Picture: ISTOCK
Picture: ISTOCK

Mumbai — Amara Raja Batteries, India’s second-biggest traditional battery maker by value, will build a lithium ion pack assembly plant as it seeks to grab a slice of the market for electric vehicle power packs, which is set to grow to $300bn by 2030.

The battery maker is building a 100MW/h assembly plant in the southern state of Andhra Pradesh, CEO S Vijayanand said. "There’s incubation work going on because we are at a beginning stage both from the market demand and product development perspective."

The new lithium ion pack assembly is expected to generate business by the end of this financial year, ending March 2019, he said.

In India, with annual sales of about 3-million passenger vehicles powered by fossil fuels, vehicle makers are considering entering the new segment as the government plans to have green vehicles make up about a third of its fleet by 2030.

The shift will be gradual as India needs to push for electric vehicles in a consistent manner over a long period and ensure that automotive jobs are unaffected, according to government think-tank NITI Aayog.

Amara Raja expects the market for supplying batteries to e-rickshaws, which are small, privately owned three-wheeler taxis, to grow at a compounded rate of about 20% over the next five years.

"There’s no lithium ion battery cell production plant in India. Amara Raja will still have to import cells … to assemble the packs," said Ali Izadi-Najafabadi, the head of intelligent mobility at Bloomberg New Energy Finance.

"It’s target annual assembly volume is small. This suggests Amara Raja is primarily interested in winning demand from the second phase of the FAME scheme which is expected to subsidize a limited number of electric buses and three-wheelers."

Prime Minister Narendra Modi will this week announce the second phase of the country’s Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles (FAME) programme, the Press Trust of India reported Wednesday. The 55-billion rupee ($765m) programme seeks to give incentives for adoption of EVs.

By 2040, more than half of all new car sales in the world and a third of the planet’s vehicle fleet — equal to 559-million vehicles — will be electric, according to a global outlook published in May by Bloomberg New Energy Finance. It expects EVs to comprise about 7% of vehicle sales in India by 2030 and 27% in 2040.