Electric car costs in India are expected to climb as the cost of raw materials such as nickel, copper, cobalt, and manganese rises, and an approaching demand-supply imbalance in global lithium-ion cell manufacturing has begun to strain manufacturers.
The impact has been greater in the second part of the year, with Chinese companies reporting price increases of up to 20%. Where China goes in EVs, the rest of the world follows.
The Chinese government’s new battery energy density requirements may also increase demand for nickel-cobalt-manganese (NCM) batteries in the local market, thus further fuelling the EV prices.
Cell prices have risen by nearly 40%, it is more pronounced in LFP since Tesla has indicated that they would utilize solely LFP in their low-end products, which is alone enough to disrupt the cell prices to go up and thus, it’s impossible for EVs’ cost to fall, explains Samrath Kochar, CEO of Trontek.
Some have already begun to boost their pricing. Revolt Motors raised the price of its flagship RV400 electric bike by Rs 18,000 late last month, alleging raw material cost constraints. Similarly, Hero Cycles’ e-bike brand, Hero Lectro, raised costs by Rs 5000 across the board.
Amidst the increase of product prices due to external factors of the supply chain, the urge of maintaining the quality standards, also fires the price revision, says Hero Lectro CEO Aditya Munjal.
Aside from the present spike in raw material costs, which is also attributable to the global commodity price boom, the greater issue is a lack of lithium-ion cells in the country.
Bloomberg predicts a slight increase in the pricing of lithium-ion battery packs to $135 per KWh in 2022.
Today, India does not make any cell, which is a key component of the battery pack, which again itself a vital part of the electric vehicle. A cell accounts for 75% of a battery pack’s cost, which accounts for 40-50% of the EV’s cost.
By 2035, India would be in the need of 3400-4100 GWh battery capacity, as per working paper by ICCT from February 2021. That is ten times the global capacity of today, 350 GWh.
It is critical for India that lithium cell production takes off in a large manner. However, localization is an inevitable challenge amidst the necessary investment that is anticipated to be $ 7-8 billion over the next five years, and at least $50-70 billion over the following ten years.
High demand for EVs can also put magnets under stress. So Bounce is investing in reluctance motors, which don’t utilize magnets to guarantee relative insulation against peaking prices and advantage over others, said Vivekananda Hellekere, the CEO and co-founder of Bounce.
