Centre plans Tesla-like battery plants to push EVs, storage

The government on Thursday announced a plan to set up Tesla like battery manufacturing Giga plants in India under National Mission on Transformative Mobility (NMTM).

The plan, which will be phased out over a period of five years, envisages setting up a few large scale, export competitive integrated batteries and cell manufacturing plants.

The Tesla Gigafactory 1 is a lithium-ion battery assembly factory near Nevada which provides battery packs to the electric vehicles and stationary storage system.

“Creation of a phased manufacturing programme (PMP) valid for five years till 2024 to localise production across the entire electric vehicles value chain. The scheme will be finalised by the National Mission on Transformative Mobility (NMTM) and battery storage, and all necessary approvals will be taken” said a a statement issued by the government. The plan is to localise the value chain, the officials said.

The Cabinet had last week approved Rs 10,000 crore for second phase of Faster Adoption and Manufacturing of Electric & Hybrid vehicles (FAME) scheme, which provides subsidy for electric vehicles. The incentives are primarily targeted at two- and three-wheelers, fleet taxis and buses as a sizeable number of Indian public travel in it. The first phase, FAME-1, was introduced in 2015 and offered incentives to hybrid and electric vehicles of up to Rs 29,000 for two-wheelers and Rs 1.38 lakh for cars.

A Mumbai-based analyst said the new policies related to the electric vehicle mobility ecosystem is likely to give a push to the EV industry, as a charging station is being planned at every three kilometres, though initially it will start in bigger cities and along the national and state highways.

India had an early start of its power-electronics, which is used by EVs extensively However, the industry has not kept pace with new developments that have seen digitisation of power-electronics over the last decade. India would need a new power-electronics industry that can help develop and produce high-efficiency sub-systems for EV industries.

A recent Icra report claimed that the battery cost of EV, accounting for almost one-third of the total cost, will remain a key determinant in the rate of acceptance of EVs globally. In a significant development, the cost of lithium-ion EV battery has fallen to almost one-fourth to $208/Kwh in 2017 from $800/Kwh in 2011.

According to industry experts, the EV industry is at a nascent stage in India. It is less than 1% of the total vehicle sales, but has the potential to grow over 5% in the next few years. At present, there are more than four lakh electric two-wheelers and few thousand electric cars on Indian roads. The industry volumes have been fluctuating, mostly depending on the incentives offered by the government, the experts said. Further, more than 95% electric vehicles are low-speed electric scooters (less than 25km/hour) that do not require registration and licences.

Almost all electric scooters run on lead batteries to keep the prices low. However, failures and low life of batteries have become major limiting factors for sales besides the government subsidies.

Commenting on the development, Sohinder Gill, director general, Society of Manufacturers of Electric Vehicles (SMEV), said, “If introduced and implemented successfully, it should make India self-reliant on the most important element of EVs and also help significantly bring down the cost of EVs. Given the government thrust on e-mobility, it can become a lucrative business proposition in the near future. All it needs is a leap of faith by some business houses to quickly invest in an integrated plant to produce global quality batteries, without waiting for the threshold volumes of EVs to kick in.”