Ashok Leyland Ltd., flagship of the conglomerate led by the billionaire Hinduja family, is banking on China’s third-largest battery maker CALB Group Co. to help in its ambition of gradually mastering the technology behind lithium-ion cells.
India’s second-biggest maker of trucks and buses, which signed a 20-year agreement with CALB earlier this month, will start with importing cells from its Chinese partner and learn the process of assembling them into packs, Ashok Leyland’s Chief Executive Officer Shenu Agarwal said in an interview. The automaker will gradually seek the capability to design and manufacture lithium-ion batteries domestically, he added.
Ashok Leyland’s collaboration with a Chinese cell-making behemoth, if successful, could serve as a test case for some of the largest Indian conglomerates. Reliance Industries Ltd. and the JSW Group are among the companies also pursuing tie-ups with Chinese firms for battery technology that doesn’t exist locally.
India needs to tap Chinese prowess to accelerate its green energy goals even as it pushes for strategic self-reliance in critical sectors. While Beijing has put curbs on exports of rare earth magnets and technological know-how, the recent thaw in bilateral relations has stoked hopes of expanded business ties.
“We are not really an EV player if 70% of the components come from outside,” Agarwal said, adding that the company is looking to forge partnerships with other firms as well to master the battery value chain.
The Chennai-based firm, as part of its tie-up with CALB, plans to invest more than 50 billion rupees ($563 million) in seven to 10 years to manufacture next-generation batteries for everything from cars to grids. Ashok Leyland, one of the world’s top bus manufacturers, is already importing battery packs from CALB.
“Given its sheer size and geographical proximity, India is an especially attractive destination for investment from Chinese auto and battery manufacturers,” Komal Kareer, an BloombergNEF analyst said. India’s burgeoning electric vehicle market and growing energy storage sector present a significant opportunity for Chinese companies, she added.
Deliberately Cautious
Initially, CALB will supply cells while Ashok Leyland will focus on developing pack-assembly expertise, including ways to manage heat generated by the electronic components and integrating software in the design — with guidance from the Chinese company.
The company’s approach is deliberately cautious, Agarwal said, adding that even leading Chinese manufacturers still grapple with wide variations in factory efficiency. “Process is even more important than technology in the beginning,” he said.
The two companies have not yet defined every phase of their partnership and aim to “do whatever is permissible by the law of the land,” Agarwal said.
The South Asian nation is expected to become the third-largest battery market in the world with demand expected to grow 19 times by 2035, according to estimates from BloombergNEF.
Businesses in India had begun scouting for partnerships with Chinese firms even before bilateral ties improved with Indian Prime Minister Narendra Modi and Chinese President Xi Jinping’s Aug. 31 meeting.
Billionaire Gautam Adani has been exploring a potential battery manufacturing tie-up with EV giant BYD and visited the world’s biggest battery maker Contemporary Amperex Technology Co.’s facilities in China earlier this year. Tycoon Sajjan Jindal’s JSW Group has an agreement with Chery Automobile Co. for electric-vehicle technology and components, Bloomberg News reported in July, citing people familiar with the matter.
Supportive Role
Ashok Leyland will initially make battery packs for its own vehicles, but expects to supply to other automakers, including two-wheelers and three-wheelers, as well as for grid-scale storage, within two to three years.
The company also plans to build an India-based research and development hub focusing on battery innovation, packaging, and materials science, with CALB playing a limited but supportive role, Agarwal said. It sees the rapidly growing market in battery energy storage systems as the biggest opportunity.
The ultimate ambition is to design and develop lithium-ion cells in India — a milestone that will take at least five years, Agarwal said, adding that the company’s strategy is to build capability and be ready when the market reaches a tipping point.
Ashok Leyland is betting that phased learning will put it in a stronger position than rivals that rushed into cell manufacturing. “Batteries are a black box today. No one currently understands batteries in India,” he said. “This technology needs a lot of patience.”
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