In this article, we will discuss Challenges to EV Manufacturing in India. So, let’s get started.
Challenges to EV Manufacturing in India
- Supply Chain Disruption: The last two years of supply chain disruptions due to the Covid-19 pandemic and the US-China trade war have precipitated fundamental changes in global manufacturing strategies.
- This is particularly true of high-tech industries that continue to face logistical headwinds, including shortages of critical components like silicon chips and batteries.
- India’s big automobile companies also had to stop production owing to shortages of chips, like those that power new multimedia features in the vehicles.
- Expensive Materials: The consequence of supply chain disruptions and the race to shorten supply chains, is that critical components are becoming prohibitively expensive.
- In the case of EVs, Indian manufacturers are also struggling to source lithium-ion batteries, which are largely imported from China, South Korea and Taiwan.
- Prices for battery-grade lithium carbonate, a key input, went up 400% year-on-year in November 2021.
- Import Dependence for Raw Materials: India does not possess critical raw materials such as lithium, cobalt and nickel, which are used to make lithium-ion (Li-ion) battery cells.
- Consequently, Indian manufacturers must rely heavily on imports of battery cells from China, Japan, Korea, and Taiwan, and assemble them into battery packs.
- Although India has received an encouraging response from investors under the PLI scheme to manufacture ACC batteries domestically, most bidders are expected to start manufacturing only from 2025.
- So, India’s import-driven strategy, for the domestic assembly of critical battery packs, will continue for a few more years.
