India EV news: The wonder metal that could upend India’s EV ambition

Electric Vehicles (EVs) in India saw a CAGR growth of 205% and 149% in domestic sales volumes of two-wheelers and four-wheelers respectively in FY20-22, but continued concerns over Raw material availability is expected to dampen the demand scenario in the coming years.

The growth seen in recent years can be attributed to a weak base, growing demand and measures taken by governments to stimulate said demand. Although the manufacturing cost of lithium-ion batteries has decreased over the past few years, their production costs are not expected to decline from current levels in the next three years, which will dampen the demand for vehicles to some extent. electricity, CareEdge said in its report.

The three main raw materials needed to manufacture cathodes are lithium, cobalt and nickel. Demand for these metals has increased over the past five years, leading to a mismatch between supply and demand, the report notes.

Australia, Chile and China are the world’s largest lithium suppliers, while the Democratic Republic of Congo (DRC), Russia and Australia are the top three cobalt producers. As for nickel, Indonesia, the Philippines and Russia are the main producers.

The prices of these key metals have been volatile over the past few months for multiple reasons such as the Russian-Ukrainian war and activism against the negative environmental impact of mining these metals.

“Based on market data, we believe that increasing lithium, cobalt and nickel mining capacity would take at least three years and that, in the meantime, battery prices would remain firm at the levels current,” CareEdge said.

Demand for electric vehicles in various categories is therefore expected to rise sharply from 2023 onwards. However, according to research by Bloomberg NEF, the weighted production cost per kwh in CY2022 is expected to rise slightly to around USD 135 after posting a sharp reduction over the past decade, rising from over $1000 to $132 in 2021.

The problem for India

The research firm argued that the large-scale transition to electric vehicles in India, which was expected to happen after 2023, will be delayed by at least three years. Lack of charging infrastructure continues to be a problem.

“The shift to electric vehicles in the car segment will continue to be hampered by relatively much higher car prices (compared to comparable prices for electric and internal combustion vehicles in the two-wheeler segment), as well as the lack of of charging infrastructure which is not yet available to be scaled up on a pan-India basis,” the report states.

India’s imports of lithium-ion batteries jumped 54% from a year earlier to $1.83 billion in the year to March, according to Commerce Ministry data. Nearly 87% of purchases came from China and Hong Kong, despite India’s efforts to avoid imports from its northern neighbor.

To address import concerns and promote self-sufficiency, the government would seek to change laws to allow private miners to mine lithium.

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Although CNG remains the preferred option, cost savings have declined over the past year

The Indian government plans to add local manufacturing of a suite of zero-emission technologies as it pursues the goal of becoming carbon neutral by 2070 and seizing opportunities from the global transition to cleaner energy .

India has also pledged to build 500 gigawatts of clean energy capacity by 2030, and the deployment of huge volumes of battery storage is seen as vital to enable round-the-clock use of renewables. .

Apart from efforts to boost local production, India is also looking for lithium and cobalt assets overseas. A joint venture was formed with three state-owned companies —

Co., . and Mineral Exploration Corp. — to acquire mines abroad.

CNG remains the optimal choice in India

CareEdge in its report stated that it expects CNG/LPG passenger vehicles to show the highest growth rate over the next five years due to lower cost of ownership and differential of price between gasoline/diesel and gas prices.

The price gap has narrowed in recent months as the government reduced excise duties on fuel even as CNG and LPG prices continued to climb due to rising import costs. The research company estimated that while demand will be tempered to some degree because of this, it will still enjoy higher demand given the cost savings it will continue to offer.