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Epsilon first Indian firm to invest $650 mn on EV battery parts plant in US

Move follows India-US minerals pact; firm to set up 50,000 mtpa plant with revenue generating potential of $500 million at full capacity utilisation

ev battery

Nitin Kumar New Delhi
With India entering the United States-led Minerals Security Partnership (MSP), Mumbai-headquartered Epsilon Advanced Materials (EAM) has become the first India company to set up a battery material unit in the US.

The announcement comes days after Prime Minister Narendra Modi’s three-day state visit to the US. The battery materials company is planning to invest $650 million to set up the synthetic graphite anode manufacturing facility. The unit is expected to be commissioned by 2026.

The proposed plant, with a targeted annual capacity of 50,000 tonnes, will use cutting-edge green technologies to produce high-capacity anode materials and provide critical battery materials to power more than one million EVs.

Though EAM is currently evaluating multiple locations across the US for the proposed unit, it has already signed strategic supply agreements with local raw material suppliers and transport partners to create a seamless supply chain network with focus on minimising carbon emissions and reducing transportation costs, Epsilon said in a statement on Monday.

“This investment is aimed at building strong US-India trade ties and contributes towards creating cleaner and sustainable energy alternatives,” Epsilon said.

Through this unit, EAM will produce high-capacity synthetic anode materials, customised for specific cell chemistries. The firm is also expected to generate revenue of over $500 million at full capacity by 2031 along with creating more than 1,500 direct and indirect employment opportunities at this facility.

“Our investment in the US is driven by the aim of energising the world with clean energy solutions. The battery value chain is a critical enabler to electric mobility adoption, and we are channelising our efforts to localise the battery manufacturing ecosystem. This will help automakers leverage EV subsidies under the US Inflation Reduction Act (IRA) and pass on the benefits to the end-user,” Vikram Handa, Founder and Managing Director of Epsilon Advanced Materials said.

The United States announced the IRA to boost domestic manufacturing of batteries, encouraging the supply chain of battery-critical minerals procured locally or from free-trade partner countries. A tax credit of $7,500 has been announced for EVs made with domestically manufactured batteries. The act aims to reduce the US' reliance on China for securing critical minerals for battery making.

As the US mandates that sourcing critical battery materials from China will not qualify for the $7500 credit per EV, India companies are aiming at getting the maximum benefits under the new partnership.

The US government has set up an ambitious goal for EVs with the vision to convert 50 per cent of vehicle sales to electric by 2030 and generate 1,000 GWh of battery capacity. With this plant, EAM will contribute to the US EV roadmap by ensuring a local supply chain for batteries.

India Energy Storage Alliance (IESA), thinks Epsilon's entry into the US will not only boost the supply chain for critical minerals but also give India the edge in developing its EV ecosystem. “With this, Epsilon Carbon becomes the first Indian company to announce an investment of in a greenfield electric vehicle battery component factory in the US. We believe this will definitely create huge opportunities for Indian firms in the battery supply chain industry,” said Debi Prasad Dash, Executive Director, IESA.

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First Published: Jun 26 2023 | 6:38 PM IST

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