Amara Raja’s strategy for competitive cell manufacturing in India | Interaction with Vikramadithya Gourineni

The Amara Raja Giga Corridor at Divitipally, Mahabubnagar district in Telangana, covers 260 acres and will entail an investment of INR 9,500 crore until 2031. Amara Raja Advanced Cell Technologies recently held a groundbreaking ceremony for its Customer Qualification Plant (CQP), which is anticipated to be operational by Q1 of the next FY. The company also inaugurated Phase 1 of its battery pack assembly plant within the Giga Corridor, with a current capacity of 1.5 GWh.

Amara Raja’s Giga Corridor project recently received a boost after the company collaborated with Gotion Inobat (GIB) to develop and manufacture LFP cells. The company also has an agreement with Jiangsu Highstar Battery Manufacturing Co. for NMC technology.

On the demand side, Amara Raja has signed an MoU with Piaggio Vehicles and Ather Energy to develop and supply cells for their electric vehicles.

We attended their annual summit, Evolve 2024, in Hyderabad on August 9. This is an excerpt from EVreporter’s interaction with Vikramadithya Gourineni, Executive Director at Amara Raja Energy & Mobility, on the sidelines of the event.

You recently announced a partnership with Ather to supply cells. Is Amara Raja also looking at taking up pack manufacturing for them? How will this partnership help with your cell manufacturing plans?

Ather makes its own packs in-house, though they have specific requirements for NMC (Nickel Manganese Cobalt) and LFP (Lithium Iron Phosphate) cells. We are also open to exploring future cell formats and chemistries that might interest them.

This collaboration is valuable because Ather, one of India’s earliest electric 2W manufacturers, has accumulated extensive data on vehicle usage, battery performance, and areas of improvement. This data will be instrumental in optimally designing cell specifications for India’s 2W usage conditions, tailored to their vehicle needs. The insights they provide will allow us to design highly competitive cells. It’s similar to what companies like Tesla have done—leveraging detailed usage data to fine-tune battery specifications.

Additionally, having a customer with such clear requirements right from the start helps us immensely in the design and development process. We’re sharing our product designs with them, and their feedback will help us refine these products further, ensuring they meet the exact needs of their applications.

Have you identified any suppliers in India for battery active materials?

We are actively engaging with potential suppliers in India, especially now that we understand the specific cell chemistries and specifications our partners require. For the initial production run, we will likely rely on the supply chain of our technology partner Gotion, including their approved vendors, most of whom are closely linked or owned by them. However, over time, we’re keen to ensure Indian suppliers can meet these demands.

Gotion is a global player, and Amara Raja is their local partner in India. Does this mean Gotion will similarly have different manufacturing partners in various parts of the world?

Yes, Gotion operates globally, focusing on setting up factories in various regions. It already has facilities in Europe and the United States, and it’s looking at other geographies as well. In these regions, it typically seeks local partners who are strong in specific aspects of the value chain and can help with localization.

What sets our partnership apart is that it’s a 100% locally owned investment by Amara Raja in India. We’re using a technology licensing model here, whereas, in other regions, Gotion might take the lead, investing more heavily and acting as the primary developer. Our approach is to localize as much of the value chain as possible. Once we start manufacturing cells and get support on the battery pack front, we can explore additional opportunities, potentially involving other participants and chemistries of interest for future projects.

Is LMFP a chemistry of interest for you at the moment, alongside LFP and NMC?

LMFP can be relevant, but the technology is not as mature as some might think. Often, customers see the latest technologies and assume they need them, but our deeper understanding now allows us to educate them. We can help customers realize they may not need the latest technology if their primary concern is the vehicle’s lifecycle and operational needs at a certain cost.

The chemistry we’re discussing (LMFP) is not a pure chemistry but rather a blend of NMC (Nickel Manganese Cobalt) and LFP (Lithium Iron Phosphate) in various ratios. The industry is still working towards achieving a 100% LMFP solution, which no one has fully mastered yet. A major challenge is the manganese in NMC, which tends to dissolve in the electrolyte over time, especially when aiming for longer lifecycles of 8,000 to 10,000 cycles.

Currently, LMFP chemistry is in production in China and going out to select applications. Still, when we talk about mass production in China, it means something different from what we’re doing in India. Even in China, it’s not going to large accounts. It’s still mainly in the testing phase and not commercially available for large-scale applications yet.

You mentioned working on both NMC and LFP chemistries. How does that impact the planning of your cell manufacturing setup?

We have two different partners. GIB has a strong LFP portfolio, while for NMC, we are collaborating with Jiangsu Highstar Battery for the NMC 2170 cell.

The production lines for NMC and LFP will be entirely distinct. While a factory line can be designed to be agnostic, meaning it can handle both chemistries, it’s not ideal to switch between them once the line is installed. The materials and equipment requirements differ—NMC requires denser materials, and LFP needs more equipment to achieve the same output. Switching between chemistries, especially from LFP to NMC, could also lead to contamination issues that would negatively affect the NMC cells.

Therefore, we prefer to keep the lines completely separate. We will design and install the lines specifically for each chemistry, taking inputs from both partners to ensure the most efficient setup.

You already have an established battery pack facility in Andhra Pradesh. How does opening this new facility within the Giga Corridor affect your existing pack manufacturing facilities?

Our current facility in Andhra Pradesh is running efficiently and supplying to our clients, and the team is well-trained. We’ve brought many experienced workers from this plant to help with the new facility. We plan to operate both plants, with the new one initially envisioned to reach a capacity of 5 GWh. However, the battery pack market dynamics are changing rapidly, so we’ll remain flexible and adapt as needed.

Given the current overcapacity in battery cell production and China’s significant scale and leverage in sourcing, how can the cells produced in India compete in terms of price and quality?

Pricing is currently a concern. Raw material availability, while previously a concern, is now less of an issue due to the overcapacity in both cell production and raw materials. The focus has shifted to how effectively we can procure these materials at competitive prices. Our partnership with Gotion, for instance, allows us to connect our planned 16 GWh of capacity to a much larger ecosystem of 200-300 GWh. This connection is crucial for us; Gotion sees us as part of their ecosystem, which should help us remain competitive in raw material procurement.

Chinese manufacturers can leverage their pricing power to undercut local investments. This pricing strategy, seen in various industries, often aims to weaken local industries before raising prices once competition is diminished. Even with protective measures like a 100% duty, their costs are so low that it may not be enough to deter them in certain industries.

Government strategies will be crucial. Measures like dumping duties and customs duties have been used in the past. Additionally, non-tariff barriers such as the Approved List of Module Makers (ALMM) in the solar industry could be applied to batteries. This approach requires manufacturers to produce locally to participate in public tenders, reducing the ability to compete solely on price.

Recent government incentives for EV manufacturers include lower import duties for a set period, with the condition of establishing local manufacturing. These measures ensure that domestic value addition is above a certain threshold, which supports local capacity building.

Historically, similar protections have allowed local industries to develop and compete. For instance, the lead-acid battery industry faced significant threats but managed to achieve scale when dumping from China was restricted. Once local capacity is established, it becomes easier to compete effectively. Therefore, with the right amount of support and time to build capacity, Indian manufacturers should be able to compete in the long run.

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