by the
government. This holistic approach will ensure a future where India
is both a consumer and a crucial contributor to the global shift
towards sustainable automotive solutions.
This article is part of a series featuring
highlights from S&P Global Mobility's 2024 Solutions Webinar
Series. The Indian EV Battery Outlook webinar occurred on April 2,
2024.
Register
for upcoming webinar sessions.
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