Epsilon to challenge China's dominance in EV battery cell materials

May set up ₹9K cr plant for making 100K tonnes of graphite anode

Rare earth magnet is not the only area where the Chinese dominate the world. They also control two other crucial areas of electric vehicle (EV) battery cell — manufacturing of graphite anode, required for lithium-ion batteries, as well as cathode powder, to make lithium iron phosphate (LiFePO4 or LFP) battery. LFP batteries go into buses and commercial vehicles (CVs), and are considered safer. 

But an Indian company, Epsilon Advanced Materials, is trying to break into the market. It has finalised plans to set up a plant to manufacture these in Karnataka. To begin with, it is setting up a 100,000 tonnes per annum (tpa) of synthetic graphite anode-making plant (having an initial capacity of 30,000 tpa) with a total investment of ₹9,000 crore, which will make it the largest non-Chinese operation in the world. 

Vikram Handa, managing director of Epsilon, says: "The 30,000 tpa plant will be able to power battery cells of 30 GWh. We expect commercial rollout by 2027, and it will be the largest non-Chinese facility in the world." 

Handa says current demand in the country is limited as battery cells are imported directly. But Epsilon products have been qualified and cleared by global cell-makers in Japan, South Korea and the US. This took four to five years. In 2021, it started the process of qualifying with customers but they wanted the product to be churned out in commercial quantity. So, Epsilon set up a plant with a capacity of 2,000 tpa in India, which went into production in early 2024. This helped companies to test and then qualify them as part of their global supply chain, and place bigger orders. 

"As the investment is high, we are in the final stages of signing up contracts with foreign companies, which will assure takeoff from the plant for a fixed period of time. You cannot build a plant and then look for customers. We are talking to private equity and strategic investors to raise money for the first phase of the plant," says Handa. 

He plans to initially keep around 25 per cent of the capacity for India as more battery cell players have got into the business and many like Ola Electric and Exide have already started production or building their cell plants. As part of the plan, Handa is also looking at setting up a facility of around 60,000 tpa in two phases in the US — 30,000 tpa of that by 2027 — to be closer to his clients. The US demand is over 500,000 TPA, he says and estimates that the Indian market, once battery cell-makers start manufacturing commercially, would be around 15,000 tpa. 

Of course, Handa says, while China has scale and can play the pricing game, for many global cell players, it is a strategic call as they do not want to depend only on China for their crucial battery cell components. "The graphite anode story is similar to that of the rare earth — 99 per cent of graphite processing happens in China and since last year, Beijing has applied export licensing regime on synthetic graphite anodes, just like that on rare earth magnets," says Handa. 

In LFP too, Handa says his company is planning a 100,000 tpa cathode powder plant, also in Karnataka. But this will be in the later phase, which will take the total investment to ₹15,000 crore. By comparison it is small, considering that China already has over 20 million tonnes per annum  capacity. 

For LFP, Epsilon has bought a German company, which has patents and the required technology.