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The EV battery race is on. Globally.

Yes, including right here in India.

Today, we take look at what’s triggered this EV battery rush in India, and what’s the space looking like.

On 11 November 2020, the Government of India announced incentives worth 3 tn to encourage companies in ten sectors to boost local manufacturing and increase exports.

The production-linked incentive (PLI) scheme earmarked 180 bn towards advanced cell chemistry, which aimed at bringing at least 50 gigawatts (GW) of lithium-ion batteries to the market.

Lithium-ion cells are considered the heart of electric vehicles (EVs).

Currently, most electric vehicle makers import cells and batteries from China, the world’s top producer of lithium-ion cells.

However, companies are now accelerating plans to produce lithium-ion cells in the country, hoping to take advantage of 180 bn worth of government subsidies.

Here are the top 5 Indian companies, which are also listed, in the EV battery race.

1. Amara Raja Batteries

Amara Raja Batteries is India's second-largest automotive batteries manufacturer.

The company recently set up India’s maiden technology hub to develop lithium-ion cells, at its Tirupati facility in Andhra Pradesh.

Amara Raja has invested 200 m into the hub.

The company has a technology transfer agreement with the Indian Space Research Organisation (ISRO) since early 2019.

In January 2019, ISRO named 10 companies from a list of 141, to which it proposed to transfer the technology to manufacture lithium-ion cells as part of the government's effort to push electric mobility.

Under the tech transfer, ISRO will help these companies set up lithium-ion cell manufacturing units and train their staff. The cells were originally developed for use in launch vehicles and satellites.

However, none of them have started manufacturing. Amara Raja is the first to set up the development hub towards the same.

2. Exide Industries

Exide Industries is primarily engaged in the manufacturing of storage batteries and allied products in India. The company is the leading storage batteries manufacturer in India with a leader in almost all categories such as automotive, industrial, and submarine.

The company has recently invested 331.7 m (US$ 4.5 m) in its subsidiary Exide Leclanche Energy and increased its stake from 77.9% to 80.2%.

In June 2018, Exide Industries and Leclanche, a global energy storage solutions provider, formed a joint venture (JV) to build lithium-ion batteries and provide energy storage systems for India’s EV market and grid-based applications.

The JV was formed with a focus on e-transport, stationary energy storage systems, and specialty storage markets.

As part of the JV, Leclanche will provide its know-how and intellectual property for lithium-ion cells, modules, and battery management systems, and Exide Industries will leverage its sales network and brands

3. Tata Group - Tata Power/Tata Chemicals

Tata Power is an Indian electric utility company and is part of the Tata Group. The core business of the company is to generate, transmit and distribute electricity.

The company is building an ecosystem for EVs with the support of group companies - Tata Chemicals and Tata Motors. Tata Power will bring in the know-how while Tata Chemicals will provide battery technology.

Tata Chemicals has also signed an MoU with the Indian Space Research Organisation (ISRO) for the transfer of ISRO’s lithium-ion cell technology.

It will soon start building a manufacturing facility for lithium-ion cells in Gujarat.

The Tata group company is likely to seek incentives under the PLI scheme and may also export the cells from India.

4. Hero MotoCorp

Hero MotoCorp, formerly Hero Honda, is the largest two-wheeler manufacturer in India and the world.

The company has a toe-hold in the domestic electric vehicle (EV) segment with a roughly 34.6% stake in EV start up Ather Energy.

Ather Energy recently unveiled its all-new electric vehicle manufacturing plant at Hosur in Tamil Nadu, spread across 123,000 square feet.

With a capacity to produce 110,000 scooters annually, the facility will serve as Ather Energy’s national manufacturing hub. The factory is supported by the government of Tamil Nadu under its EV Policy.

Apart from manufacturing EVs, the facility will also focus on lithium-ion battery manufacturing which is a key area of focus for Ather Energy going ahead.

The facility has the capacity to produce 120,000 battery packs annually.

Ather Energy is the only EV OEM in India to make its own battery packs and has filed 13 patents on the design and manufacturing of the batteries.

5. Maruti Suzuki

Maruti Suzuki is a subsidiary of the Japanese automotive manufacturer Suzuki. The company sells hatchbacks, sedans, motor utility vehicles (MUVs), and sport utility vehicles (SUVs) in India.

The company plans to procure lithium-ion battery packs from a newly formed joint venture (JV) with Toshiba and Denso as it looks to build a portfolio of hybrid cars.

It is a small operation limited to serving 20,000 hybrid cars annually. The battery in hybrid cars has a different chemical composition than that in lithium-ion batteries.

The first phase of the project was delayed by a few months due to operating and logistical hurdles posed by the Covid-19 pandemic.

As a result, the company has put plans for the second phase of its project on hold, as the work on the first phase is currently behind schedule.

The lack of a well-defined electric vehicle infrastructure and a slowing market for such vehicles has led the joint venture, Automotive Electronics Power (AEPPL), to go slow on the second phase.

How can you ride the EV trend?

As you can see, India's electric vehicle revolution is just getting started. As this economic boom kicks into high gear, it will create many beneficiaries.

You too can profit from this megatrend in the stock market.

Equitymaster’s Co-Head of Research, Tanushree Banerjee, has been watching the EV space closely and has identified the key to profit from this revolution.

To know more, you can check out her article in one of the recent editions of Profit Hunter: The Key to Profit from India’s EV Revolution

And if you would like to invest in the EV space, Richa Agarwal, Editor of the smallcap recommendation service, Hidden Treasure, recently recommended a proxy play on India’s EV revolution.

If you are not a subscriber, here’s where you can sign up.

This article is syndicated from Equitymaster.com




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