India's dreams of becoming a world leader in manufacturing electric cars faces one big nightmare: it has very limited supply of lithium.
Known for its heavily polluted cities, India is setting its sights on new electric-powered cars to lessen the impact brought about by diesel-powered vehicles.
But with very scarce inventory of lithium -- the main chemical element needed to build batteries to power electric cars - the country is forced to buy this key mineral elsewhere.
According to Jasmeet Kalsi, director at Manikaran Power Ltd, India's electric vehicle market will thus count on imports from China of lithium chemicals used to make battery cells.
China has a booming lithium and battery cell supply network -- while India has none, Kalsi said.
India has launched a new set of policies last year to promote clean energy, including a $1.4 billion project to make India a manufacturing center for electric vehicles.
While the country's electric vehicles form a tiny segment of the market - with approximately 3,000 EV units sold in 2018 compared with the 3.4 million fossil fuel EVs sold in the same period - India is expected to become the fourth biggest country market for electric vehicles by 2040, BloombergNEF reported.
India is laying down several proposals to manufacture lithium-ion battery facilities. In contrast, China -- the world's biggest electric vehicle market -- dominates the battery supply business.
China has about 75 percent of battery cell output capacity, and Chinese companies have massive control in local and foreign battery raw materials and processing plants, BloomberNEF disclosed.
Companies in India have been trying to prospect for shares in overseas resources, and on-shoring more raw materials production capacity for the country, Sophie Lu, chief of metals and mining for BloombergNEF, said.
A joint partnership called Khanij Bidesh India Ltd. has been forged between three government-controlled entities -- Mineral Exploration Corp National Aluminium Co., and Hindustan Copper Ltd. -- to source out lithium and cobalt mines from overseas firms.
India's second-biggest traditional battery maker in terms of market capitalization - Amara Raja Batteries Ltd. -- is set to establish a lithium-ion manufacturing facility, while Suzuki Motor Corp. along with Denso Corp. and Toshiba Corp. will build a lithium-ion battery assembly complex.
Meanwhile, Manikaran signed a deal with Australia's Neometals to jointly finance the development of a lithium facility in India with a capacity of 10,000 tons to 15,000 tons. However, Kalsi pointed out that despite the agreement, this capacity is not enough to meet India's requirement of 200,000 tons of lithium hydroxide in the next 10 years.
