At present, India is at a nascent stage of creating a domestic Lithium-ion cell manufacturing ecosystem. Preetesh Singh, Specialist – CASE & Alternative Powertrains at Nomura Research Institute, discusses how India and companies at home are currently positioned with respect to their cell manufacturing plans.
Li-ion cell manufacturing | Global
The exhibit below shows the top 10 existing battery manufacturing facilities in the world, all of which are focused on NMC, NCA and LFP chemistries only.
China leads with 6 out of 10 facilities, followed by Europe and the US.
China manufactures 75% of all lithium-ion batteries, has 70% of the world’s cathode manufacturing capacity and 85% of the world’s anode production capacity. China is at the focal point of today’s battery supply chain. It has more than half the world’s capacity for processing and refining lithium, cobalt, and graphite.
China is expected to continue dominating global lithium-ion battery manufacturing in the coming years, with Europe trailing. India is expected to come up as an emerging market for manufacturing owing to government initiatives to curb import dependence and rapidly rising local demand.
Currently, India is absent on the map of lithium-ion cell manufacturing and has a negligible presence in the global supply chain of advanced cell technologies. However, the anticipated size of India’s battery market (for EVs, grid storage applications, consumer electronics, and other uses) is big enough to support Giga-scale manufacturing capacity in the coming years.
The exhibit below shows the top emerging manufacturing facilities in the world. NMC and LFP will continue to dominate the market due to an existing and stable supply chain.
Battery supply chain
The emerging battery market has very high levels of dependency on critical metals and raw materials like Cobalt, Nickel, Aluminium and Lithium. The cost for all of these metals has been on the rise, especially since 2020, due to the impact of the pandemic and a sudden global demand for these materials.
China has a large capture of the Lithium-ion cell supply chain. Whatever metals that it doesn’t produce locally, they have successfully captured the processing part of the value chain. Raw material sourcing presents a significant barrier to capturing a large portion of the battery manufacturing value chain. India has extremely low reserves of ingredients such as lithium and cobalt, which form key components for manufacturing cathodes and electrolytes. Additionally, the country has limited reserves of battery-grade graphite (anode material) and relies on the Chinese market for imports.
The graph below shows the global distribution in terms of metal production and processing for the critical metals that go into a battery.
China’s head start in the overall supply chain and its local tie-up/collaborations with lithium-producing countries have further increased its control over raw material sourcing, which may present additional challenges for India.
With the above background, if we were to look at the evolution of battery chemistries in India, then the graph would look something like the following:
Some key evolvements to note are:
- The continued dominance of LFP batteries owing to their high energy density and advanced manufacturing capabilities across the world.
- Growth in less cobalt-intensive NMC to decrease India’s dependence on imports and a gradual movement towards high-performance LiBs and non-LiB chemistries.
- Conventional NMC chemistries are anticipated to be phased out in India because of the high requirement of scarce minerals of which India has insufficient natural reserves, and replaced with advanced NMC and other new chemistries as they reach commercialization.
- LFP uses Lithium, and its cathode constitutes 21% of the total battery cost. By fostering domestic cell manufacturing capacity, India is poised to capture over 90% of LFPs’ cell value, owing to the greater use of domestically available minerals such as iron oxide, phosphate, and graphite. The remaining 10% of the value is attributed to the lithium in the cathode, which India cannot capture because of a lack of domestic reserves.
- For NMC 532, battery cathodes cost high (42% of total battery cost) because of the recent surge in global prices of nickel, manganese, and cobalt. The dependence on imports shrinks the domestic value capture of NMC batteries in India. Given current raw material prices, about 40% of NMC batteries’ value capture is possible in India.
The key challenges in establishing the entire cell value chain in India are listed below:
Possibilities in India
NITI Aayog has proposed a Phased Manufacturing Program (PMP) to maximize domestic value addition in advance battery manufacturing under the PLI scheme. To make domestically produced batteries more cost-competitive with cheaper imports, the GoI has determined the necessity of levying customs tariffs on the import of battery packs and cells.
Lithium-ion cells, battery packs, and accessory parts used in the production of EVs could be subject to a graduated duty structure under a planned PMP. The program will reduce investment risks since manufacturers may plan their investments in accordance with a defined roadmap of duties on certain commodities. Battery components (the anode, cathode, electrolyte, etc.), battery materials (cobalt, lithium, nickel, etc.), and machinery to set up plants for advanced chemistry cell manufacturing will also likely be subject to higher duties in the future, according to the proposed PMP roadmap (through 2030).
The PLI scheme for advanced chemistry cell (ACC) manufacturing
PLI scheme for ACC (INR 18,100 crore) along with the already launched PLI Scheme for the automotive sector (INR 25,938 crore) and Faster Adaption of Manufacturing of Electric Vehicles (FAME) (₹10,000 crores) is aimed to enable India to leapfrog from traditional fossil fuel-based automobile transportation system to environmentally cleaner EV based system. With a systematic and strategic push from the government and constructive public-private partnerships, the ACC battery manufacturing ecosystem is projected to grow exponentially in India. This growth is necessary to ensure India’s self-reliance and energy security.
PLI for ACC has successfully awarded ~30 GWh scale for battery manufacturing in India, the companies are: Rajesh Exports, Ola Electric & Reliance New Energy.
OLA Electric – Ola was shortlisted under the PLI scheme and would receive incentives for setting up an ACC manufacturing plant of up to 20 GWh.
- The company plans to set up its plant in 2023 with a capacity of up to 1 GWh. For this, they will invest up to $1 Billion.
- Ola is in talks with several state governments to find 1,000 acres of land for the plant.
- Ola is in touch with more than 40 global suppliers from Germany, Korea, and Japan, such as Dürr & Siemens.
- The company has invested in Israeli battery technology firm StoreDot, giving them exclusive rights to manufacture batteries integrating StoreDot’s technology in India.
- The plan is to further expand the cell production capacity to 20 GWh by 2026-27 and gradually increase it to 50 GWh.
- Ola plans to use 40 GWh of battery capacity to meet its annual target to produce 10 million e-scooters and the remainder 10 GWh for its electric cars.
Reliance – Reliance is constructing the Dhirubhai Ambani Green Energy Giga Complex on over 5,000 acres in Jamnagar. It will be among the largest integrated renewable energy manufacturing facilities in the world. The company is investing ₹ 600 Billion to construct world-scale, state-of-the-art facilities to manufacture and integrate critical components of the New Energy ecosystem and ₹ 150 Billion in value-chain, partnerships, and future technologies, including upstream and downstream industries, to create a fully integrated, end-to-end renewable energy ecosystem.
- Reliance New Energy has acquired sodium-ion battery technology company Faradion Ltd. for an enterprise value of GBP 100 million. RNEL is also investing GBP 25 million as growth capital to accelerate commercial rollout.
- RNEL has acquired assets of LFP batteries provider Lithium Werks for USD 61 million.
Special thanks to Anant Taraniya – Senior Associate Consultant at Nomura Research Institute, and Mridul Agarwal – Associate consultant at Nomura Research Institute, for their extensive contribution to this analysis.
This article was originally published in EVreporter October 2022 magazine, which can be accessed here.
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