Electric Vehicles in India

Challenges to EV Manufacturing in India

In this article we will discuss Challenges to EV Manufacturing in India

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.

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Competitive World is your online guide for competitive exam preparation

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