Improvements in battery technology over the past six years have been impressive. Today’s battery cells have higher energy densities and are much less expensive on a per kWh basis than they were just a few years ago. Lithium-ion (Li-ion) cells enjoy the bulk of investment, and remain the preferred technology for LG Chem, Panasonic, and Samsung, the three largest producers. Lithium-metal technologies with much higher energy densities are in development, but currently lack the production scale and established supply chain advantages of Li-ion.
Verifiable information on battery costs is difficult to ascertain with any precision, owing to intense commercial sensitivity, supply chain dynamics, manufacturer mark-up. The declining per-kWh cost of batteries is happening at the same time that battery pack sizes are increasing. Manufacturers are augmenting the size of batteries keeping in mind the delicate balance between using larger batteries to improve performance and range, keeping costs affordable and accordingly OEMs are investing heavily in building up EV production capacity.
On the basis of battery, the Indian electric car market has been classified into Lithium- Iron-Phosphate (LFP), Lithium-Nickel-Manganese Cobalt Oxide (LiNMC), and others. The “others” category includes other Li-ion based batteries, such as Lithium-Titanate oxide (LTO) battery, Lithium-Nickel-Cobalt-Aluminum oxide (NCA) battery, nickel- metal hydride (NiMH) battery, and lead acid battery. LFP battery-based electric car was the largest category in the market, contributing over 65% sales volume in 2017, owing to the benefits such as high current rating, thermal stability and safety levels, and long cycle life.
Lithium-ion battery manufacturing consists of three parts. First is cell to battery-pack manufacturing involving a value-add of 30 to 40%. The second is cell manufacturing with a value add of 25 to 30%. The third involves battery-chemicals with a value of 35 to 40% of the total cost of battery pack. While cell to pack manufacturing plants have started functioning, the others need to be encouraged. India would provide incentives and tax incentives for such manufacturing.
India needs a minimum of 10 GWh of cells by 2022, which would need to be expanded to about 50 GWh by 2025. Therefore, manufacturing these cells in India would be encouraged.
It is imperative that India gets the cell-cost and parameters like energy-density (size and weight), life-cycles, safety and temperature tolerance right, so that its batteries are best in the world. Early plants can be set-up either by international manufacturers or as joint ventures between Indian companies and international manufacturers. This needs to be coupled with strong support to R&D in the new battery chemistry and manufacturing process to those organizations that have the capability of translating R&D to commercialization.
At the same time, India would need a policy to secure materials used in Lithium-ion batteries, including lithium, cobalt, nickel, manganese, and graphite. Our first task will be to scan for these resources within India and at the same time make or incentivize strategic investments in international mines for these materials. Perhaps the most important task would be setting up of Lithium-ion battery recycling industry. India would need to introduce strict norms for recycling every Lithium-ion battery used in an EV, mobile phone or a laptop. It could allow import of used Lithium-ion batteries for recycling, with tight environment norms, so that all recycling plants have zero-emission. To incentivise longer life batteries to be developed and produced, India would enable battery systems, both within vehicles and in “second life” to avail potential revenue in supporting load balancing, time-of-day charging, energy banking and other uses after their useful life in the automobile is exhausted.