China's Lithium monopoly risk? Maruti Suzuki Chairman reveals why battery cells aren't made in India

Overdependence on China for lithium sourcing is deterring major investments in battery cell manufacturing in India, according to Maruti Suzuki India Chairman RC Bhargava. Speaking on Tuesday at the sidelines of the inauguration of Maruti Suzuki India's first electric vehicle e-VITARA export to 100 countries, and the launch of lithium-ion battery cell production for strong hybrid electric vehicles at its facility, Bhargava outlined the challenges facing the sector.

"The risk associated with sourcing lithium, given that China controls the supply, is one of the reasons investors are not investing in battery cells manufacturing in India on a significant scale," he said.

Bhargava further highlighted that India currently lacks its own battery cell production capability. "We don't make EV batteries yet...Nobody is making battery cells in India. One of the problems of EVs today is that people are packaging the cells into batteries, but actual production of cells is not taking place (in India)."

Bhargava acknowledged that establishing battery cell production plants in India is a "very capital-intensive proposition." Industry estimates suggest that setting up a battery plant could cost around Rs 20,000 crore. "The raw material (lithium) is a problem. If I put up a plant, if the raw material is not available to me, as an investor, what is my risk...especially if the raw material is controlled by one supplier?" he questioned.

He also noted that the risk is "very high," which he believes is one of the primary reasons investors are hesitant to enter the battery manufacturing space in India. "How do I protect myself against the arbitrary decision by the supplier?" Bhargava asked, pointing to the uncertain and potentially disruptive influence of a single-source supply chain.

Asked whether partnerships with other firms could resolve the issue, Bhargava stated, "Either you partner with a Chinese company, give them majority and let them set up, and they assure you the supply of raw material, but so far no one has done it yet."

Despite these challenges, Maruti Suzuki’s subsidiary, TDS Lithium-Ion Battery Gujarat Pvt Ltd (TDSG), has made significant strides in localising battery cell production. TDSG has become the first company in India to achieve electrode-level localisation of lithium-ion battery cells and is now producing cells and electrodes for strong hybrid electric vehicles at its facility. 

Since 2021, TDSG has been manufacturing batteries for mild hybrid vehicles, producing battery packs for over 10 lakh vehicles. With an investment of Rs 4,267 crore, TDSG plans to expand to produce 12 million cells annually.

(With inputs from PTI)