India's lithium-ion cell ecosystem emerging but EV makers face 15% price premium until 2027

Mumbai: A manufacturing ecosystem for lithium-ion cells is slowly coming up in India, but electric vehicle makers should not expect an immediate cost windfall, according to Vikram Gourineni, executive director at Amara Raja Energy & Mobility.

Locally produced cells will carry a minimum 15% price premium over imports in the near term, as it takes time to create a meaningful upstream ecosystem from raw materials to components that China spent two decades building, Gourineni told ET.

Until domestic cell makers achieve a scale of 8-10 GWh and a supporting supply chain develops around them, the economics simply will not work in the favour of EV makers, he said.

Amara Raja is targeting 2027 for its first bulk production of lithium-ion cells, becoming the second company after Ola Electric to commence local cell production.

"We're aiming for the end of next year for bulk production to start," Gourineni said. "I always give myself a little leeway of a quarter or two, but that's the target."

The company will take a graduated approach to scaling. Cell production will begin this year at a megawatt-hour scale, with commercial samples supplied to Indian customers for qualification. Bulk production at the first Gigafactory of 2 GWh will follow in 2027 and will predominantly serve the electric two-wheeler segment.

To de-risk demand concentration, Amara Raja also plans to supply into adjacent segments such as power tools and lawn and garden equipment.

Tata Group venture Agratas, setting up a facility in Gujarat, is also expected to enter the market in a similar timeframe.

Amara Raja has earmarked ₹10,000 crore in investments through 2032 to build out its lithium-cell and pack manufacturing capabilities. While 16 GWh was the originally planned capacity, the company sees an upside to this number given healthy demand growth, though access to raw materials and technology where required remain potential challenges.

The announcements come on the back of an operational milestone the company crossed recently—cumulative deployment of 1 GWh of lithium energy storage in the telecom sector across 50,000 sites nationwide.

In a significant strategic pivot, Amara Raja has revised its capacity allocation across the planned 16 GWh, moving from a largely mobility-focused plan to an equal split between mobility and energy storage solutions (ESS).