India’s lithium-ion cell supply chain – Leading players and plans

Over the past decade, demand for lithium-ion batteries has increased significantly due to the growing adoption of electric vehicles and the expansion of renewable energy sources. Asia-Pacific is one of the largest markets for lithium-ion batteries. China is the largest producer and consumer of lithium-ion batteries, followed by North America, Europe, Japan and South Korea. India’s LiB industry is also making significant strides, with many companies investing in the sector and new startups coming up.

India LiB Demand Overview

India’s rapidly growing population and economy are driving the demand for energy storage solutions. The Indian government has a focus on increasing electric vehicle penetration to reduce air pollution and dependence on fossil fuels. As per Niti Aayog’s estimates, the battery demand in India is expected to rise to about 230 GWh by 2030. Despite such large demand, cell manufacturing is still at a nascent stage in India. Given the vast business opportunity, numerous players are now looking to venture into Li-ion battery manufacturing in India. Most of the companies in India are currently focusing on battery-pack manufacturing and are importing cells from China and Korea.

India’s LiB Industry – Key players’ activity

Ola Electric, Reliance and Rajesh Exports have been selected under the PLI scheme for receiving incentives for cell manufacturing and are expected to start cell manufacturing latest by 2024. Traditional battery manufacturers’ presence is inevitable in lithium-ion battery manufacturing. These companies have an excellent understanding of the automotive industry and have long-term experience working with OEMs. Non-traditional players such as Mahindra, L&T, India Power, Thermax, Tata Chemical, and many startup companies are looking to enter into the pack manufacturing business, with some planning to explore cell manufacturing in the future.

Announcements and associations by the companies selected under the PLI scheme

Ola Electric

• Ola Electric, which currently imports battery cells from South Korea, plans to set up an Advanced chemistry cell manufacturing plant with 1GWh of battery capacity by 2023 and expand it to 20 GWh in 2026-2027 and 50 GWh in the long term. Ola needs 40 GWh of battery capacity to meet its annual target of producing 10 million e-scooters. Ola expects high demand security for LiB batteries owing to their current and anticipated future captive demand and expected demand from other OEMs.

• The company reportedly plans to invest up to $1 Billion in cell manufacturing. Ola is in talks with several state governments to find 1,000 acres of land for the manufacturing plant and is speaking to more than 40 global suppliers from Germany, Korea and Japan, such as Dürr and Siemens. In addition, the company invested in Israel battery technology firm StoreDot to have exclusive rights to manufacture batteries integrating StoreDot’s technology in India.

Reliance

• Reliance has made investments in two companies, LithiumWerks and Faradion. LithiumWerks owns proprietary LFP cell technology. Reliance acquired all its assets, including the entire portfolio of 219 patents, a manufacturing facility in China, key business contracts, and hiring existing employees. Faradion, on the other hand, is a sodium-ion battery technology company.

• Reliance plans to invest ₹150 B in value-chain, partnerships, and future technologies, to create a fully integrated, end-to-end ACC (advanced chemistry cell) manufacturing facility. The company also has an exclusive collaboration with Ambri, an American energy storage company, to set up a large-scale battery manufacturing facility in India.

Cell component manufacturing: Anode, Cathode, Electrolyte and Separator

There is a critical need to localise the cell supply chain. The cell materials constitute around 40% of its cost, and India has minimal availability of cell raw materials. If India targets to achieve 60% of the value addition (as mandated by the PLI), it needs to localise the manufacturing of anode, cathode, electrolyte, and separator.

Anode

Companies such as Epsilon, Himadri & HEG are exploring and taking steps to manufacture anode locally. Epsilon produces meso coke, a precursor to anode material, on a commercial scale of 2,500 TPA capacity to manufacture synthetic and natural graphite. By 2030, they plan to have capacities of around 100,000 million TPA of the synthetic anode and 50,000 million TPA tons of natural graphite.

Himadri Chemicals plans to produce around 20,000 MT soon and expand to 100,000 million tons of anode material by 2028 in a phased manner.

