In recent years, India’s electric vehicle (EV) industry has witnessed a significant surge in momentum, fueled by a global shift towards sustainable transportation solutions. Central to the success and sustainability of this sector is the growth of the EV battery industry and EV battery, a critical component that directly impacts the performance, range, and overall viability of electric vehicles. As the nation strives to address environmental concerns, reduce dependency on conventional fuel sources, and embrace a cleaner, greener future, the EV battery industry has emerged as a focal point for innovation and investment. However, this growth is not without its set of challenges, ranging from technological hurdles to infrastructural limitations. Against this backdrop, various government initiatives play a pivotal role in shaping the trajectory of India’s EV battery sector, steering the nation towards a more sustainable and electrified future. This blog focuses on the dynamic landscape of India’s EV battery industry, exploring its growth trajectory, the challenges it confronts, and the strategic initiatives undertaken by the government to propel this transformative journey.
Factors Driving the Demand for Batteries in India
The increasing demand for electric vehicles across passenger and commercial segments is one of the primary factors that is responsible for driving demand for batteries in India. Homes are also becoming smarter and using different types of electronic devices to complete routine tasks. The usage of electronic devices at home has increased the demand for the required power supply and the existing capacity of grid supply is not enough to meet this demand. Shortage of the required grid supply also proves an important driving factor for increasing demand for batteries. Besides, Central and State Govts. are continuously taking big initiatives to accelerate rapid urbanization and industrialization to contribute to the economy which leads to increased demand for electricity. Batteries, especially in the form of backup power solutions, in rural areas with limited or unreliable access to the electricity grid, and urban, and industrial settings, are essential to ensure uninterrupted power supply. Batteries prove good off-grid solutions when grid supply is not available. The telecommunication infrastructure is another domain that essentially requires high-capacity batteries to ensure smooth connectivity in remote areas. The power sector currently produces insufficient energy and it requires huge improvement to successfully overcome the considerable issues of unstable power infrastructure. High capacity Energy Storage Solutions appear to be a feasible amenity to bring positive change in the energy sector but they also need batteries to keep ESS functioning and deliver expected results. Above-listed factors are significantly driving the demand for batteries in India.
Opportunities and Challenges
The adoption of EVs is continuously increasing and electric vehicles are penetrating the market with higher sales. They require lithium-ion batteries in huge amounts. Consistently growing sales of EVs also increase the demand for lithium-ion batteries because they are the main components in electric vehicles. These numbers will increase more in the coming years to touch new limits. Lithium-ion batteries also help as an emergency power backup system at home, workplace, and C&I. These batteries additionally play a key role in increasing the capacity of the power backup system and provide enlarged backup time. These consistently growing demands provide huge opportunities for all lithium-ion battery manufacturers. When combined with meticulous planning and feasible strategies lithium-ion battery manufacturers can reap great benefits from this opportunity to lead in the market. This is undoubtedly a golden opportunity to grow in terms of revenue and growth, however, there are some significant challenges as well which prove big constraints to meet the targets and require urgent attention. The battery manufacturing sector is very big, not only in India but across the world, and is currently incapable of meeting the constantly increasing demands in the market. The shortage of key raw materials like lithium, cobalt, etc. is the main reason behind the limited manufacturing of batteries. Importing these raw materials from foreign countries is the only feasible solution to overcome this shortage with China being reportedly the biggest supplier of lithium, cobalt, and other raw materials. Expensive import, and stipulated rules & regulations are other challenges in the way of manufacturing lithium batteries in the required quantity and ensuring smooth supply to the end-user. Mineral Exploration Corporation Limited (MECL) however has found some lithium reserves in India at J&K and Rajasthan locations but exploration and processing of lithium is still a work in progress and require some time. Expensive manufacturing techniques, the fragile ecosystem around the reserves, and other important environmental challenges act as a barrier to moving further. In these scenarios, effective government policies become imperative in order to enable the start of lithium mining to ensure easy availability of raw lithium at a reduced price and cut dependency on foreign exports.
Government’s Initiatives in Creating a Sustainable EV Battery Ecosystem
Over the last few years, the government has introduced policies, and regulatory support along with the required framework for the development of the amicable EV ecosystem in the country. FAME II scheme delivered good results in the last few years and now the ACC (Advanced Chemistry Cell) PLI scheme is expected to help the nation save millions against the import of crude oil and enhance the share of renewable energy at the national grid level. This government initiative also emphasizes optimizing domestic value addition and making India globally competitive as far as battery manufacturing capabilities are concerned. As per the guidelines of the ACC PLI program, manufacturers essentially have to set up the manufacturing facility within a period of a maximum of two years after getting the approval and the applicable incentives will be disbursed later after continuously selling batteries that are manufactured indigenously. The disbursal time may span up to a period of over five years or even more. These guidelines clearly demonstrate the government’s determination to create a world-class EV ecosystem in the country as soon as possible. The provision of disbursing incentives on the basis of continuous selling of batteries will also give confidence to manufacturers to successfully run their battery manufacturing units for a long time and receive government support to escape all roadblocks.
Servotech is already a renowned brand in the EV charger manufacturing industry and has secured a respected place in the list of most competent manufacturers. In order to enhance our manufacturing capabilities, we have established our subsidiary Techbec Green Energy Private Limited. We have also signed an MoU with GoUP, in line with Uttar Pradesh Electric Vehicle Manufacturing and Mobility Policy 2022, to set up an EV charger manufacturing unit. This upcoming plant is a 300 cr. investment and will be partially operational in the first quarter of 2025 and will have the annual capacity of manufacturing around 10,000 EV chargers. This plant will additionally create over 500 jobs. Servotech expects to touch the revenue targets of 2,000-3,000 cr in coming years while supporting & strengthening indigenous manufacturing and securing a place among the top 3 EV charger manufacturers and will construct its new plant in Uttar Pradesh in a campus-inspired style as well as will maintain a state-of-the-art infrastructure along with a world-class R&D facility equipped with the latest machinery and amenities. Servotech maintains a progressive approach and consistently works with big expansion plans for future growth. Since beginning in 2004, the company has registered exponential growth in the last two decades. During this long & successful journey, we have offered an extensive range of products including AC&DC EV chargers and more.
Mr. Raman Bhatia, Founder & Managing Director
Servotech Power Systems Ltd.
This article was originally published in Industrial Products Finder