Government plans to hire Tesla and Samsung for local battery production


Government plans to attract global majors to set up battery manufacturing units in India

The government plans to use companies like Tesla Inc, Samsung and LG Energy to encourage them to invest in battery manufacturing locally, as it seeks to establish a national supply chain for clean transportation, said to Reuters two government sources.

Five roadshows will be held from next month in countries like the United States, Germany, France, South Korea and Japan to convince battery makers to set up local production, the one of the managers.

Tesla, LG Energy and Samsung are among those who will be invited to attend, although a list of delegates has yet to be confirmed.

Other companies targeted include Northvolt, Panasonic and Toshiba, the official said.

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The move is part of a larger $ 2.4 billion incentive package to boost battery manufacturing for which the government has started soliciting investment proposals from companies.

While domestic players like Reliance Industries, Adani Group and Tata Group have shown interest, so far there has been little enthusiasm from global players, the official said.

Some global companies are reluctant to come without a local partner because it requires significant investment and India still ranks poorly on contract enforcement, he added.

Others choose to invest in larger markets like the United States and Europe where the demand for batteries is higher.

“The arrival of global companies in India will be a sign of seriousness and they will also bring good standards of technology, quality and safety,” the person said.

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India’s plans come as countries prepare to meet in Glasgow next week for the United Nations Climate Change Conference (COP26).

India sees clean automotive technology as a central part of its strategy to reduce pollution in big cities and oil dependency, while meeting its emissions targets.

Electric vehicles (EVs) currently represent a fraction of total sales in India, mainly due to their high price as the batteries are imported.

But growth is accelerating as the government offers incentives to automakers as well as buyers of electric vehicles.

The government projects that electric cars will account for 30% of total passenger car sales by 2030 and that electric motorcycles and scooters will account for 40% of total sales

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This should stimulate demand for batteries which currently account for around 35-40% of the total cost of vehicles, but which can be reduced with local production.

Under the $ 2.4 billion program, India aims to establish a total of 50 gigawatt hours (Gwh) of battery storage capacity over five years, which is expected to attract direct investment of around $ 6 billion.

To benefit from the incentives, companies must set up a minimum of 5 Gwh of storage capacity and meet certain local content conditions.

This would require a minimum investment of more than $ 850 million, the official said.