This is an audio transcript of The Morning Brief podcast episode: The battery bet, charged for change: Is India's EV revolution round the corner?

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Cost of electrics two wheeler electric three wheeler electric four wheeler will be equivalent to the fourth of the petrol vehicle and the country will change.

Kiran Somwanshi  

That is the big Ev bet coming from the road transport and highways Minister Nitin Gadkari and the humble battery pack will have a critical role to play in making this possible. After all, the battery constitutes 35 to 40% of the cost of an electric vehicle that is at the center of India's quest towards green mobility. India imports lithium batteries in huge quantities instead of manufacturing them. To encourage domestic manufacturing the government rolled out scheme to promote setting up off battery storage capacity in the country. This came along with the soaring demand for EVs has got the battery space heated up, and at times, quite literally. Instances of Evie fires point to the safety issues and inefficient battery design and also hint at the challenges involved. So how easy is it to gear up India's battery ecosystem? What are the challenges? How to overcome them? And where do the opportunities lie? Let's find out. It's Friday, the first of July from the economic times. I'm Karen so munchie you are listening to the evey battery bed charged for change on the morning brief. This episode is part of the economic times sustainability forum initiative in partnership with Boston Consulting Group. In this episode I speak to Natarajan Shankar, Managing Director and Partner BCG, India Nilesh carne, Chief Mumbai distribution and Evie operations at Tata Power and Szeged Mishra co founders simple energy. Together we analyze what is charging up the battery space and how can tech help. Before we jump on to understand India's position with regards to the batteries, let's understand batteries first, batteries are chiefly made up of lithium, cobalt, nickel, iron, copper and aluminium. Electric vehicles run on lithium iron or Lion batteries. They store energy and they can be recharged. Batteries are stacked together in cells and modules to make a battery pack. Currently, India imports lithium batteries in huge quantities instead of manufacturing them domestically. Nilesh explains the reason why

Nilesh  

India has a scarcity of the primary raw materials required for the manufacturing of the lithium ion cell because predominantly the batteries which are used for the vehicles as well as the battery storage in the grid level, the lithium iron batteries are used for the material which required for the manufacturing of the battery battery like lithium cobalt, and the Bauxite and the graphite up to some extent graphite is available in India. But rest of these materials are predominantly available in China, along with the countries like Chile, Congo, Australia and so we are dependent on the basic material required for the battery. And that's why we are dependent import that batteries anyway, we have gone a stage ahead and we are started doing assembly of the batteries. But definitely as the raw material we are dependent overseas.

Kiran Somwanshi  

It is not just raw material dependency that is a reason for imports, Natrajan points to the lack of investment in local manufacturing.

Natrajan  

Globally, if you really look at how cell manufacturing investments have happened, they require a large amount of scale and a fair bit of certainty of demand. Actually, globally, most investments and cell manufacturing happen only once the demand is more or less assured. It's sort of market where players have been investing after they have a fair degree of certainty of almost demand and in a lot of cases even back to back contracts for a large part of the capacity they're putting in and hence from a starting point of India. Were at a high level first. The electrification certainty itself was getting gummed up over time. I think now the intent from the government Let them players is very clear. Second, from an India point of view the vehicle ecosystems are very different, right. So what a two wheeler requires in terms of cell technology, both chemistry and form factor may be different from what a four wheeler requires compared to what a bus requires. And hence, there was sort of this whole part of players being uncertain about both scale and the certainty of demand,

Kiran Somwanshi  

well Shreshth makes a case for pushing this local manufacturing.

Shreshth  

So, usually what companies do that they get it from somebody else in the Indian market, we see a lot of players that are getting it from a third party or importing it from a neighboring country and rebranding and selling it in India, that maybe in the short term, it would help us help the companies in making some money but in the longer run, when you talk about the incidences where batteries have caught fire, that is just because of the same reason, because Indian conditions are different from any other country, the temperatures vary, the riding conditions vary, the terrestrial conditions also vary all those things play a very important role. So in right now, a lot of players are doing that, but I believe in order to control the complete vehicle or compete, control the quality of it or the safety of it, you need to do it in house.

Kiran Somwanshi  

Sensing the need for pushing local manufacturing of batteries. The government of India rolled out a production link scheme for Advanced Chemistry cell ACC battery storage last year.

BG Sound  

This is probably one of the most important aspects of the Eevee ecosystem in India, lowering battery costs and localization of battery manufacturing. The ACC BLS scheme had an outlay of 18,100 crores and it emphasized setting up of 50 Giga watt our capacity in India.

Kiran Somwanshi  

Well, the scheme seems quite timely, and it got a good response. In March this year, four companies were selected under this scheme, who NDI Ola electric reliance, new energy, solar, and Rajesh exports. But how effective is it going to be in pushing local manufacturing

Shreshth  

PMI scheme that the government is giving to the companies that helps the companies get into the Indian market and set up their production facility that also helps OEMs like us and other companies, hardware manufacturers and all those companies as well to fulfill their needs. Because right now, we are dependent on importing the cells from outside and when the cells are being manufactured in India that would help in governing the quality of the complete battery pack and the complete vehicle or if a power tool is being used that way. So that's definitely a great policy and the government is taking initiatives towards bringing companies in India and manufacturing.

