By 2030, investments in cell manufacturing are expected to exceed $ 9 billion due to the rise in demand from various applications and future growth prospects expected post 2030, according to credit rating agency, Icra.

Based on Electric Vehicle (EV) penetration across automotive segments and its exponential growth over the next decade and battery, Icra’s projection remains the most critical and costly component of an EV.

“In EVs, advanced chemistry batteries remain the most critical and the costliest component, accounting for almost 35-40 per cent of the vehicle price," says Shamsher Dewan, senior vice president and group Head - Corporate Ratings, Icra.

Currently battery cells are not manufactured in India, which makes most EV makers rely on imports, and manufacturing operations in India are limited to the assembly of battery packs, adds Dewan.

In case of achieving mass scale penetration of EVs and a competitive cost structure, it’s believed that India will need to create its own ecosystem of developing battery cells locally. However, multiple challenges exist such as establishment of a cell manufacturing ecosystem, primary ones being technology complexity, high capital intensity and raw material availability. Then there is 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 critical, he said.

Additionally, the robust demand from EVs, the annual battery demand for stationary applications (grid storage, telecom towers etc.) is also likely to grow at a rapid pace and be substantial, according to ICRA.
Spurred by Government support in the form of subsidies, enhanced awareness and increasing product launches, the electric vehicle (EV) segment saw a significant upturn in prospects in FY2022.

Achieving economies of scale in battery manufacturing will remain critical in lowering the cost of an EV and helping achieve pricing parity. Additionally, given that the charging infrastructure penetration will only improve gradually, improvements in energy efficiency remain imperative. Locating cell manufacturers close to the original equipment manufacturers (OEM) 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.

Given the need to invest in cell manufacturing units to keep pace with the expected surge in battery demand for both EV and stationary applications, numerous entities have already committed significant investments in this segment. 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. The policy emphasizes on enhancing domestic value addition and is expected to support capability development in this sunrise.

Lithium-ion batteries have emerged as the battery of choice for EVs, given their high energy efficiency, decent thermal stability and low self-discharge. While Lithium Nickel Manganese Oxide (NMC) is the most prevalent cathode chemistry currently, Lithium Iron Phosphate (LFP) chemistry is expected to gain increased acceptance going forward, given its higher thermal stability and lower production cost. Multiple other chemistries also continue to be under development, even as commercial viability for such chemistries may take time.