India wants to make EV batteries at home. Will cars get cheaper?

India wants to build the batteries that power electric vehicles, not just assemble them. But will that eventually make EVs cheaper? Here's what experts say

The Union government wants India to move beyond assembling battery packs and start manufacturing lithium-ion cells at home. The assumption is if batteries become cheaper to make in India, EVs should become cheaper too.

 

However, industry executives, researchers and analysts say the answer is more complicated.

 

While domestic battery manufacturing can reduce costs over time, consumers are unlikely to see cheaper EVs unless India builds the rest of the battery ecosystem, from critical minerals and battery materials to recycling, testing and large-scale component manufacturing.

Why batteries matter

Batteries remain the single biggest cost component in an EV. A 2019 study by the Indian Council for Research on International Economic Relations (Icrier) estimated that batteries accounted for nearly half the cost of an electric vehicle. Although battery prices have fallen since then, they continue to be the largest contributor to an EV's price.

 

But lower battery prices do not automatically translate into cheaper vehicles. The World Economic Forum has found that even as battery costs declined globally, EV prices did not fall at the same pace because manufacturers continued to face higher costs for logistics, metals, semiconductors and other components.

What India is trying to build

The government has committed ₹18,100 crore under the ACC PLI scheme to create 50 GWh of domestic cell-manufacturing capacity while progressively increasing local value addition.

 

The tender floated on July 15 covers the final 10 GWh of the programme. Compared with the 2021 tender, it eases entry requirements, shifts the focus from energy density to battery efficiency and offers lower subsidies per kilowatt-hour.

 

The government has also launched the National Critical Mineral Mission to secure supplies of lithium, cobalt, nickel and graphite. The Battery Waste Management Rules seek to recover materials through recycling, while PM E-Drive supports EV adoption and links incentives to domestic content requirements.

 

The wider objective is to reduce India’s dependence on imported battery cells, most of which currently come from China.

 

Implementation, however, has been slower than planned.

 

A January 2026 report by the Institute for Energy Economics and Financial Analysis and JMK Research found that only 1.4 GWh of the PLI scheme’s 50 GWh target had been commissioned by October 2025. The commissioned capacity came entirely from Ola Electric.

 

No incentives had been disbursed by then because domestic value-addition requirements had not been met, according to the report. Delays in installing equipment, shortages of technical expertise and difficulties in meeting localisation targets have also slowed progress.

Will local batteries make EVs cheaper?

Rijhul Ladha, transport and EV policy researcher at the Institute of Transportation Studies, University of California, Davis, said India still imports more than 99 per cent of the battery cells used in EVs. Most domestically assembled vehicles use imported cells fitted into battery packs manufactured in India.

 

Local cell production is therefore likely to strengthen supply chains before it reduces vehicle prices, he said. Over time, it could encourage domestic supplier networks, reduce exposure to disruptions and generate economies of scale.

 

But these gains will depend on sustained demand and high factory utilisation. Demand certainty can come from fuel-efficiency rules, EV mandates and purchase incentives linked to domestic value addition, Ladha said.

 

Ankit Gaggar, Co-founder, BGauss, said India also remains dependent on imports for critical minerals, cathode and anode materials, semiconductors and several electronic components.

 

“Cost efficiency can only be achieved through localisation of the entire electric vehicle component value chain through large-scale manufacturing,” he said.

 

Factories must operate at higher utilisation levels before they can spread fixed costs over larger production volumes. New manufacturers will also need to recover investments in plants, equipment and product development before they can consistently produce cheaper cells.

 

Whether manufacturers pass on any savings will also depend on competition and the vehicle segment.

 

Niraj Rathi, senior director at Brickwork Ratings, said electric two- and three-wheelers have already achieved price parity with petrol vehicles in several cases. Manufacturers in these segments could use future cost savings to increase margins or gain market share instead of cutting prices.

 

Electric passenger vehicles still carry a sizeable upfront premium, giving manufacturers more room to lower prices as battery and production costs decline.

 

Exchange-rate movements, global commodity prices, export restrictions, financing expenses and charging infrastructure costs could nevertheless offset some of the savings from domestic manufacturing, Rathi said.

Why making battery cells is not enough

Experts say India’s larger challenge is developing the industries that supply cell manufacturers.

 

Ritika Verma, research associate at Icrier, said the country continues to depend on imported processed lithium, cobalt and other battery minerals because it lacks the capacity and technology to refine them at scale.

 

Supply disruptions or export restrictions by producer countries could consequently raise domestic battery costs even after cell-manufacturing plants begin operating.

 

Policy support, she said, must extend to mineral refining, cathode-active materials, electrolytes, recycling infrastructure and research. At present, the ACC PLI scheme primarily incentivises battery manufacturing, while recyclers, refurbishers and material-recovery companies receive less support.

 

“If we are talking about the whole battery supply chain, manufacturing is just the end part of it,” she said.

 

Rajat Verma, founder and chief executive of Lohum, made a similar point from the perspective of a company working across recycling, mineral processing and cathode-active materials.

 

"Just focusing on one part of the value chain will never help. One has to create that entire ecosystem within the nation," he told Business Standard.

 

According to him, India has started moving in that direction. Along with the ACC PLI scheme, policies now cover critical minerals, recycling, processing and demand incentives for recycled materials.

 

He said these measures need to work together if localisation is to reduce EV costs.

 

Recycling could also become an important domestic source of lithium, nickel and cobalt over time.

 

Today, its contribution is small because relatively few EV batteries have reached the end of their life. But Verma said recycled materials could eventually account for 40-50 per cent of domestic production, much like recycled aluminium and copper do globally.

 

He added that India also needs raw-material security, engineering talent, domestic equipment manufacturers, local procurement incentives and greater investment in research and development if it wants to build a globally competitive battery industry. 

Testing and quality assurance will also have to expand alongside manufacturing.

 

RT Desai, group field officer for energy and environment at HORIBA India, said stronger validation systems could reduce long-term costs by detecting problems early, improving battery durability and reducing failures and rework. Consumers may consequently see improvements in safety, reliability and battery life before they see substantial price reductions.

When will consumers see cheaper EVs?

There are signs that localisation can reduce costs under the right conditions.

 

Earlier this year, Ola Electric cut the price of its Roadster X+ 9.1 kWh electric motorcycle by ₹60,000. The company attributed the reduction to efficiencies from producing its own Bharat Cells and increasing production at its gigafactory.

 

Experts, however, caution against treating that as the industry norm.

 

Whether manufacturers pass on savings depends on production volumes, competition and the maturity of the supply chain.

 

Ladha said consumers are likely to see the benefits of localisation in stages.

 

- The first will be stronger supply chains and fewer disruptions as more battery cells are produced domestically.

- The second will be better batteries, designed for Indian temperatures, road conditions and driving patterns. Improvements in safety, battery life, charging performance and thermal management are likely to emerge before major price reductions.

- Lower prices will come later.

- New factories must recover their investments, improve production yields and achieve higher utilisation before they can consistently produce cheaper batteries. Deeper localisation of materials and components will also be needed.

 

For now, experts agree that India's battery manufacturing push is unlikely to produce sharply cheaper EVs on its own.

 

The real test is whether India can build an ecosystem that stretches from critical minerals and materials processing to cell manufacturing, testing, recycling and research.

 

If that happens, the biggest gains may not be lower prices immediately, but a more resilient supply chain, better batteries and, eventually, EVs that become more affordable as the industry matures.