Kiran Somwanshi  

But how soon we can see the scheme showing results.

Nilesh  

I could see around three years will require to build up all that facility in time to come but definitely there is a good push from the government side as well as there is a big market there for a lot of companies are coming forward companies like the reliance and the solar or electric, Honda etcetera has come forward, but obviously it will take some time.

Kiran Somwanshi  

Natarajan also shares this optimism but provides an interesting perspective.

Natrajan  

In my view, at least 7200 gigawatt hour of sand manufacturing will come in over the next two, three years. As players are investing in this space. Of course, they need to be competitive in terms of cost and technology. And as we are also partnering with many players on this journey, we are actually seeing them focus exactly on that and ensuring a fit for the Indian environment as well. I think the only other element to call out is that we do require investments in technology and upstream manufacturing, which is essentially sell component manufacturing. Because otherwise from the import dependence on batteries where we are today, we will ensure that cell assembly comes in, but it is equally critical that sell raw material for manufacturing also sort of gets localized over time. Otherwise, the dependence on imports will just move one step backward.

Kiran Somwanshi  

While the PLI scheme sounds great, it is definitely not a panacea for the battery sector. There are certain challenges to overcome outside of this scheme. As our experts point out, these are related to upstreaming financing models, designing and customizing of the batteries, as well as pace of tech adoption.

Nilesh  

I would say today, we are still one step removed to ensure that the sell component, the localization also starts to happen, which I think is the next most critical agenda for us as a country to solve for. So I think that is one challenge on the supply chain side. The second part, I will broaden it beyond just the infrastructure, right to also cover the ecosystem. From the demand side if I really look at the largest challenge, I would actually call out two aspects. One is just the entire financing ecosystem that I it and that includes gamut of elements it includes ensuring that the resale value is is established it ensures that the technology risk is taken care of it has to build in the fact that people are willing to fund the Eevee. So, there are a set of factors which need to come together there. The second large element on the infrastructure is the entire charging infrastructure, but there I think India is different and unique right the infrastructure for a two wheeler is very different than that for a four wheeler, which can be very different than what a three wheeler or a commercial vehicle requires, right. And I think the charging infra in India will evolve in a very different way compared to global markets. That's because of each of these vehicle categories having differing needs swapping, I think will be a solution for the commercial use cases, which will coexist with home charging and public charging will also be critical for some use cases, but it may not be a barrier for others see, the

Natrajan  

government policy was the challenge, but recently government of India has come up with the standard policy as well as the standard specifications of the battery and that was a challenge, but now, it will take up obviously, the first thing what we have discussed that we are dependent on importing the material, so far is the battery manufacturing is concerned that is another challenge. And the third thing that how fast you know, we will implement that technologies across because lot of discussions so far as the stationary battery storage as well as the electric vehicle manufacturing was being discussed, but this is the challenge that this is something that you can enable electric vehicles are not being pushed, because infrastructure is not available, but now the things are moving. So, these are few challenges, but I could see the deck is clear and the things are going in a positive direction.

Shreshth  

So the majority of the challenge is the design aspect and the infrastructure and the skilled labor because lithium ion technology is still relatively new to the Indian market. So people need to work a lot and a lot of time has to be spent on understanding how it behaves because lithium ion technology was initially evolved in the European and the Western market, where the temperature is not as much varied as like Indian conditions. So people need to understand and government and government is also working towards it. And companies are putting a lot of efforts and money to impart that knowledge or gain that knowledge by testing and validating the battery packs in real time conditions how they would perform, and then only it would help us in during the manufacturing of sales are the battery packs.

Kiran Somwanshi  

Efforts are being made to implement new technologies in order to overcome some of these challenges. As Natarajan says, not all of them are related to take a loan.

Natrajan  

There are many innovations happening, as some of them are technology innovations, our business model innovations, for example, take the entire financing ecosystem, many people are experimenting with ways to almost assure a resale guarantee to commercial players, while tying up the use of a second life battery. Now that's a business model innovation, not necessarily a technology innovation, but it builds strongly on a digital platform. So I would say innovation is happening at all levels, I think the innovation so I would cut into three parts. First is there are manufacturing improvements with the current cell technology elements like dry coating, tablets, architecture, many of them will be critical to bring down the costs for the current cell technologies. The second is different chemistries like sodium ion, etc, which depend only on easily available minerals. So that's the second level of innovation which is happening. The third is innovation at a cell level itself, right for example, solid state batteries or even before that lower cobalt cathode, more silicon and anodes and completely different technologies like solid state itself.

Kiran Somwanshi  

Nilesh provides us a similar peek into the technology that is determining the future of batteries today.

