Ola to set up cell manufacturing plant for powering Lithium-ion battery

Ola Electric is working on a plan to set up a cell manufacturing plant to power its lithium-ion (Li-ion) battery. Once executed , it could become one among the first few Indian manufacturers to do so since all the cells for the battery are currently imported.      

Ola will initially source the cells for the Li-ion battery used in its soon-to-be-launched e-scooters from South Korea. The batteries are going to be made in the upcoming integrated plant near Bengaluru where the e-scooter will also be manufactured.

South Korea, China, and Japan account for nearly 85 per cent of the global cell production. The key cell-making companies include LG Chemicals, Panasonic, BYD, Samsung, and others. Most of them also make the batteries. 

Many companies assemble the Li-ion batteries, such as scooter maker Ather Energy, and a joint venture between Suzuki, Toshiba and Dentsu. The others include Exide, Sun Mobility, Exicom, and Okaya.

In the cell space, Mahindra & Mahindra had announced that it was collaborating with LG Chemicals for making unique cells exclusively for the Indian market.    

Manufacturing the cells in India is a key element under the government’s Atmanirbhar Bharat, or self-reliance, campaign. 

It has already announced a production-linked incentive scheme (PLI) to provide financial incentives to potential cell manufacturers. The government believes this will lead to a substantial saving in foreign exchange as well as reducing the price of the battery.

A senior member of the Ola Electric leadership team confirmed the decision. “Yes, we will manufacture the cells. The batteries will be made in our in-house future factory. Our plan is to go for end-to-end integration,” he said, without going into further details.

The company is investing Rs 2,400 crore to set up a plant. 

In Phase 1 (June 2021), it will have the capacity to make two million two wheelers. By the next year, the figure will rise to 10 million.  

According to experts, Li-ion batteries account for anything between 35-40 per cent of the cost of an e-scooter and cells constitute around 70 per cent of the  battery cost. 

In short, it is a key determinant of the price.

E-scooter makers estimate that a one-million scooter plant will require enough batteries to create 2 gigawatt per hour (GWh) of battery capacity to power the vehicles. 

For 10 million two wheelers, they estimate that Ola will need a battery capacity of 20 GWh.  

Under the PLI scheme, the government has earmarked an outlay of Rs 18,000 crore for incentivising the manufacturing of advanced chemistry cells. 

It hopes to support over 50 GWh of capacity from five players and save Rs 1.05 lakh in foreign exchange. 

Each player under the policy will be expected to commit itself to a capacity ranging from 5-20 GWh in five years.