EV Adoption To Hit 20% By FY30, Says CareEdge Ratings Report

India has set an ambitious target to meet 50% of its primary energy requirement from renewable sources by 2030. To achieve this, India needs to balance Electric Vehicle (EV) penetration with grid-level energy storage capacity. This calls for a transition to meet India’s increasing demand for advanced chemistry batteries, particularly lithium-ion (Li-ion) batteries, due to the limitations of traditional batteries like lead-acid and nickel-metal hydride, according to a recent report by CareEdge.

Previously, the high cost of Li-ion batteries was a major barrier to large-scale adoption. However, the report found that the cost dropped from USD 780/kWh in CY13 to USD 139/kWh in CY23, driven by technological advancements and economies of scale. This has made Li-ion batteries the dominant battery technology today.

Currently, India imports almost its entire supply of Li-ion batteries. However, CareEdge Ratings projects India’s import dependency to decline to approximately 20% by FY27, despite significant demand growth due to large-scale integrated capacities being developed for Li-ion battery storage. At present, the domestic demand of ~15 GWh for Li-ion battery storage is largely met through imports of Li-ion cells/batteries. CareEdge Ratings expects Li-ion battery demand to grow exponentially to ~54 GWh by FY27 and further to ~127 GWh by FY30.

 

The report associates this growth in demand with anticipated increases in EV penetration and the decarbonization of electricity grids, which can be further supported by ambitious government targets and incentives from both central and state governments. The Government of India (GoI) has s et a target of achieving 30% EV penetration by 2030 (as a percentage of annual sales). However, CareEdge Ratings projects a 20% EV penetration by FY30, due to slower-than-expected EV adoption in the 4-wheeler segment. Additionally, consumer preference for hybrid 4-wheel vehicles and the slow development of EV charging infrastructure are also contributing factors. In terms of battery energy storage systems (BESS), CareEdge Ratings expects cumulative grid-level energy storage capacity to reach around 100 GWh by FY30.

Cost of Lithium-Ion Batteries

The study found a drop in the cost of lithium-ion batteries over the decade ending in CY23, due to technological advancements and greater economies of scale. These factors have supported faster adoption across end-use sectors and growth in demand. The report also highlighted the recent addition of giga-scale integrated capacities as a key factor contributing to the decline in India’s import dependency.

The GoI has already allocated 40 GWh of integrated battery capacity under the PLI scheme, with an additional 10 GWh expected to be awarded shortly. Additionally, existing conventional battery manufacturers and other companies in India are expected to set up battery capacities outside of the PLI scheme.

Import Dependency to Decline by 20% by FY27

A large portion of these capacities is expected to gradually come online by FY27. CareEdge Ratings expects India’s import dependency to decline to ~20% by FY27 due to these capacity additions.

“The demand for lithium-ion battery storage in India is expected to grow significantly, driven predominantly by the shift towards EVs and renewable energy storage requirements. Consequently, India’s dependence on imports is expected to decline sharply to ~20% by FY27, from near-full dependence currently, due to giga-scale integrated battery capacities coming online domestically. Previously, progress on domestic capacity for Li-ion battery manufacturing was slow due to declining costs driven by evolving technology. However, domestic capacity is now expected to expand, with the understanding that lithium-ion technology has reached maturity. Additionally, Li-ion chemistries rely heavily on scarce minerals such as lithium, cobalt, and nickel, for which India has limited natural reserves. Domestic players, therefore, need to secure long-term supply sources from countries with substantial reserves and focus on battery reuse and recycling, which will provide environmental benefits and reduce price and supply risks associated with mineral imports. Furthermore, the cost-competitiveness of Indian manufacturers, in light of capacity expansion and the pricing strategies of large global integrated players, especially Chinese manufacturers, will be a key factor to monitor,” said Hardik Shah, Director at CareEdge Ratings.