In June, Tirupati-based lead-acid battery maker Amara Raja Batteries Ltd announced an “energy and mobility” strategy, including setting up a new energy business unit. Roughly six months later, in December, its arch-rival Exide Industries Ltd announced that it would set up a new manufacturing plant. Normally, investor eyes would have just slid past both these announcements.
The two companies are not only India’s top two lead-acid battery makers, but also amongst the country’s oldest. Exide’s year of establishment coincides with the very year of India’s independence. Over the decades, they’ve cornered nearly 60% of the auto battery market in India, becoming household names with a robust export market. Exide currently has a market cap of $2 billion, while Amara Raja is worth $1.39 billion, respectively.
This time around, however, the announcements weren’t for Exide and Amara Raja’s traditional business—they were for lithium-ion (Li-ion) cells.
Kolkata-based Exide plans to build a multi gigawatt-hours (GWh) lithium-ion cell manufacturing plant, while Amara Raja’s energy business unit will make Li-ion cells, battery packs, EV chargers, and more. They’re among ten bidders that have applied for the government’s Rs 18,100 crore ($2.4 billion) production-linked incentive (PLI) scheme for advanced cell chemistry batteries announced in May.
As the demand for electric vehicles (EVs) rises, there’s also a growing demand for Li-ion batteries Li-ion batteries Li-ion batteries Li-ion batteries are made up of multiple, connected Li-ion cells, in addition to other components. A Li-ion battery pack is made up of multiple batteries. . Apart from EVs, Li-ion batteries are widely used in telecom towers, mobile phones, and power grids, among others. The Indian government estimates estimates NITI Aayog INDIA’S ENERGY STORAGE MISSION: A Make-in-India Opportunity for Globally Competitive Battery Manufacturing Read more that the country will need a minimum of 60 GWh of Li-ion cells by 2025, and double that by 2030.
The veterans have been caught in this whirlwind—Exide and Amara Raja shares slid 12% and 31%, respectively, in 2021, against a 21% rise in the benchmark index Sensex. Mutual funds, too, have consistently decreased their holdings over the past few quarters. Backed into a corner and with pressure building from investors for months, the jump into the Li-ion segment was a no-brainer. The two are the only companies out of the 10 that applied for the PLI scheme with any battery experience under their belt.
That may not be enough, however—the lithium space is a different ball game altogether as production requires new chemistries and new ways to manufacture.