Ola Cell Tech zeroes in on suppliers for batteries, to invest Rs 2,249 cr

Ola Cell Technologies Pvt Ltd has identified key raw material suppliers for the short as well as the long term for making its lithium ion cell batteries.

Its key raw material suppliers include Umicore, Epsilon Advanced Materials, and Neogen.

Based on preliminary validation, 28 key suppliers were identified for engaging on commercial offtake contracts out of 201 initially identified. These have been based on a few criteria — technical capability and openness to collaboration, interest in supplying to Ola as a preferred supplier and interest in localising, among others.

As many as 15 suppliers have shown an interest in localising operations within the PLI timeline.

The cell company is investing Rs 2,249 crore in the first phase of its lithium ion battery cell factory to hit a capacity of 5 Gwh.

This is expected to be operational by October. Construction is on for both the phases. It is targeting a capacity 20 Gwh through the two phases.

In the first leg of the first phase it will have a capacity of 1.4 Gwh with an investment of Rs 1,226 crore and in the second leg an additional 3.6 Gwh with an investment of Rs 1,023 crore, according to a project cost-vetting report.

Pilot trials are on.

As part of its plan, it will add another 1.4 Gwh by April 2025 in the second phase and 13.6 Gwh by CYQ2 2026.

For the second phase, budgetary capex has been pegged at Rs 1,226 crore. Capex for the third phase has not been finalised.

An Ola Electric spokesperson, however, declined to comment on a query. The company is awaiting clearance for its Rs 5,500 crore initial public offering, which is expected to be approved by the Securities and Exchange Board of India soon.

Ola will be the first Indian company to manufacture cells for batteries in the country. Those will initially be used for its captive consumption to make electric scooters and other vehicles. It is also eligible for incentives under the production-linked incentive (PLI) scheme for lithium ion batteries.

Umicore, for instance, is a leading circular materials technology company which is into recycling precious materials, energy and surface technologies, among others, and has an office in India.

Epsilon is a leading manufacturer of coal tar derivatives with India’s first coal chemical complex located near raw material sources.

And Neogen has a joint venture with Mitsubishi Chemicals and UBE Corporation for making electrolyte solutions required in lithium ion cell manufacturing in India.

The new plant, which is being set up in Tamil Nadu next to its two-wheeler factory, is coming up on 104 acres.

Ola Electric, which owns 99 per cent in the cell company, has seen a sharp increase in its market share in e-two-wheelers with a 50 per cent share in May, way ahead of its rivals TVS, Bajaj Auto, and Ather.

In May this year its registrations hit over 33,577 vehicles. The company is also planning to launch its electric three-wheeler and electric motorcycles in the next few months or next year, according to sources.

The production of battery cells in India, now entirely imported from China, South Korea, and Japan, will help the company in two ways. The battery accounts for nearly 40 per cent of the cost of the electric two-wheeler. Ola will have control of technology as well as the supply chain.

Two experts say it will help in substantial cost saving.

The plan

> To complete 20 Gwh per annum capacity by Q2CY26

> Expected to complete 5 Gwh capacity this year 

> Ropes in top raw material suppliers like Epsilon, Neogen, Umicore 

> Would require 40 cells per scooter powered with 4 Kwh battery