Cutting battery cost to drive EV push

Vijay C Roy

Last week, Tata Passenger Electric Mobility Limited (TPEM), a subsidiary of Tata Motors, announced a reduction in prices of its bestselling electric vehicles or EVs — Nexon and Tiago. Nexon.ev got a price reduction of up to Rs 1.2 lakh and Tiago.ev of up to Rs 70,000. The reduction was done to pass on the softening of battery prices.

“Battery costs constitute a substantial part of the overall cost of an EV. With battery cell prices having softened in the recent past and considering their potential reduction in the foreseeable future, we have chosen to proactively pass on the resulting benefits directly to customers,” says Vivek Srivatsa, chief commercial officer, TPEM.

Tata Motors’ move comes days after MG Motor slashed the prices of Comet, a hatchback EV, by Rs 99,000 to Rs 1.4 lakh. In January last year, too, Tata Motors had cut prices of Nexon.ev by up to Rs 85,000.

The company had said then that the decision was taken after it received benefits from additional locations, government initiatives and as a result of production efficiency. Since battery constitutes a substantial cost of an EV, it is perceived that the recent cut will increase affordability. It is also expected that in the near future, the price of the electric vehicle will come down with the localisation of battery production.

In the 2023 calendar year, the EV segment grew by over 90 per cent against the 8 per cent growth recorded by the personal vehicle industry. This growth momentum has continued in CY 2024, with EV sales registering 100 per cent year-on-year (YoY) growth in January 2024.

The EV adoption in India at present is a mere 2.2 per cent. The main reason is the high price of an electric vehicle and the lack of charging infrastructure in the country. Therefore, to make electric vehicles accessible to masses, a few manufacturers are working on setting up battery units in India.

“Battery constitutes 50 per cent of the total cost of the vehicle, So, if we lower the battery cost, only then will the cost of the vehicle come down. The battery cost can be reduced only if we localise it. Currently, the cost of the battery is $140-150 per kWh, which is likely to come down to $90-100 kWh in the near future with more lithium mines to be operational soon, which was delayed due to the pandemic,” says Shashank Srivastava, senior executive officer, marketing & sales, Maruti Suzuki India Limited.

According to him, EV adoption will increase significantly once it touches 4.5 per cent share. Initially, there would be an increase in adoption of electric SUVs, followed by sedans and small cars.

Suzuki Motor Corporation has committed Rs 10,000-crore investment for production of battery electric vehicles (BEVs) and batteries in Gujarat. The company would also be launching a mid-size electric SUV in the next fiscal year. It will be powered by a 60 kWh battery pack offering up to 550 km of driving range. This will be the company’s first EV in the sports utility vehicle (SUV) segment and is code-named eVX.

Similarly, in June last year, Tata Group signed an outline deal with the Gujarat government on building a lithium-ion cell factory with an investment of about Rs 13,000 crore. The move comes as India is looking to create its own electric vehicle supply chain.

According to a joint statement on the memorandum of understanding (MoU) between Tata’s unit Agratas Energy Storage Solutions and the Gujarat government, work on the plant was expected to start in less than three years.

Further, Hyundai Motor India will set up a state-of-the-art battery pack unit with an annual capacity to assemble 1.78 lakh units. It is expected that Hyundai Motor will be investing Rs 700 crore in a battery assembly plant in Chennai, Tamil Nadu, which will have a capacity of 75,000 battery packs annually in the first phase by 2025.

Hydrogen-powered car

In March 2022, Union Transport Minister Nitin Gadkari arrived in Parliament in a green hydrogen-powered car. Gadkari said hydrogen car is the future. “Prime Minister Narendra Modi has also mentioned this and this is a big step towards a self-reliant India. Petrol and diesel cause pollution, but hydro fuel cell cars do not,” he added.

Earlier, he launched India’s first hydrogen-based advanced Fuel Cell Electric Vehicle, the Toyota Mirai. Toyota Mirai is part of a pilot project by Toyota Kirloskar Motor and the International Centre for Automotive Technology. The pilot project aims to test the car’s effectiveness on Indian roads.

The hydrogen fuel it runs on is sourced from Indian Oil in Faridabad. The car is said to cover a distance of 845 miles without the need for refuelling. Green hydrogen is a zero-emission fuel that can be used to run vehicles and reduce dependency on petrol and diesel. A hydrogen-powered car stores hydrogen in a high-pressure tank, which is then transferred to the fuel cell to create energy through a reaction between hydrogen and oxygen.

Biogas Engine

As part of its efforts to find sustainable mobility solutions and reduce CO2 emissions, Maruti Suzuki is working on an ambitious project in which cow dung will be used to produce biogas for usage in its carbon-neutral internal combustion engine vehicles like CNG, biogas and ethanol.

Suzuki has a plan to not only develop CNG automotive solutions around biogas in India, but also to export the business to other farming regions, including Africa, ASEAN countries and Japan.

Future Outlook

The localisation of battery packs would be a big trigger for passenger vehicle makers, with the industry expecting 18-20 per cent penetration by 2030. However, the government’s view is 30 per cent EV penetration by 2030.

According to Tata Motors, today, the CNG segment is roughly 10-12 per cent of the total passenger vehicle market, electric is about 2 per cent, diesel 15 per cent, and petrol segment the rest. “By 2030, I think 25-30 per cent will be CNG, and around 30 per cent electric. Diesel will come down significantly to sub 5 per cent,” says Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility.

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