We are going ahead with our EV investments in a phased manner: Amara Raja Executive director

Harshavardhana Gourineni, Executive Director, Amara Raja Energy & Mobility

While homegrown battery maker Amara Raja Energy & Mobility Limited has applied for benefits under the production-linked incentive (PLI) scheme for making advanced chemistry cells for battery electric vehicles (BEVs), a senior manager told Moneycontrol that its plans for the EV business do not hinge on receiving government aid. In fact, executive director Harshavardhana Gourineni in an exclusive interaction said the company is moving ahead on its investments in building a gigafactory in Telangana.

Gigafactory, a term popularised by US EV maker Tesla, refers to a facility that is primarily focused on green technology products.

“Even though we bid for the PLI scheme, we haven't been granted certification yet. We'll be hearing back (from the government) on that. But I would like to note that our business model and prospects are not based on receiving these incentives,” Gourineni said during the chat with Moneycontrol.

In 2021, Amara Raja created a step-down subsidiary—Amara Raja Advanced Cell Technologies (ARACT)—which is dedicated to building battery packs and lithium-ion cells for EVs. In December 2022, the Hyderabad-based company announced that it would be investing Rs 9,500 crore to set up a 16 GWh lithium-ion cell manufacturing-cum-battery pack assembly unit in Telangana.

“We are going ahead with our investments in a phased manner to be able to bring in the right cell technology, tropicalise them to the Indian climate and bring solutions to our esteemed partners. However, cell manufacturing from a pilot level to a commercial scale will take time,” added Gourineni,

The company will begin the first phase, the 5 GWh battery pack assembly unit, in the near term. As he put it, “Phase-wise, we are addressing the EV market. We have very strong ongoing relationships with all the OEMs (original equipment manufacturers) here in India and plan to serve them from our second approach arena (gigafactory).”

ARACT had recently announced that it had inked a technical licensing pact with Gotion-InoBat Batteries (GIB) EnergyX Slovakia in order to avail the licence and technology to make lithium ferro phosphate for lithium-ion cells.

“The partnership will assist us in developing a local ecosystem for both cell manufacturing, bringing in manufacturing know-how and participating in these key growth areas in EV (market), which is largely two-wheeler and three-wheeler at the moment. We are setting up for longer-term collaborations for four-wheeler and commercial vehicles as well,” said Gourineni.

In his view, the EV industry is “fast growing” but is still “nascent”. “We're assembling batteries and establishing ourselves as a dominant player from the outset,” Gourineni stressed.

When queried on the budget announcement on customs duty cuts on minerals like lithium, copper, etc., Gournieni said that any advantage the EV battery making industry can get on raw material sourcing would be very beneficial. However, he mentioned that it’s too early to comment on how it will impact the economics of cell manufacturing in the country. He also said that the company doesn't see any specific advantages of budget schemes announced for Andhra Pradesh but added that any spending on infrastructure in the state will be “additional tailwinds” for the company.

Amara Raja Bullish on Lead-Acid Batteries

On its traditional business, Gourineni said that Amara Raja continues to be bullish on lead acid batteries driven by export opportunities, especially in lucrative markets like North America where it is eyeing a 5-10 percent market share in the coming years, as well as growth of industries such as data centres.

On the industrial side, talking about exports, he added that the group has  made some initial inroads into Europe and South America for its Quanta range of batteries, which cater to higher wattage applications and data centres UPS, and is looking to get much deeper there. "Traditionally, for both automotive and industrial, we've had very good market penetration market shares across what we term as Indian Ocean rim, which is Southeast Asia, Middle East and Africa. We continue to stay strong there," said Gourineni.

Being one of the largest manufacturers of lead-acid batteries for both industrial and automotive applications, the company is betting big on next-generation technologies AGM Batteries: AGM (Absorbent Glass Mat).

“AGM is a technology that's in dire need these. The Start Stop nature has placed a huge demand on the battery to not only continuously crank the vehicle, but also maintain electrical loads even when the vehicles turned off. We have released this technology to the global markets in the previous financial year, and we will be bringing it into the domestic market later this year,” he said

In his view, these batteries are designed to meet the complex requirements of modern automotive technologies such as start-stop systems and Hybrid Electric Vehicles (HEVs).

“They are increasingly being adopted in many western markets like Europe and America and is slowly gaining prominence in the Indian sub-continent due to their superior performance and reliability, particularly in automotive and industrial applications," claimed Gourineni.

He also affirmed that such high-end lead acid batteries continue to see usage even in EVs for auxiliary power purposes. “It has become very clear that there will always be a role for lead acid batteries, not just replacement for ICE (internal combustion engine) and hybrid vehicles, but even in the new energy landscape with electric vehicles," noted Gourineni.

According to him, the global lead acid industry is set to double to about $100 billion by 2033-34 and the company aims to get a significant slice of that pie.