- Government’s well thought out PLI scheme is likely to transform India into a EV manufacturing hub by 2025
- According to the BNEF forecast, cost of Li-ion battery will reduce globally by 2024
- A Joint Venture Li-ion battery manufacturing facility by Suzuki Motor Corp., Toshiba Corp. and Denso Corp is set to open in Gujarat in April 2021
The dawn of sustainability and electro-mobility has increased the demand for EVs on Indian roads. Along with EVs the manufacturing process of EV batteries has grabbed the attention of major players. As of now China is the leading contender in the race to the throne followed by Japan and the US. Major EV car manufacturing companies like Tesla also deals with China for the supply of NMC batteries. However there is a possibility for the entry of a fourth country – INDIA- which until 2020 was not even part of the game .
The EV scenario is lukewarm if we look at the sales report of the number of vehicles sold in India. According to an Economic Times report, 156,000 electric vehicles were sold in India in the year FY20. Another report from EV Volume, which provides sales stats for EVs, states that, in 2019, 296,700 plug-in vehicles were delivered in the first three quarters. We can deduce the lag of EVs in India from the two reports. One of the factors which influence the low number of EVs on the Indian road is the cost of manufacturing one, and the most important component of EVs are the batteries. The average battery cost of a typical electric vehicle is around $7,350. The average battery pack price of $137 per kilowatt hour is still above the $100 threshold to match the cost of an ICE vehicle. Lowering of the battery cost will significantly reduce the cost of EVs which will trigger mass adoption.
The cost of lithium-ion packs are on track to drop to $93 per kWh by 2024, according to BNEF forecasts. Such price cut would not have been beneficial for Indian EV market if we had relied on China for the supply of Li-ion battery. However, the Indian Government in 2019 announced the Production Linked Incentive Scheme which aims to give companies incentives on incremental sales from products manufactured in domestic units. Under the umbrella of PLI scheme and the Government’s decision to impose tariffs on import of lithium ion cells for the next 10 years, the ACC Battery sector raised its head towards the possibility of locally manufacturing Li-ion battery.
The first step towards the aim to become self-sufficient across the EV value chain by 2025 was taken by Suzuki Motor Corp., Toshiba Corp. and Denso Corp. They plan to set up a joint manufacturing facility for lithium-ion (Li-ion) battery in Gujarat which is set to open in April 2021 with the facility of assembling the battery packs, before stepping up to manufacturing Li-ion cells around 2024-25. The presence of lithium deposits of 1,600 tonnes in Mandya district of Karnataka adds to a string of good news for the future of EV manufacturing in India.
The joint venture, TDS Lithium-ion Battery Pvt. Ltd, is expected to receive incentive under the government’s PLI scheme for Advanced Chemistry Cell (ACC) manufacturing in India. Tesla is also planning to set up its manufacturing plant in Maharashtra and is currently in talks with the state’s Industry Minister Subhash Desai.
Given the forecast of price reduction of EV battery and the Indian Government’s timely industrial policies and smart incentive scheme, India should gear up for a cleaner and more efficient travelling alternative.