South Korea's LG Energy Solution is in talks with JSW Energy to manufacture batteries for electric vehicles and renewable energy storage in a joint venture that would need an investment of over $1.5 billion, two sources told Reuters.
The two companies have signed an initial agreement to form an equal partnership in which LGES will contribute the technology and equipment for making batteries and JSW will invest money, said one of the sources.
The discussions include setting up a plant in India with a total capacity of 10 gigawatt hours of which JSW is likely to use about 70% for energy storage and electric vehicles and LGES will take the remainder, both sources said.
"LGES wanted a partner in India and JSW is interested because it is coming up with its own brand of EVs starting with buses and trucks, and later on cars," said the second person.
The agreement is non-binding and both companies expect to finalise the talks over coming months, said the two sources who have direct knowledge of the discussions but declined to be identified as the talks are still private.
"We are exploring various potential business options and monitoring market situation closely," LGES said in a statement, adding that it does not have any specific plans for India.
JSW Energy declined to comment.
Reuters reported last year that LGES and JSW were in early talks to build batteries together in India.
For LGES, which supplies Tesla, General Motors and Hyundai, the joint venture will establish its manufacturing presence in India where it is the top battery supplier to e-scooter makers like Ola Electric and home-grown rival TVS Motor.
It also gives LGES an opportunity to lower its risk of manufacturing in a country where the EV market is still in its infancy. Slowing EV demand elsewhere in the world has already forced it to reduce capital expenditure next year.
For JSW, whose billionaire chairman Sajjan Jindal has publicly aired his desire to build EVs, this will be an opportunity to secure supplies locally for its energy business while bringing down the cost of its EVs.
The Indian steel-to-energy group last year formed a joint venture with China's SAIC Motor giving it a 35% stake in the Chinese carmaker's India unit, MG Motor, which it is now helping grow.
"JSW has proposed a 25-year agreement to LGES," said the second person, adding that the Indian company continues to engage with other battery players as well.
The companies would like the plant to be operational before the end of 2026 and expect to make a final decision in about 3-4 months, the first person said.
If the venture goes ahead it will be a win for India's Prime Minister Narendra Modi's government that is offering companies billions of dollars in incentives to boost local manufacturing of clean cars.
Domestic carmakers Tata Motor and rival MG Motor dominate India's electric car sales, while home-grown brands like Ola, TVS and Bajaj Auto lead e-scooter sales.
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