Chemicals: Giga factory race has just begun

27 Feb 2024 , 11:46 AM

India battery manufacturing & supply chain summit shed light on the evolving battery ecosystem. With the giga factory race picking up in India, chemical companies have started exploring supply chain opportunities with some already committing large capex. Though battery manufacturing is complex and involves various components that may vary with evolving chemistry, India’s ambitious goal of EV adoption, renewables and local sourcing equips the space with guaranteed demand offtake. However, complexities around the rigorous qualification processes will warrant a cautious approach, as the strike rate will be low in the near future as companies undergo the learning curve. Analysts of IIFL Securities present below the summit’s KTAs. 

It’s just the start, very long road ahead: 

India Energy Storage Alliance (IESA) estimates 140GWh and 550Gwh of ACC battery manufacturing capacity by 2030 and 2035 respectively. The journey of setting up giga factories has just begun. These are still very low numbers vs China, wherein Svolt China and CATL are setting up 300+GWh and 180+GWh respectively by 2030. 

Chemicals to play a critical role: 

With four (cathode, anode, electrolyte and separator) out of six major manufacturing segments of a battery being driven by chemistry, Chemicals will play a critical role. Access to the right technology remains key, as these precursor materials will have to undergo rigorous testing for passing qualification processes. 

China’s dominance – threat or opportunity?: 

With the supply chain from natural and synthetic graphite to Anode active material elements mostly concentrated within China, the benefits of more diverse supply chain will be overshadowed if mid-stream remains concentrated. Thus, there exists potential risks to ex-China supply chain. However, the emphasis on local sourcing will create opportunities in cell components. Favourable policies needed: Though Government has doled out PLI for ACC and placed emphasis on domestic value addition, the cell component players too are looking forward to incentives. 

Lithium Vs Sodium:

Reducing dependence on lithium resources and developing low-cost battery systems is driving research on sodium-ion batteries (Na). Though Na batteries show greater promise due to abundance of availability and low cost, energy density remains a concern.