According to the latest report by market consulting firm Arthur D. Little, India needs to invest more than $10 billion in battery manufacturing by 2030 to accelerate the transition to electric vehicles.
Arthur D. Little estimates that by 2030, India’s total lithium-ion battery capacity will increase from the current 3 gigawatt-hours to 20 gigawatt-hours. Increasing battery production capacity is essential to meet the demand for lithium-ion batteries in the Indian EV market. Due to the lack of local battery capacity in India, India has to import 70% of its lithium-ion battery needs from overseas markets, the report said.
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The report said India’s adoption of electric vehicles is “low prospects” and “far behind” Western markets due to its heavy reliance on imports of batteries and limited local production. High reliance on imports makes the Indian EV industry vulnerable to disruptions in global supply chains. Moreover, the cost of batteries accounts for 40% of the total cost of electric vehicles, making the price of electric vehicles in the Indian market relatively high.
India plans to achieve zero carbon emissions by 2070, and clean transport will help it achieve this goal. Companies such as Reliance India, Ola Electric Mobility, and Rajesh Exports plan to manufacture batteries in India and claim subsidies from India ($2.2 billion) for advanced chemical battery projects.
Another reason for India’s heavy reliance on battery imports is limited access to raw materials such as lithium, nickel, cobalt, and manganese, which account for more than 80 percent of battery costs, the report said. The report said that the Indian government should provide tax subsidies, vigorously build battery development parks, and promote market investment in raw material refining and battery manufacturing.