PLI Scheme for Battery Storage Will Lower Cost of EVs in India: SMEV

SMEV has said that the PLI scheme for promoting battery storage will lead to the reduction of cost on purchase of electric vehicles (EVs)

The Society of Manufacturers of Electric Vehicles (SMEV) has said that the production linked incentive (PLI) scheme for promoting battery storage will lead to the reduction of cost on purchase of electric vehicles (EVs) thereby accelerating accessibility and adoption of greener vehicles in the country. 

Welcoming the government’s approval of the PLI scheme for promoting battery storage at an estimated outlay of Rs 18,100 crore, SMEV also said it will attract huge investments in the EV industry in the next 1-2 years.

“Battery occupies a larger portion of any electric vehicle’s cost. Thus, the right policy move will help us steer towards green growth in the industry, while exponentially increasing our manufacturing capacity,” SMEV Director General Sohinder Gill said in a statement. 

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He further said, “Once we fully start battery manufacturing operations in the country, it will lead to the reduction of cost on purchase of electric vehicles owing to increased accessibility.”

According to Gill, the PLI scheme for promoting battery storage would “strengthen our ‘Make in India initiative’ and also attract huge investments in the EV industry in the next 1-2 years”.

The PLI scheme, National Programme on Advanced Chemistry Cell (ACC) Battery Storage is expected to attract direct investment of around Rs 45,000 crore in ACC battery storage manufacturing projects, the government said. Also, a cumulative 50 GWh of ACC manufacturing facilities in India are expected to be set up under the programme.

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The scheme is estimated to lead to net savings of Rs 2,00,000 crore to Rs 2,50,000 crore on account of oil import bill reduction during the period of this programme due to EV adoption as ACCs manufactured under the programme is expected to accelerate EV adoption, an official statement said.

The PLI Scheme for 10 “key sectors”, including telecom, electronics, solar PV and batteries was first approved in November 2020. The focus of the scheme is usually on indigenous manufacturing and increase exports, though in the case of Solar PV and batteries, it will definitely be self sufficiency and import substitution also.

It is worth noting that the scheme does not or cannot really do much about sourcing of primary metals commodities like Lithium, Cobalt etc , that will be required for manufacture.  These also suffer from control by a few countries, notably China, which will continue to impact any effort to manufacture domestically at a competitive global price, or a price that can compete with Chinese prices. It’s an issue that has dogged the PLI scheme for solar manufacturing too, with industry leader Hitesh Doshi of Waaree Technologies highlighting the same in a column this week. .