EnerBlu has only recently started building its first battery manufacturing plant in the US, but its chief strategy officer, Robert Pedraza, is already eyeing the Chennai Metropolitan Transport Corporation as a potential customer.
“Current lithium ion batteries (LiB) cannot operate in extreme temperatures,” he says. “They have to oversize the batteries too for buses.” Pedraza had been in India last month to explore a joint venture battery production plant.
Taiwan-based power management firm Delta Electronics is also making plans for India. It has bought 65 acres in Krishnagiri near Bengaluru for a battery manufacturing plant. If policies work out positively, Delta hopes to roll out LiBs from the unit in about two years. “Beyond 2020 will be too late,” says Hiren Shah, senior director of Delta Electronics India. “Then there will be too many players.”
The Indian market is attractive to domestic companies as well. They are also in the early stages of making manufacturing plants. This includes battery company Exicom, renewable energy company Hero Future EnergiesBSE 3.67 %, diversified company Ravin Group, the Bengaluru-based Sun Mobility and Bharat Heavy ElectricalsBSE 2.41 % (BHEL) and several others.
Unlike overseas companies, Indian players are cautious and waiting to see the domestic policy before taking the plunge.
Battery manufacturers are basing strategy on potential demand in India once electric vehicles (EVs) and renewable energy projects take off. According to a 2-year-old study by US’ Variant Market Research, the LiB market in India is to reach $5 billion in 2024, growing 26% a year.
Creating battery manufacturing capacity would take up a big part of the investment required to create an EV. Japanese auto major Suzuki, along with Denso and Toshiba, pooled $180 million last year to build a LiB plant in India.
The economics favours LiBs. Cell prices have dropped 73% — from $1,000 per kWh in 2010 to $272 per kWh in 2016.
The US-based Rocky Mountain Institute, in a more recent study, says switching completely to EVs in 2030 can create a domestic battery market of $300 billion. All battery manufacturers now import the cells and assemble the battery, which can capture not more than 30% of this value. If India imports only raw materials lithium and cobalt, about 80% of the value can be captured in the country, they feel.
WALK, DON’T RUN
This is what many manufacturers in the country are now setting out to do, although they are treading cautiously. In the absence of subsidies and incentives — and a clear plan for EVs for the next two decades — most Indian players are unlikely to invest big money immediately.
EnerBlu started in California, but moved to Kentucky after it received $30 million in subsidies from the government there. It is now investing $400 million in a new factory, using an innovative technology that can increase the life of the battery, dramatically enhance power and also make it work at high temperatures. EnerBlu touts it as the ideal solution for India, saying it is close to signing up a leading automobile company for a joint venture.
If EnerBlu sets up a plant in India, the batteries would be not the usual LiB. It is making what is known as a lithium titanium oxide battery, which uses titanium oxide instead of graphite as the negative electrode. Such a battery can provide higher power and last longer. Its manufacturing had been expensive, but EnerBlu has supposedly developed a process which makes it cheaper.
Others are exploring alternative battery chemistry. Delta, for example, is bringing what is known as the NMC battery, which uses nickel, manganese and cobalt in the positive electrode. Ravin Group is investigating the benefits of lithium ion as well as sodium ion batteries. LiB is the most compact possible, but sodium ion batteries have their uses in spite of their bulk.
The government has been funding research in sodium batteries in some institutions because sodium is widely available in India. For a long time, there had been a question mark on availability of lithium, as known lithium deposits are concentrated in few countries. The Indian Space Research Organisation (Isro) achieved $200 per kWh for LiB and expects mass production to further lower costs.
But not everyone is convinced yet. In fact, some automobile industry leaders have even questioned the wisdom of going ahead full steam on electric vehicles because India would then be dependent on lithium imports in large amounts.
Vikram Kirloskar, vice-chairman, Toyota Kirloskar Motor, believes the choice is between dealing with the Arabs or Chinese, as India may only end up shifting dependence from oil to lithium in its imports.
Battery manufacturers and some analysts provide a more nuanced view. “It is a misconception that lithium will not be available,” says Rahul Walawalkar, head of emerging technologies and markets at Customised Energy Solutions, a US company.
Lithium deposits have not been fully explored. “I will be very surprised if India does not have lithium deposits,” says Walawalkar. Some countries are reluctant to reveal the size of their deposits because lithium is considered a material useful for nuclear fusion.
Around the world, however, there is a race to secure the availability of lithium.
China has taken the lead in this regard, forming partnerships and buying mines, despite the domestic availability of large lithium deposits. India has been a slow starter, but is now exploring ways of signing agreements with South American countries that have large lithium deposits.
“The International Solar Alliance is a golden opportunity for India,” says Mridula Dixit Bharadwaj, principal scientist of the Centre for Study of Science, Technology and Policy, a think tank. “We scanned 61 countries that have signed the agreement,” says Bharadwaj, “and there are many potential partners.”
THE NEW GREAT GAME
Lithium has an advantage over oil in one aspect. Once the battery industry picks up in size, lithium can be recycled. Industry leaders cite this as a big advantage.
India’s oil imports bill in 2017-18 is expected to be $90 billion and analysts see it slowly rising to around $160 billion by 2030. If India switches to full electric and sets up manufacturing, importing only the raw material, the imports bill is not likely to exceed $60 billion by 2030. Oil imports increase steadily, while lithium imports decrease as recycling picks up.
“There is no one-to-one comparison between lithium and oil,” says Chetan Maini, founder, Sun Mobility.
China, the US and European nations are working hard to provide incentives to battery manufacturers. EnerBlu made a move from one US state to another for a considerable incentive. China is going all out to be world leader in EVs.
Early this year, the UK started giving research & development (R&D) grants from a £65-million fund to battery manufacturers.
Europe is forming a consortium like Airbus to make its industry globally competitive.
“Europe doesn’t want to fall into the China trap,” says Sunil Jain, chief executive, Hero Future Energies.
Indian manufacturers expect similar policies.
Maini thinks manufacturing will pick up in three stages. Assembly with imported cells will start in 24 months, with 45% potential for value addition. Cell manufacture can start in 24-48 months, with about 75% value addition potential. In the final phase, Indian companies can begin processing raw material, with value addition as high as 85%.
With deep R&D, India can even find materials for batteries with nearly 100% value capture. Over to the Niti Aayog then, to charge things up.