Amara Raja advances its lithium-ion cell manufacturing plans with strategic partnerships

Amara Raja Energy & Mobility (ARE&M) broke ground for its 16 GWh Li-ion cell factory in Mahbubnagar, Telangana, nearly a year ago. In this interaction with Vikramadithya Gourineni, Executive Director, New Energy Business, ARE&M, we discuss the progress made thus far and the significance of striking the right partnerships to build the cell business.

Can you please bring us up to speed with the current status of the manufacturing facility?

As part of the announcement last year, we shared that Phase 1 of our investment would consist of setting up our R&D centre, the start of a pack facility with an ultimate capacity of 5 GWh, a commercial pilot plant for cell-making, and 2 GWh of cell-making. I am happy to share that the pack facility construction has been completed, and the first line is in the final stages of commissioning.

We brought over a very lean team of supervisory staff from our pack facility located in Karakambadi, Andhra Pradesh and trained all local youth to run this plant. In the future, even supervisory staff and leadership will eventually grow out of this batch of talent. Construction is underway on both the R&D and commercial pilot plants, and we should see commissioning next year. The final piece of our Phase 1 investments, the 2 GWh of cell-making, is in the design stage right now, and we are confident of commencing construction next quarter.

What led you to invest another EUR 20M in InoBat and license the LFP cell technology from GIB EnergyX?

As you know, we participated in InoBat’s earlier funding round with an investment of 10 million Euros, and this recent investment will bring our total to 30 million Euros. There are a couple of interesting developments that made us consider topping up our investment.

One of the clear attractions to us was the recent addition of Gotion High-Tech to InoBat’s list of shareholders and the benefits accruing to InoBat.

With Gotion onboard, InoBat’s cell program has received a major boost and is more ready to deliver on their futuristic product offerings for applications like electric aviation. Also, with the heft of Gotion, InoBat’s many announced Gigafactory projects have a greater likelihood of coming to fruition. In fact, GIB, a JV between InoBat and Gotion, has just signed an investment agreement with the Government of Slovakia to establish a 20 GWh facility.

Coming to the licensing technology from GIB, for us it was a no-brainer. Gotion is a highly credible name in LFP technology with a proven track record. By licensing through GIB, we have the security of linkage to our investment in InoBat and the ability to be directly plugged into an alternate battery supply chain being localized by GIB in the EMEA region. In addition to technology prowess, with a partner like Gotion onboard, we see immense advantages in capital efficiency, supply chain security and pricing, and in optimizing our conversion costs.

Regarding licensing the LFP technology from GIB, what timelines do you see for this collaboration to start manifesting?

Well, the collaboration will take effect immediately. Teams on both sides are already connected and working on transferring technical documentation, scheduling trainings on product design, and jointly designing the factories, which includes all buildings, utilities, equipment, and other critical facilities. We have a very tight schedule and aim to begin construction on the first LFP facility within the next quarter or so. From the start of construction, we are targeting to be running commercial production in 24 months. This is quite aggressive, considering it is our first time, but we will work closely with GIB to meet these timelines. A similar process will be followed for all factories, with the last of our currently planned capacity being commissioned before 2030.

In terms of chemistry, is NMC still in focus for the initial 2 GWh line for e-2Ws?

Our initial 2 GWh of capacity remains NMC, largely catering to e-2Ws. Due to constraints in space and form factor, cylindrical NMC cells remain the favourite here. There was a short-lived hysteria around battery fires and safety, but we feel that all credible OEMs have largely solved for this with improved BMS and pack design.

One issue around NMC remains cost pressure. With policy around EV subsidies being reworked, e2W OEMs are looking at cheaper LFP product offerings, which we are equally prepared to supply. However, we are still confident in the ability of the Indian market to consume our NMC capacity, so any LFP capacity towards e-2W would only be additional to this.

You expressed concerns about cell ecosystem buildup in India last time. Would you like to share how those concerns regarding domestic value chain development have fared?

To be frank, the concerns remain, but I think that’s the reality. In this chicken-and-egg scenario, it will be the downstream players like OEMs and battery-makers that take the lead in electric mobility in India. The same was the situation for the Lead-Acid battery industry, where even today, we do not have a single domestic separator manufacturer, but the industry has still found success.

There are a couple of promising efforts for specific materials, but these remain largely outliers, with the bulk of the value chain remaining unaccounted for. It is somewhat understandable as the major concerns revolve around the quantum of investment and access to the requisite technology. For every dollar invested in cell-making, 4 to 5 dollars need to be spent in establishing equivalent upstream capacities in battery materials. We are optimistic that as cell capacity begins to come online there will be more interest in the battery material space. In the meantime, the value of our partnership is being plugged into the supply chain ecosystem of a large global player, securing supply and prices.

Can you share a summary of recent progress made by Amara Raja in other areas besides cell/battery manufacturing?

Due to the eye-catching investments required for cell-making, other equally essential solutions that we offer at Amara Raja often go unnoticed. I am happy to share that our power electronics portfolio has been steadily strengthening, with a strong product offering coming to market.

We have successfully localized portable chargers for e-2W and e-3W requirements, and our plant is just entering mass production. This will be an essential product with each vehicle sale, much like a charger being bundled within each mobile phone package.

In addition, we are targeting a larger rollout of our DC fast chargers with an expanded range. Today, the bulk of the market for these products comes from government tendering with very little domestic content requirement. We hope to see increasing domestic content requirements as well as further private-sector participation in charge point operations.

Lastly, we are moving quickly towards a solution-based approach on the stationary side rather than looking at the battery as a single product sale. This includes segments such as Telecom, UPS, and Energy Storage. We are particularly optimistic about the potential of utility-scale ESS, and our product offerings are quickly getting ready for deployment.

What is your current outlook towards your cell manufacturing business?

There are still a lot of challenges for building a successful cell business in India, be it the technology, Gigafactory execution, risk of slow market adoption, supply chain, talent, etc. Earnings in cell making will take time to stabilize and reach attractive levels, but it is a bet that the country must take.

We have missed all major high-tech buses to date, and we cannot afford to miss this one that will redefine mobility globally. Having a strong partner goes a long way in overcoming this, and of all cell projects in India, the quality of our partner stands noticeably the highest. The way forward for success in this space for a company such as ours is through having a network of partnerships to overcome challenges too large for single players. This is what we have embraced in Amara Raja. We are happy to participate broadly and partner, but not attempting to do it all ourselves be in technology or value chain development.

This interview was first published in EVreporter July 2024 magazine.

Also read: Amara Raja to license LFP cell technology from Gotion-InoBat-Batteries