India is home to a recent lithium discovery that has been categorized as G3. While the discovery is promising, it may take years for the actual output to be realized. With 5.9 million metric tonnes of resources, India will be ranked sixth globally in terms of lithium reserves, after Bolivia, Argentina, Chile, Australia, and China.
Electric Vehicle Sales and Government Targets
Electric vehicle (EV) sales continue to rise worldwide. In CY2022, global EV sales rose 60% to 10.4 million units, representing 13% of total vehicle sales (80 million). China led the way, selling 6.2 million EVs in 2022, doubling sales from the previous year. In Europe, 2.6 million EVs were sold, up 50%, while North America sold 1.1 million EVs, up 50%.
Despite India’s small share of the global EV market, the country had over 300,000 EV sales in CY2022, representing an impressive increase from the 200,000 EV sales in 2021, with a growth rate of 50%. By 2030, India plans to sell 30% of personal cars, 70% of commercial vehicles, and 80% of two- and three-wheelers as EVs.
Several countries have set ambitious targets for EV adoption. If government targets are met, by 2030, 100% of new cars sold in the United Kingdom, Sweden, the Netherlands, Norway, and Germany, 64% in France, 50% in the United States, and more than 40% in Korea and Oceania will be EVs.
Lithium Battery Demand and Manufacturers
Lithium batteries (LiBs) are the power source for EVs. In 2022, LiB demand reached 473 GWh. In December 2022, 31 GWh of the 60 GWh battery sales were in China, 20 GWh in Europe, and 9 GWh in the United States. Contemporary Amperex Technology Co., Limited (CATL) has the largest market share (35%), followed by LG (15%) and BYD (14%). By 2030, LiB demand is expected to exceed 4 TWh.
CATL plans to increase capacity from 177 GWh to 1.2 TWh, LG from 150 GWh to 1 TWh, and Tesla from zero to close to 1 TWh. The lithium iron phosphate (LFP) and lithium nickel manganese cobalt oxide (LNMCO) chemistries are the most commonly used in EV batteries (NMC). LFP batteries are more durable and heat resistant than NMC batteries, but they take up more space. LFP batteries cost 30% less.
India’s EV Ecosystem Challenges
In India, the EV ecosystem faces several significant challenges, including insufficient availability of raw materials, unreliable power networks, and a delayed entry into the technology sector. However, the recent lithium discovery in India is expected to help alleviate the raw materials issue in due time.
The EV supply chain in India is mostly import-driven. Indian companies import LiON cells, smart battery management systems, and motor and control units. While some Indian companies assemble cells in-house or by a third party, most of the players in the EV ecosystem, including cell and pack, power train, and power electronics, are not listed. The listed companies that do exist, such as Bosch or ABB, don’t generate significant revenue from EVs. In contrast, companies like Hero or Bajaj, or suppliers like Amara Raja, may have more to lose from their current businesses from their current businesses than to gain from a potential EV market. The discovery of this large deposit of lithium in India could also help the country to become a major player in the $3.5 trillion in global automotive revenues market.