Cathode

India doesn’t have many cathode manufacturers yet, given the scarcity of raw material. Epsilon Carbon has tied up with a US company to explore the cathode manufacturing business in India. A few startups are also venturing into cathode manufacturing. Some initiatives have been announced by Allox and Epsilon. Hyderabad-based Allox enhances the imported material and manufactures the LFP cathode through a patented process at a current manufacturing capacity of 50 kilograms per day. They plan to go into commercial production and increase the production capacity to 10 to 15 tons per day. Allox has also signed an MoU with Govt. of Telangana for setting up a C-LFP active battery material production unit. The 3GWh per annum capacity facility with an investment of ₹210 Cr will be expanded to 10 GWH/PA with ₹750 Cr by 2030.

Electrolyte

Indian companies such as Neogen Chemicals and Gujarat Fluorochemicals have recently invested & started manufacturing electrolytes for lithium-ion batteries in India.

Separators

Daramic (an Asahi Kasei Group company) currently manufactures PE separators in India for Lead Acid Batteries. They are believed to be future-ready for a transition into Li-ion batteries. Daramic plans to start a greenfield project for lithium-ion battery separators. Once the local demand increases, Asahi Kasei Group company is expected to have aggressive plans for separator manufacturing in India.

The strategy of cell component manufacturers in India

Due to the lack of domestic demand for the above cell material, the first target for any company entering cell component manufacturing is obtaining approval for their products from global cell manufacturers such as Panasonic or LG Chem. Becoming a supplier to such players gives them a substantial advantage and acceptability. Furthermore, as global cell players enter different geographies, they can accompany them to capture other markets.

The second requisite is export to lead demand. Anode manufacturers in India are making manufacturing plans based on not the Indian scenario but the global scenario since the domestic market for local cell manufacturing companies is expected to take at least three to four years to mature in India.

Availability of raw materials and India’s treaties with the world

There is a need to have G2G (government to government) collaborations for raw material access. Institutions like the National Aluminium Company (NALCO), Hindustan Copper (HCL), Mineral Exploration Corporation (MECL), National Mineral Development Corporation (NDMC) and others are working towards establishing such collaborations. To ensure a steady supply of raw materials for Lithium-ion battery production in the country, India will be obtaining lithium and cobalt in countries like Australia, Argentina, Bolivia, and Chile.

A joint venture company, Khanij Bidesh India (KABIL) Ltd., has been created by the Ministry of Mines. National Aluminium Company (NALCO), Hindustan Copper (HCL), and Mineral Exploration Corporation (MECL) are three companies that are a part of this joint venture.

In 2020, KABIL signed a non-binding MoU with a non-disclosure agreement with three State-owned Argentinian organisations in July, September and December for information sharing regarding prospective mineral acreages. KABIL has also signed an MoU with Australia’s Critical Minerals Facilitation Office (CMFO) to collaborate on lithium and cobalt identification projects in Australia.

State-owned NMDC (National Mineral Development Corp) is looking to mine lithium, cobalt and nickel through Legacy Iron Ore Ltd in Australia. NMDC owns a 90% share in Legacy Iron Ore Limited. NMDC will bring back its entire quota to India to meet the growing lithium requirement because of the rising domestic sales of electric vehicles. NMDC is also looking for cobalt, nickel and gold mines in various geographies, including Africa.

Hence, once these G2G collaborations pick up, India will solve major challenges with respect to raw materials access for cell manufacturing.

Conclusion

India is currently heavily dependent on imports for lithium-ion batteries, which account for a significant portion of the cost of electric vehicles and energy storage systems. To reduce dependence on imports and promote domestic manufacturing, the Indian government has launched several initiatives to support the local production of lithium-ion batteries.

As of today, there are several domestic and international companies that have set up lithium-ion battery pack manufacturing plants in India. The production of lithium-ion cells in India is still in its early stages, but it is expected to grow rapidly in the coming years due to the government’s initiatives to promote domestic manufacturing and the increasing demand for electric vehicles and energy storage systems.

Special Thanks to Mridul Agarwal, Associate Consultant at Nomura Research Institute Consulting and Solutions, for his extensive contribution to this analysis.

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This article was originally published in EVreporter April 2023 Magazine which can be accessed here.