Lithium-Ion Battery (LiB) Manufacturing Landscape in India, Jan 2022

Lithium-Ion Battery (LiB) Manufacturing Landscape in India, Jan 2022

Executive Summary

The Government of India’s Make in India initiative, aimed at promoting India as the preferred destination for global manufacturing, has helped industries such as pharmaceuticals and apparel carve a niche. However, when it comes to intermediate industries such as batteries, specifically lithium-ion batteries (LiB), India is still dependent on imports.

Considering that LiBs are in huge demand (~80 per cent) from the automotive industry for electric vehicles (EVs) and India is expected to be the world’s third-largest automotive market by 2026, LiB manufacturing requires immediate attention. Add to this the Government of India’s target of 30% of new vehicle sales to be electric by 2030 and 34 gigawatts (GW)/136 gigawatt-hour (GWh) of battery storage needed to add 450GW of renewables in India by 2030, according to the Central Electricity Authority (CEA). India is therefore poised to become a key LiB consumer.

This report estimates that the annual capacity addition of LiB for automotive applications will increase from 2.3GWh in
FY2021 to 104GWh by FY2030 and for non-automotive applications from 0.3GWh to 12GWh. So, 90 per cent of the
total LiB demand will be driven by automotive applications on the back of favourable government policies including
Faster Adoption and Manufacturing of Hybrid & EV (FAME) and various state-level EV policies. The demand for LiB in
the non-automotive segment will be driven by telecom towers, data centres, and grid-scale renewable energy (RE)
integration and rooftop solar (RTS), followed in turn by newer applications including materials handling equipment and
power tools.

The report also tracks the journey of battery adoption in India – lead-acid (LA) batteries, initially used in automotive and non-automotive applications, were superseded by LiB a few years ago. This was encouraged by the mushrooming of battery pack players from the industry’s end with an initial investment in assembly set-up a mere US$1.3m. In addition, government support allowing 100% foreign direct investment (FDI) and mandating manufacture of battery packs in India increased the growth. The same, however, has not been true for the key component of battery packs – cells. Until now, India was completely dependent on imports of cells from neighbouring countries like China owing to the unavailability of key raw materials and technological know-how. This led battery pack assemblers to bear the brunt of high cell prices, hoarding of cells in the hands of a few Chinese suppliers, availability of lower-grade cells, and non-availability of cells that can withstand higher temperatures specific to India.

This report also highlights the challenges for the battery pack and cell manufacturing industry in India. End-use customers are wary of the battery pack Cell manufacturing costs in India in 2020 were the lowest among the U.S., Europe, even China and South Korea. Lithium-Ion Battery (LiB) Manufacturing Landscape in India 3 and battery management system (BMS) quality offered by local assemblers and hence safety issues arising out of this. Battery pack assemblers find the market unprofitable owing to single-digit EBITDA margins. In addition, cell manufacturing, though a lucrative opportunity, is laced with challenges ranging from unavailability of key raw materials to requirement of huge investments and absence of technological know-how. The report therefore suggests battery recycling as one of the alternate solutions to meet surging LiB demand. It will result in recovery of 90 per cent of lithium, cobalt, nickel, manganese, and graphite and put India on the path to a circular economy.

Overall, however, as India already has huge cost advantages in battery assembly and software-driven BMS capabilities, it can also realise significant benefits through a vertically integrated value chain once lithium-ion cell manufacturing booms. For cell manufacturing and battery pack assembly, the future looks promising in India with the proviso that issues like battery standardization and battery safety issues are addressed and the industry and government work in sync.

1. Introduction

2. Lithium-ion Battery (LiB)- India Market Size

     2.A LiB Applications

3. Key Players in the LiB Market in India

     3.A Planned Investments

4. Market Drivers

     4.A Government Policy Initiatives

     4.B No significant Entry Barriers for Battery Pack Manufacturers

     4.C Low Manufacturing Costs in India

     4.D Falling Battery Prices

5. LiB Manufacturing in India- Current Capabilities

     5.A Current Manufacturing Capabilities along the Value Chain

     5.B Need for LIV Manufacturing in India

6. Risks and Challenges

     6.A For Battery Pack Manufacturers

     6.B For Cell Manufacturers

     6.C For OEMs

7. Conclusion

8. Annexure

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