Insights into Editorial: Getting Charged up
Union Minister of State with Independent Charge for Power, Coal, New & Renewable Energy and Mines, recently announced that only electric vehicles (EVs) will be sold in India from 2030. But the current National Electric Mobility Mission Plan (NEMMP) has set a sales target of only 5-7 million EVs and hybrid electric vehicles annually by 2020. On the other hand, the Indian automobile market, which includes two-, three- and four-wheelers, is expected to clock an annual sales figure of around 23 million by 2030. Replacing these with EVs would require a significant push as far as vehicle-charging infrastructure and batteries are concerned.
What is National Electric Mobility Mission Plan (NEMMP)?
The principal end objectives of the National Mission for Electric Mobility (NMEM) are
- National energy security,
- mitigation of the adverse impact of vehicles on the environment and
- Growth of domestic manufacturing capabilities.
The NEMMP 2020 is the mission document for the NMEM.
- The plan lays the targets and provides the joint Government – industry vision for realizing the huge potential that exists for full range of efficient and environmentally friendly electric vehicle (including hybrids) technologies by 2020.
- The NEMMP 2020 is a well-researched document and relies on in-depth primary data based study conducted jointly by the Government and the Industry.
What is the opportunity for the domestic manufacturing industry and job creation?
The transition to Electric Vehicles would require a battery capacity of about 400 GWh (gigawatt hours) each year, equivalent to increasing the current global EV battery production by a factor of five, just to cater to the Indian EV market.
This gigantic demand for batteries is an ideal opportunity for the domestic manufacturing industry and job creation. However, India has missed many such opportunities to be integrated in the global value chain for solar cells and wafers and electronics manufacturing due to a lack of suitable policy support. This has led to an ever-increasing import bill for electronics products, currently the highest after oil and gold. The annual EV battery market is expected to be around $30-55 billion and India cannot afford to fulfil the demand solely through imports.
The resource endowment of minerals used for Lithium batteries:
Among different battery technologies available in the market, variants of lithium-ion batteries such as lithium-titanate, lithium-cobalt, and lithium-sulphurare predominantly used in electric vehicles.
- Manufacturing lithium-ion batteries would require critical minerals such as cobalt, graphite, lithium and phosphate. Among them, lithium is of particular importance.
- Today it is primarily used in pharmaceuticals, ceramics and glass, metallurgy and lubrication industry, though in much smaller quantities.
- The resource endowment is limited to only nine countries and 95% of global lithium production comes from Argentina, Australia, Chile and China.
Entire mineral supply chain to be overhauled in India:
- The recent demand surge in the electric mobility market has already resulted in a twofold increase in lithium prices from $4,390 per tonne (in 2013) to $9,100 per tonne currently.
- It is estimated by the CEEW that India would require about 40,000 tonnes of lithium to manufacture EV batteries in 2030, considerably higher than the current annual global lithium production of 32,000 tonnes.
- To meet India’s demands amid a global surge in electric vehicle demand, the entire mineral supply chain needs to be overhauled and expanded.
China and U.S. in the lead:
China and the U.S., which have ambitious electric mobility targets, are way ahead in the race to secure lithium supplies.
- With the second largest reserves of lithium, is making strategic moves to control the majority of international lithium mining assets.
- China’s Tianqi Lithium holds a majority share in the expansion of the Talison Lithium plant in Australia, which would make it the single largest producer of lithium globally upon completion.
- Also, its equity investors are planning to buy stakes in Chile’s lithium mining companies.
- S.-based lithium mining companies have already secured mines in Chile and also hold significant shares in several upcoming mining projects in Australia.
- Tesla, which plans to manufacture half a million EVs annually by 2020, is investing in R&D to reduce supply risks.
- It has partnered with Pure Energy Minerals to extract high-purity metal from Nevada, using radically different and cost-efficient production technology.
What is the imperative on India in the present trend lead by USA and China?
Global investment trends suggest that China and the U.S. will control a large share of the lithium production capacity. In order to avoid a scenario like the one that played during the oil crises of the 1970s and the price shocks of 1980s and 2000s,
- It is imperative that India secure mineral supplies for its domestic industry by acquisition of overseas assets such as mineral reserves and the associated production.
- India has long-term trade relations with lithium-producing countries in Latin America through preferential trade agreements (PTAs). A recent extension of the PTA with Chile provides India some tariff concessions for lithium carbonate imports.
- India needs to further diversify the supply risk by including lithium in existing PTAs or establishing new PTAs with other lithium-producing countries.
However, the move will only enable and not ensure risk-free mineral supplies to India.
What is the need of the Hour in India?
- Research and development
- India must focus on creating a vibrant battery research and development ecosystem domestically.
- Currently, the domestic battery market is largely dominated by lead-acid battery
- Research should focus on developing alternative technologies containing minerals with low supply risks.
- Battery recycling
- Battery recycling techniques need to be developed to recover associated minerals and materials.
- Recycling lithium batteries present in the waste stream will significantly reduce the burden in procuring fresh resources.
- Policy Formulation
- There is a need to formulate policies incentivising domestic public and private mining companies to invest in overseas lithium mining assets.
‘Fuel security’ is a key driver in the push for electric vehicles. However, given India’s limited hold on critical lithium reserves and concentration of production in the hands of a few, fuel security concerns could still be the same with ‘white gold’ lithium, replacing ‘black gold’. Policies that incentivise domestic manufacturing, address the need for virgin resources and recycling of used batteries, while constantly pushing R&D for substitutes and alternatives are vital to secure electric mobility.