Suzuki, Denso and Toshiba's lithium-ion JV unit to go on stream by year-end

Development brings Suzuki's India arm, Maruti Suzuki closer to the plans of introducing new tech vehicles, including hybrid and battery electric vehicles by 2025

Suzuki Motor Corp, Denso Corp and Toshiba are set to start commercial production of the lithium-ion cell at their joint venture (JV) unit by December, said a person aware of the company's plans. The development brings Suzuki's India subsidiary, Maruti Suzuki closer to the plans of introducing new technology vehicles, including hybrid and battery electric vehicles by 2025.

The lithium-ion cell manufacturing unit was set up as a 50:40:10 JV among the three companies in 2017 with an investment of Rs 1,250 crore. It's the largest lithium-ion cell manufacturing plant in India. The joint venture is also expected to receive sops under the government’s production linked incentive (PLI) scheme for advanced chemistry cell (ACC) manufacturing in India.

Lithium-ion cells are the most critical part of an EV. Most EV makers currently buy batteries and cells from China, the world’s largest producer of Li-ion cells. In addition to  meeting the requirements of  Toyota and Suzuki for their range of upcoming electric and hybrid  models, the unit may also supply to other firms and address export markets, said the person cited earlier.

“We are planning to launch an EV by 2025. In this direction, prototypes testing exercises will be carried out jointly between Suzuki and Toyota,” said a spokesperson at Maruti Suzuki India.

“Unlike some other players, Maruti follows a bottom-up strategy and has always pushed for higher localisation. It is evident in their approach to electrification too, as Suzuki has already invested in a Li-ion battery plant in Gujarat,” said Amit Mishra, Vice President, Research at Antique Institutional Equities.

Maruti is working on its plans to localise other critical hybrid and EV components, which will make these advanced technologies affordable and accessible to Indian customers, said Mishra. Maruti’s greater thrust on localisation will help develop the supply chain of advanced auto technologies in India, he added.

It is set to start production at a time when most of the automakers in India are revving up their electric vehicle (EV) plans amid a policy push and slew of incentive schemes announced by the government to  promote battery electric vehicles. The latest being Tata Motors. Earlier this week, the Tata Group flagship said it will raise $1 billion (Rs 7,500 crore) as part of its agreement with TPG Rise Climate along with its co-investor ADQ in  EVCo, its newly formed subsidiary.  The investment will translate into an equity valuation of up to $9.1 billion (Rs 67,349 crore).

Some believe, Maruti's delay in entering the EV space will give competitive advantage to Tata Motors.  Tata Motors is building a range of affordable electric cars and the company has already established itself as the front-runner in the EV space, according to a 12 October research report by Kotak Institutional Equities.  

“With lack of EV launches from Maruti Suzuki India  the immediate future and existing models of Hyundai Kona and MG ZS being priced above Rs 2 million (Rs 20 lakh), we believe Tata Motors can leapfrog in the EV space with its accessible pricing, higher range in products, which can improve further and focus on rapidly expanding charging infrastructure,”  it said.  

Rising cost of ICE internal combustion engine powered models due to regulatory requirement coupled with the rising fuel cost and reducing prices of EV led by subsidies, is expected to augur well for EVs. However, infrastructure challenges and long-term costs viability sans subsidies, will be the key monitorables as India pursues its electro mobility goals, said experts.