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NEW DELHI : Electric two- and three-wheeler makers in India may raise their product prices to offset higher costs of imported battery cells amid supply disruptions fuelled by the Ukraine crisis, according to industry experts.

The average cost of battery cells in 2021 was approximately $101 per kilowatt-hour (kWh), or about 7,670/kWh, according to data sourced from Bloomberg NEF.

Soumen Mandal, senior research analyst, IoT and automotive at Counterpoint Research India, said the cost of cells in an EV battery currently is around $130/kWh or higher, a figure that could increase going forward.

The Ola S1 scooter has a 2.98kWh battery pack, while the Ather 450X has a 2.61kWh battery. Ather Energy, an Indian electric scooter manufacturer, already increased prices of its 450X scooter by little more than 3% or around 5,500 in January. The company had attributed the step to rising input costs at the time. Bhavish Aggarwal, chief executive of Ola Electric, announced on 17 March that prices of the company’s S1 Pro electric scooter will be increased next month. The Ola S1 Pro currently costs 1,29,999. Ola Electric, though, is yet to announce what the new price of the scooter will be when it goes on sale again next month. “Raw material prices required for making battery cells have gone up due to global conflicts and restrictions in trade, which has led to an increase in cell prices in all major cell-making nations such as China, Korea and Taiwan. With cell prices going up, so have the import costs that India’s battery makers pay. In the past two months, there has been almost a 30% increase in cell prices," said Rajat Verma, chief executive at Greater Noida-based battery maker Lohum.

“Our suppliers in China have warned us that we will see further increases in the next quarters. Battery pack assemblers in India will pass on this added cost to the OEMs (original equipment manufacturers). Prices of EVs, as a result, will have to increase – given that the battery pack is such a substantial part of the product," Verma added. A March 2022 industry report on the Indian EV sector by Bank of America Securities said that Hero Electric is the market leader in electric two-wheelers with a 32% market share, followed by Okinawa at 21%. The report acknowledged rising component costs, especially nickel, due to the ongoing Ukraine-Russia conflict, but said that with EV sales largely being boosted by urban markets, a rise of about 5% should not slow down EV adoption in the country.

Sohinder Singh Gill, chief executive of Hero Electric and director general of Society of Manufacturers of Electric Vehicles (SMEV), acknowledged that increasing prices of battery cells and higher raw material costs are affecting the industry but added that the overall price rise of electric scooters should not be more than 5-7%. He said that Hero Electric doesn’t plan to raise its product prices currently.

“Whether EVs will become more expensive or not will purely depend on the strategies of the companies. Some may have the resources to absorb the losses, while some may pass this on to the customer. Some may also choose to increase prices, but at a later stage. Some, if you see, have already increased the prices from as early as in January – and it’s all down to the rise in battery prices," Gill said. Gunjan Prithyani, research analyst at Bank of America Securities, said despite the price rise, monthly sales of EVs in India have crossed 30,000 units, accounting for an adoption rate of over 4% of all two-wheelers sold in the country in March.

Recycling of batteries may help address the issue. However, Samrath Kochhar, chief executive of battery assembler Trontek, which supplies to companies such as Hero Electric among others, said that “recycling in India is not very effective for the battery sector, since recycled batteries cannot cater to EVs, and we don’t make our own cells".

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