Switch To Lithium-ion Battery: The Next Big Shift In the Indian Auto Space
The EV disruption is truly underway aided by rising fuel costs and favorable policy initiatives
India is in the midst of transition to electric vehicles (EVs). Several think-tanks including NITI Aayog and CEEW have predicted that there would be 80 per cent EV adoption in two wheelers and three wheelers by 2030. Even a conservative estimate predicts that there would be 6 million EVs in India by 2025.
Lithium demand: The main driver for adoption is the FAME-II scheme, favorable state level polices, mandated emission reduction and proven lower lifecycle cost for electric vehicles. This EV adoption is also clearly driven by the Lithium batteries. Even at a conservative 40 per cent EV penetration, we would need about 60 giga-watt-hour of lithium-ion battery. Overall Lithium battery requirement will be much bigger because of applications such as telecom, rooftop solar, DG offset etc. In an optimistic scenario, this could be 150 giga-watt-hour of lithium requirement. Hence Lithium is going to drive India's EV revolution front and center.
India's EV ecosystem is unique. Indian population mostly rides on two wheelers and three wheelers, which constitutes over 80 per cent of the vehicles on the road. Disruption is clearly underway in this segment. There are also new players such as Bounce and Vogo, who are coming up with newer business models for e-mobility. Commercial three wheelers and L5 Loader vehicles are on the fastest mode of EV adoption. This disruption is driven by the rising fuel costs and favorable policy incentives.
Battery cost: There has been significant reduction in the cost of lithium-ion battery over the last decade, in accordance with Wright's Law. The cost has come from a cost of $1,000 per kilowatt hour in 2010 to about $150 per kilowatt hour. In spite of cost fluctuations over the last few quarters, the overall EV adoption can be directly linked to the fall in the Lithium-ion battery cost. So as the battery costs continue to fall, the demand for EV will continue to rise.
India recently launched Advanced Cell Chemistry - Production Linked Incentive (ACC-PLI) scheme for setting up 50 giga-watt-hour of lithium cell production. This scheme is technology and chemistry agnostic. With higher energy density and higher cycle life, the incentives are proportionately higher and is open for new technological innovation in cell chemistry.
Lithium-ion technology: Technology for Lithium batteries is constantly evolving. Until recently there are two main chemistries – LFP (Lithium Ferro Phosphate) and NMC (Nickel Manganese Cobalt). NMC chemistry has higher energy density and LFP has higher life cycle and is considered safer especially for Indian conditions. Even under NMC there are variants such NMC111, NMC622, NMC811 and so on (which specifies the percentage of Nickel, Manganese and Cobalt in a cathode of a lithium cell). Solid state batteries are inherently safer because they are nonflammable, and lot of research is going on in this area. Research is being done on silicon or a metal anode as well. Continuous research and constant technological improvement in Lithium battery is expected to continue throughout this decade.
Software and semiconductor: Battery Management System (BMS) is the brain behind Lithium battery, and it monitors, controls, and protects the battery against any abuse conditions. Typical BMS consists of high-end microcontroller and other active semiconductor components. It monitors and controls the Lithium battery through high-end algorithms and software. This is one area India can truly lead the rest of the world, due to India's inherent strength in software and semiconductor. BMS provides algorithms for estimation of state of charge, state of health, thermal management, cell balancing, state of safety etc. To get better performance, increased safety, and higher cycle life of the Lithium battery, software and semiconductor is going to play a key role.
Lithium availability: It is a well-known fact that India does not have the needed mineral reserve for lithium manufacturing. These reserves are predominantly available in Australia, Latin America, Democratic Republic of Congo, and certain East European countries. Lithium supply chain is dominated by China, controlling over 70% of the processing and material supply. India doesn't have any cell manufacturing yet with near zero presence in upstream manufacturing of cathode/anode manufacturing, chemical processing etc. This is one of the biggest challenges for India in switching to Lithium.
Urban mining and lithium-ion recycling: India has over 1 billion mobile phones and a few tens of millions of laptops and other electronic gadgets. Urban Mining is where you extract the key metals from the used batteries. It is shown elsewhere in the world that lithium-ion battery recycling can be done in zero effluent plants where we can recover over 90% of the metals. Now India could aspire to become the urban mining capital of the world. It is estimated that through recycling, we could produce about 80 giga-watt-hour of lithium capacity by 2030 meeting most of its demands through Urban Mining.
Safety: The key thing for India is going to be the safety of the battery in the vehicle. There has been a lot of focus on range of the vehicle, fast charging, battery cycle life, light weighting of the battery, affordability etc. But the key question that needs to be asked, is it safe for Indian conditions?
Testing standards: AIS-156 testing standard for Lithium battery is comparable to any international standard. These standard tests the battery pack for all electrical, mechanical, and thermal conditions. Standardization bodies are continuously working to improve the testing standards. Bureau of Indian Standards (BIS) recently came up with IS-17855 standard, which is the test specifications for Lithium-Ion battery pack performance. In this standard, BIS has come up with a new range of performance tests to measure energy efficiency, cranking power, fast charging efficiency, temperature dependent degradation, loss of charge during storage etc. Bureau of Energy Efficiency (BEE) also has recently come up with a Star Rating program for Lithium battery. The Star rating program from BEE has been successful in other products and it provides an easy-to-understand rating and consumers would be in a better position to distinguish various battery packs in terms of their safety, quality, etc.
In summaryThe Indian automotive ecosystem is unique. The EV disruption is truly underway aided by rising fuel costs and favorable policy initiatives. The two wheelers and commercial three wheelers are on the fastest mode of EV adoption. Lithium-Ion battery will be pivotal to India's EV success. India can aspire to become the urban mining capital of the world by doing the Lithium recycling. India needs customized EV solution which are unique for Indian conditions and for the Lithium battery manufacturers the goal must be 100 per cent safety. The role of software and semiconductor in EV revolution is huge and India has an opportunity to lead the rest of the world in this segment. Going forward, with ongoing progress in battery technology, it is expected that these lithium-powered batteries will replace petrol/diesel as the source of power in vehicles.