Roadmap for a Sustainable Electric Vehicle Battery Ecosystem in India

Across the world, government mandates and climate action targets are spurring the energy and transport sector to shift from fossil fuels to renewable energy and battery-powered electric vehicles (EVs). Lithium-ion batteries (LIBs), that are widely used in laptops, smart phones and other gadgets, lie at the heart of this transition. While LIB application in EVs is expected to grow globally from USD 27.30 billion1 in 2021 to USD 154.90 billion in 2028, their usage in other sectors like energy, for large-scale integration of renewables, is further expected to raise demand.

This shift, from a fuel-intensive to a mineral-intensive energy system2, will greatly increase demand. This rise in demand would impact the battery supply chain and place additional pressure on the world’s scarce mineral resourceslithium, cobalt and other metals – that are geographically concentrated in just a handful of nations.

India, a member of the global EV30@30 initiative, is aiming for a 30% EV sales share by 2030 and has launched several policy initiatives to further this goal. However, this race to electrification faces two daunting challenges. On one hand is the urgency to meet this escalating demand for EV batteries minus heavy import dependencies. On the other hand, India must pause and consider the sheer volume of spent EV batteries. Developing a sustainable battery ecosystem is key to a resource-efficient transition. Not only does India need to ramp up its battery manufacturing capabilities, it also requires forward-looking strategies, such as the creation of a cross-connected battery supply chain, through the recycling of critical raw materials. The creation of a circular economy for batteries could play the dual role of fostering the government’s clarion call of becoming self-reliant (or Aatmanirbhar) as well as furthering India’s vision of reaching a USD 5 trillion economy by 20253.
 

Increase in Self-Reliance to Decrease Import-Dependency
Currently, India has limited capacity for battery pack manufacturing and almost no battery cell manufacturing at scale. The economy completely relies on imports for LIBs which have increased three-fold4 from USD 384 million in FY2017 to USD 1.2 billion in FY2019. To reduce this expensive import dependency, the Indian government has launched the Production-Linked Incentive (PLI) Scheme for manufacturing of Advance Chemistry Cell (ACC) batteries. Under the scheme, the government has approved a budget of INR 18,000 crore over five years to establish 50 GWh of ACC battery manufacturing and 5 GWh of niche ACC technologies. This is in line with the government’s Make in India5 campaign which was launched to facilitate investment, foster innovation and build best-in-class indigenous manufacturing facilities.

A Robust Supply Chain for a Robust Economy
Battery manufacturing can add approximately 80 jobs for every GWh6 of capacity. EV market leaders like China and California (USA) boosted EV manufacturing in their country/state by mandating vehicle manufacturers to sell a certain percentage of their vehicles as battery-powered while simultaneously supporting manufacturers with production subsidies and tax credits. Similar strategies could be put into place by the government to attract industrial participation and shore up the Indian supply chain in an industry often reliant on foreign battery components. Seven European countries7 and the US have already committed funding, in billions of USD, to support research into lithium-ion batteries, and both Tesla and General Motors are investing heavily8 in manufacturing facilities for the technology. Similar measures can help in ensuring India does not transform from an oil-dependent to a ‘battery imports’ dependent nation.

Circular Economy via Recycling Ecosystem
The manufacturing of LIBs is resource-intensive, accounting for 30-50% of an EV’s life-cycle emissions. This is because mineral extraction—especially for lithium and cobalt—requires copious amounts of water and energy. The adoption of circular economy strategies for EV batteries, which includes second life applications and recycling of critical materials can help in reducing both the negative environmental impact of batteries and the reliance on raw material extraction. Recycling can also alleviate toxicity and contamination risks arising from landfill dumping of end-of-life batteries. Globally, the LIB recycling market is expected to increase from USD 4.6 billion9 in 2021 to USD 22.8 billion by 2030, growing ~20% annually. In India, the LIB recycling market is still at a nascent stage, and is expected to be around 22-23 GWh by 2030, which is a USD 1000 million10 opportunity.
 

Way Forward
To ensure the presence of the right infrastructure and the required investment in the right technology, the government needs to bring together relevant stakeholders to form a comprehensive framework of regulatory and non-regulatory measures that supports all segments of the battery value chain. Batteries are crucial for ensuring India’s low-carbon future. India needs to address raw material criticality and supply chain vulnerability to strengthen domestic manufacturing. Domestic battery production can be bolstered by providing grants for battery research and development. Some solutions that can direct capital and financing to accelerate India’s EV transition include integrating EVs to the Reserve Bank of India’s (RBI) priority-sector lending guidelines, establishing a robust framework to encourage effective academia-industry collaboration in the battery supply chain, establishing Zero Emission Vehicle (ZEV) mandates for vehicle manufactures and manufacturing grants to capitalize on the current momentum and push EV adoption effectively at the envisaged growth rate.

- Dr. Parveen Kumar Senior Program ManagerElectric Mobility, Cities Program, WRI India, New Delhi
- Pawan Mulukutla Director- Clean Mobility & Energy Tech, Cities Program, WRI India, Bangalore