Investment in EV cell manufacturing industry to augment to USD 9 billion by 2030.
Buoyed by the demand for electric vehicle batteries, investment in cell manufacturing in India is likely to exceed USD 9 billion (around Rs 70,000 crore) by 2030, a report said. Similarly, the electric vehicle battery demand in the domestic market is estimated to touch around 15 GWh and around 60 GWh by 2030, credit rating agency ICRA said in the report.
Notably, the battery manufacturing segment remains a critical cog in the overall electric vehicle ecosystem. Additionally, given that the charging infrastructure penetration will only improve gradually, improvements in energy efficiency remain imperative, ICRA said.
Locating cell manufacturers close to OEMs
According to the report, 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.
At present, battery cells are not manufactured in India, and thus most OEMs rely on imports, and manufacturing operations in India are limited to the assembly of battery packs. However, to achieve mass-scale penetration of EVs and a competitive cost structure, India will need to create its own ecosystem of developing battery cells locally, the report added.
Multiple challenges exist on the road for the establishment of a cell manufacturing ecosystem, the primary ones being technology complexity, high capital intensity, and raw material availability, he said.
The electric vehicle (EV) segment saw a significant upturn in prospects in FY2022 owing to a host of factors including government support in the form of subsidies, as per ICRA. It expects the EV penetration across automotive segments to grow exponentially over the next decade, with batteries remaining the most critical and costly component of an EV.
In addition to the robust demand for EV vehicles, the annual battery demand for stationary applications (grid storage, telecom towers, among others) is also likely to grow at a rapid pace and be substantial, ICRA said.
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 rating agency said.
The Central Government recently signed agreements with three companies for incentives under its Production-Linked Incentive (PLI) Scheme for Advanced Chemistry Cell (ACC) Battery Storage. The report added that the policy emphasizes enhancing domestic value addition and is expected to support capability development in this sunrise.
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