Nilesh  

Good developments are happening and a lot of new technologies are also being tested by Indian the institute's like the sodium ion technology illuminate where technology gene best battery technology and lithium ion technology recently the Bengaluru based battery startup was acquired by the European renewable energy company, Eden group and companies like the recently a client shares partner with excited and they have started the battery manufacturing in India for the electric vehicle the new technology like solid state batteries with the solid and conducting material in place of liquid electrolyte is found to be in the most of lithium ion batteries and that can store more energy they're safe and this expands the vehicle range from the same size of the battery and allows smaller batteries typically lighter and in lower risk of fire. So this is a development Solid electric vehicle is concerned, another judging based in Highland based batteries are coming in a big way a lot of research happened typically for the Indian environment, they are very good paladium redox flow batteries are also being tried in India, and this is also coming in big way. So that can be also a very good option of his of his lithium ion, gold Nanoedge gel batteries. So, a lot of different chemistries and different types of the batteries are coming in near future, there will be a scalability for these chemistries.

Kiran Somwanshi  

Well, there is quite a lot happening for us to be positive about the battery ecosystem. However, this bell of caution is important to heat to.

Shreshth  

So there are various technologies that are being worked upon. But again, that is in very initial stage of development, I would say it would take another decade or something of that sort to stabilize, and because it has to be commercially viable in touch to be tested across the conditions. So that is something that is being worked upon an alternative to lithium ion cells. But again, that is a time taking process. And I see that another decade would take in order to replace that because lithium ion technology came in existence in around 1990s or late 1980s. But it's still not been able to penetrate completely into the market. So definitely there are opportunities that can be worked out, and companies are working towards it. But again, that's a decade ahead.

Kiran Somwanshi  

Well, that does seem to be a likely outcome. But to the real world, commercialization of new technologies may be a decade away, there is another worry that needs a more urgent solution. And that is the recycling of the existing batteries. The life of an Eevee battery is between six and eight years, it has to be replaced when its capacity starts falling below 80%, then it is either repurposed for secondary applications or recycled by recovering metals from it with a whole focus on sustainability and the circular economy, companies have to now plan about reducing the carbon footprint of their batteries.

Shreshth  

And your company that that is working on PTM. And battery pack should take that into consideration that after five years, so maybe 10 years down the line, lithium ion waste would be a challenge to face. And they should consider that that second life of a cell is a very important thing that can be used. And that can be used for multiple purposes. Because in an electric vehicle, you have this specific charge discharge that is required. But in domestic use, or let's say a power tool, you don't require that kind of charge discharge. So that can be utilized and used in a proper way so as to reduce the overall carbon footprint.

Natrajan  

I think because of both the technology innovations as well as the manufacturing innovations and the use of the right minerals, I think there is a lot of focus from players, are there solutions, which will get implemented tomorrow. I think in India, again, the context which I said where manufacturing doesn't even exist for sales, right? So part one is really getting a lot of this scale up and going but ensuring sustainability within that is on the agenda of I would say almost every player who's investing here. So I think both of those in India today as manufacturing is coming up for batteries, it goes hand in hand and people are thinking about both of these elements very simultaneous.

Kiran Somwanshi  

Given these issues and the work that is cut out for the industry, is it possible to have the price of the Eevee car coming down to match its petrol variant in a year's time, as envisaged by the Union Minister Nitin Gadkari our guests think it is possible, but may take a little longer.

Nilesh  

From the government point of view, there are many factors which affects the economies of scale, how scalability will be achieved, how many cars will be manufactured, what sort of government support will be there so far at the Texas is concerned, import duties is concerned and all So without going into the details, it is difficult to answer that. But the way electric vehicles, you know, getting increased over a period of time there is a good demand for the electric vehicle. The Eevee charging infrastructure is being scaled up in a big way. And if the all the things go, then at least in the next three years, the target of getting Evie price matched with the normal vehicle but looks to be achievable.

Shreshth  

The government has definitely great plans but I believe another 18 to 24 months it will take but in the longer run. It's not just the government that who has to work upon it's also the OEMs and the infrastructure that needs to be built by the companies that will help in bringing the cost down and making the electric vehicles more affordable. Because r&d is the key to all the problems that we have right now if we design develop things according to the Indian conditions, we will be able to bring the prices down at that same time.

Kiran Somwanshi  

The mood around Ev batteries in India is definitely electric. And even as a government paves the road with schemes to move in auto drive or atmanibhar mode, one must remember this is not a plug and play model. The impact of the investments under the scheme will take time to scale up. Meanwhile, there are issues related to safety and design of the batteries that the manufacturers of EVs will have to solve for the consumer to trust and buy the products. The wheel of change has started. It is up to the industry players to ensure that the opportunity is well leveraged. You have been listening to the evey battery bit charged for change on the morning brief with me Kiran Somwanshi Thank you Natrajan, Nilesh and Shreshth. appreciate your participation and the insights that you all share. do tune in to ET play our latest platform for all audio content, including the morning brief. 

This episode was produced by Surbhi Modi from economic times and Sondarya Jayachandran from Aawaz, Sound Editors, Swati Joshi from Aawaz and Indranil Bhattacharjee from the economic times, executive producers Anupria Bhahadur and Arijit Barman. We hope you liked this episode. Do share it on your social media networks. The morning brief drops every Tuesday, Thursday and Friday. Have a great weekend ahead. All clips used in this episode belong to the respective owners credits mentioned in the description.

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