Battery Manufacturing Technology

In the following sections, we will dwell on the intricacies of battery manufacturing technology and examine how indigenous battery production can contribute to India’s energy security and economic development. In pursuit of accelerated development, India is strategically focusing on the manufacturing of Advanced Chemistry Cells (ACCs) through several initiatives and policies in this domain. There are various types of ACCs prevalent in the market which include lithium-ion (Li-ion), lead acid, sodium ion, and flow batteries (Exhibit 1), with each type having its unique properties.

At present, Li-ion batteries stand out as the most capable technology due to their high energy density, lightweight nature, fast charging capabilities, and extended battery life. While lead acid batteries are considered mature technologies with low round-trip efficiency and low energy density, they have their own advantages, such as low cost, easy recyclability, and high current output, making them highly commercializable. Other battery technologies, such as sodium-ion batteries and flow batteries, are in a nascent stage, requiring significant research and development to gain commercial acceptance.

Projections indicate that India's Li-ion battery capacity is poised to reach 116 GWh with a valuation of ~US$ 6B by FY30 (Exhibit 3) from its current capacity of 3 GWh, underscoring the nation's commitment to advancing its capabilities in this critical domain.

• Includes production-linked incentives (PLI), the FAME II scheme, and viability gap funding, which aim to promote and support the growth of the battery manufacturing sector
  • Viability Gap Funding: It is a scheme which aims to make infrastructure projects such as BESS, recycling, and waste management projects commercially viable
    • Initial outlay of INR 9,400 Cr, including budgetary support of INR 3,760 Cr, is provided
    • Government will offer financial support of up to 40% of the initial capital cost in such projects
  • FAME II scheme: Three-year scheme with budgetary support of INR 10,000Cr, aiming to encourage the adoption of EVs and hybrid vehicles
  • Production-Linked Incentives (PLI): PLI encompass capital subsidies, tax exemptions, interest subsidies, and battery recycling initiatives, reflecting a comprehensive approach to foster the development of a robust and sustainable battery industry in India

• With the increasing demand for EVs, the EV battery market in India is expected to reach US$ 28B in 2028 from US$ 17B in 2023
• Moreover, the government plans to increase the share of EVs up to
  • 30% for private cars by 2030
  • 70% for commercial vehicles by 2030
• Consumer electronics market in India is valued at US$ 155B with domestic production contributing around 65% 

• With evolving technologies, prices for Li-ion batteries are constantly declining, which is complemented by high demand from the automotive and consumer electronics industries
• Li-ion battery prices have dropped by ~90% from US$ 1,220 / kWh in 2010 to US$ 132 / kWh in 2021.

• India has one of the lowest battery manufacturing costs in the world, ranging between an average of US$ 90-95 / kWh
  • Manufacturing costs in Western nations average around US$ 100-110 / kWh, while  South East Asian countries have an average cost of ~ US$ 95 / kWh
  • Even China has an average manufacturing cost of US$ 95-100 / kWh
• This cost advantage is attributed to cheap labour, low land acquisition and utility costs