The role of lead-acid batteries in the evolving energy landscape

In this interaction with Harshavardhana Gourineni, Executive Director at Amara Raja Energy and Mobility, we delve into the place of lead-acid batteries in the evolving landscape for mobility and industrial applications, amid the emergence of EVs and the adoption of lithium-ion batteries for electric mobility, telecom and data centre energy storage requirements.

Please help us understand the current scale of Amara Raja’s lead acid battery business for automotive and industrial applications.

We began as an industrial battery player in the mid-eighties, pioneering maintenance-free valve-regulated lead-acid batteries for telecom. These batteries revolutionized the sector with longer cycle life and better performance in Indian conditions when power disruptions were frequent. Over the years, we expanded into automotive and other industrial segments, achieving significant scale.

We are the second largest player in India today in terms of revenue. Automotive constitutes about 70% of our business, and a third of the revenue comes from exports. Last year, our revenue, including automotive and industrial, crossed INR 10,000 crores. We have consistently achieved a high single-digit CAGR in the lead-acid business. Our YoY growth for Q3 this year was around 12%. Additionally, we have ventured into new energy space in a significant manner over the past 2 years.

How do you see the role of lead-acid batteries in the evolving mobility landscape, that looks poised to be dominated by lithium-ion batteries.

ICE vehicles are not going away anytime soon and will continue to require the starter batteries. Looking at the current trend of electrification of transport, we are looking at a 20-year runway for lead-acid batteries in the mobility space. In the emerging e-mobility scenario, lead-acid batteries are still a part of the solution with a lot of hybrid vehicles hitting the market. EVs also need a separate energy system to power the critical safety and auxiliary functions, including windows, power steering and features such as automatically tightening seat belts, which lead-acid batteries can serve. The technology for these auxiliary batteries can evolve over time, and we are observant of the relevant indications coming to the market.

In addition, the existing ICE vehicles are also expected to upgrade quite a bit. New technologies, such as AGM, are coming into the market to serve the start-stop application and support the ever increasing electronic and electrical loads on the system.

Going forward, we anticipate continued demand for lead-acid batteries, especially in sectors like automotive and telecom. Additionally, within lead acid batteries, innovations like AGM technology are opening new avenues for growth.

Auxiliary batteries are primarily needed in 4W and heavier vehicles. Electric 2Ws and 3Ws running on lithium-ion batteries don’t require auxiliary batteries.

Electric two-wheelers, especially from pure-play EV manufacturers like Ola and Ather, typically do not require auxiliary batteries, while some traditional 2W manufacturers may include them. Unlike four-wheelers, where auxiliary power is critical for functions like steering and locks, two-wheelers can rely on a DC-DC converter to step down the voltage from the main battery for any auxiliary functions.

Also, we must note that the recent growth in 2W sales has not been at the expense of the existing platforms. We are seeing quite significant growth in the e-2W space and, at the same time, considerable growth even in the ICE space. Over time, EVs will take more of the market share. But I think we’re favourably placed where a tailwind in one direction is a headwind for us in another direction, as we are also supplying lithium-ion batteries for electric 2Ws and 3Ws.

In the telecom sector, many 5G rollouts are happening on lithium-ion batteries, and the same goes for data centres. How does that impact the role of lead-acid batteries in these segments?

Within industrial applications, we have the telecom, data centre and UPS segments. Additionally, there is a long tail with energy storage coming up in a big way. In telecom, we are seeing a big migration to lithium for 5G rollouts because of advantages like a smaller form factor and better TCO. At Amara Raja, we are also powering this transition by supplying lithium-ion packs to the telecom sector. The data centres also require shorter backup times, and lithium is a better technology there.

Lead-acid batteries have a much bigger scope in industrial UPS, as there’s no form factor constraint there. For industrial use cases, longer backup times are required depending on the location and the power requirement of the industrial unit. Lead-acid technology works well where
opportunity charge is available at fairly frequent intervals.

We are also innovating on the ability of the battery to dynamically accept charge and operate under a partial state of charge. These are the characteristics we need in the evolving power scenario, where disruptions are less frequent and backup times need not be as long.

How is Amara Raja ensuring sustainability in its battery operations?

Every lead-acid battery can be recycled, and 99% of the resources can be turned back into raw materials. Lead-acid is probably the most successful implementation of a circular economy globally. However, in India, we have a parallel economy where unorganized players collect scrap and recycle it through environmentally harmful methods. The policy now enables us to secure the same scrap and put it back into our products, forcing some of the secondary melters to close down.

• Most of our raw materials (about 80%), including lead, plastic and acid, come from recycled sources.

• We are developing our very own 150,000-ton recycling unit in Cheyyar, Tamil Nadu, which should be coming up in different phases over the next financial year. It will cater to about 40% of our lead requirements, and for the balance, we will continue to leverage our relationships with existing recycling partners. The initial phase, focusing on lead refining, is scheduled for the upcoming fiscal year.

• We have been proactive in leveraging renewable energy sources, with approximately 30% of our energy needs being met through clean energy, including rooftop solar and ground mounted systems. We are also exploring partnerships with renewable energy providers to expand our reliance on clean energy. Thanks to our industrial engineering efforts and process optimization, our specific and absolute energy consumption has seen a significant decline year over year despite higher production volumes. We are committed to further reducing our energy consumption while aiming for a net-zero status by 2050.

Could you elaborate on your exports and where do you plan to expand in the future?

Our exports are largely dominated by automotive batteries, with a focus on the Indian Ocean Rim region over the past few decades. This includes Southeast Asia, the Middle East, and Africa, where we have gained significant market shares. For instance, we are market leaders in the automotive aftermarket in Singapore, Malaysia, Cambodia, the UAE, and several other GCC countries. Additionally, we have made strides in the premium segment across various African countries. In the industrial sector, our main focus has been on serving telecom and UPS markets, primarily in Africa and the Middle East, where power conditions are comparable to ours. We have made in-roads into South East Asia as well.

Looking ahead, we anticipate technological shifts in the telecom and data centre market similar to India. We will continue to maintain a diversified approach overseas, adapting to emerging market demands while penetrating new markets such as North America with advanced automotive battery technologies like EFB and AGM.

How do you envision the co-existence of different technologies in the automotive and industrial sectors?

While electric vehicles are part of the solution to reduce the environmental impact of transport, they don’t address the entire value chain. We must also focus on transitioning power generation to renewable sources. Additionally, advancements in vehicle design and hybridization will contribute to improving efficiency and reducing emissions.

I foresee a gradual shift towards EVs, with many existing vehicles transitioning to hybrids and alternative fuel options like ethanol. Furthermore, hydrogen holds potential once commercial viability is established. I believe in a future where various technologies co-exist, each contributing to sustainability. This extends beyond automotive to stationary storage, where different technologies are vying for relevance. It’s an exciting time for innovation, with opportunities in energy storage and a need for collaboration to drive progress in decarbonization.

Also read: Amara Raja Batteries’ plans for lithium-ion cell manufacturing