Tata Group declines to participate in ‘EV Battery’ PLI Scheme

The Tata Group, which is a key player in the country’s transition to clean energy, has decided to not participate in the government’s massive Rs 18,100-crore production-linked incentive (PLI) for the EV Battery development in the country. The Tata Group found that the return on the risks involved in the segment looks unfavourable for them.

PB Balaji, Chief Financial Officer of Tata Motors, apprises, “We had considered this extensively and, when we looked at the conditions of this particular PLI scheme, we found that the ‘risk-return’ equation was not working out for us and, therefore, we decided to stay away from it after having done humongous amount of work.” Balaji said this in the post-earnings discussions.

The PLI scheme is primarily for advanced chemistry cell (ACC) battery storage. It’s aimed at achieving a manufacturing capacity of 50 gigawatt-hour (GWh). The government is bullish to promote adoption of electric vehicles and lower the dependence on fossil fuel-based transportation considering its international commitments.

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A month ago – in January – the Central Government had received an overwhelming response to the scheme where as many as 10 companies participated in the bidding. These were Reliance New Energy Solar, Hyundai, Ola Electric, Mahindra & Mahindra, Larsen & Toubro, Amara Raja Batteries, Exide Industries, Rajesh Exports, India Power Corporation and Lucas-TVS. The bids were for a capacity of 130 GWh, more than twice the manufacturing capacity to be awarded.

The Ministry for Heavy Industries informed, “The scheme received an encouraging response from local as well as global investors as bids received is 2.6 times the manufacturing capacity to be awarded. The scheme called ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ was approved by the government for achieving manufacturing capacity of 50 Giga Watt Hour (GWh). The outlay of Rs 18,100 crore for the scheme is budgetary.

The ministry said that the ACC PLI scheme is expected to result in savings to the nation on account of reduction in import of crude oil to a significant extent and increase the share of renewable energy at the national grid level.

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The manufacturing facility would have to be set up within two years, while the incentive would be disbursed over a period of five years on the sale of batteries manufactured in India.

The Tata Group is an established leader in the EV segment in India. Tata Motors has more than 80 per cent share in the four wheeler EV market as of today. The company has also planned to expand their EV range to 10 new electric vehicles by 2025. Similarly, another arm of the group – Tata Chemicals – is leading the charge as far as interest in producing EV batteries goes. The company looks tp set up a new plant in Gujarat to manufacture lithium-ion battery production in Gujarat.