Epsilon looks to charge up India production capacity from 200 to 10,000 TPA

Epsilon Advanced Materials, the home-grown maker of materials used in electric vehicle (EV) batteries, plans to increase its production capacity in the country from the existing 200 tonnes per annum (TPA) to 10,000 TPA by the end of 2025. 

“Our goal is to take the India capacity to 100,000 TPA but for now 10,000 is enough as it would be sufficient for a 10-gigawatt capacity,” Vikram Handa, the company’s managing director, said in an interview with Business Standard.

This capacity increase is part of Epsilon’s commitment to invest Rs 9,000 crore in India. 

Handa is looking to increase Epsilon’s footprint not only in India but also abroad. It has announced an investment of $650 million (around Rs 5,400 crore) in the United States to set up a 50,000 TPA manufacturing unit by 2026. According to the company, the proposed US facility will provide critical battery materials to power more than 1 million EVs. Epsilon also plans to start operations in GigaVaasa, Finland.

“We took this approach of first catering to international customers as it will help us build capacity in India,” said Handa. 

Epsilon’s international expansion is buoyed by the EV-related incentives many countries offer. For instance, in the US, the Inflation Reduction Act allows a credit of up to $7,500 (around Rs 6.20 lakh) per vehicle to boost domestic manufacturing of batteries and encourage local procurement of battery-critical minerals. 

There is a huge raw material demand in the US as companies such as Tesla, Ford, and General Motors are setting up their units. Demand is also from South Korean firms, which are in the process of setting up their businesses in the US market.  

In India, however, the demand is more muted, even from the companies that have qualified under the government’s Rs 18,100 crore production-linked incentives (PLI) scheme for advanced chemistry cell (ACC) manufacturing. The scheme has strict localisation norms designed to make cell manufacturers favour local suppliers.

“Indian firms are still thinking that they will buy from China,” Handa said. “PLI winners should become anchor customers, which will help us become cost competitive.”

EAM has 50 potential customers globally, of which 15 are in India. It takes years to build an anode production facility. The share of an anode in the total cost of a cell is around 25 per cent.

“If Indian cell manufacturers want to set up big factories, they should start qualifying us right now,” said Handa, adding “The qualification process takes around 20 months.” But once a company is qualified and starts supplying, it will be for eight years.  

In the absence of demand from Indian customers, whatever Epsilon produces is exported to countries like the US, Korea, and Japan, and is used to meet energy storage systems demand or in consumer products such as laptops and phones. Still, Epsilon is augmenting its capacity in India in anticipation of future demand. “I believe the Indian demand will start from 2025 and will increase after 2027,” said Handa. 

The company also plans to enter the cathode market by partnering with technology partners and at an investment of Rs 500 crore. It plans to start its commercial scale cathode production in India by the end of this year.