Spreading risks in sourcing raw materials for electric vehicle (EV) manufacturing is “very critical” and the government can play a key role by enabling access to these from multiple locations worldwide, said Vivek Srivatsa, chief commercial officer at Tata Passenger Electric Mobility, on Friday while stressing the need for faster localisation, especially of batteries.

Photograph: Rajesh Karkera/Rediff

He was speaking during a panel discussion at BloombergNEF summit.

India’s EV ecosystem remains heavily reliant on China for critical components — particularly lithium-ion cells for batteries and rare-earth minerals used in traction motors.

In April this year, China imposed export restrictions on rare-earth magnets, creating supply bottlenecks for EV makers.

Since these magnets are vital for traction motor’s performance, the neighbouring country’s indirect ban triggered warnings of production slowdowns across the EV sector in India.

Asked about his opinion on localisation of batteries, Srivatsa replied: “I think it is a bridge we have to cross sooner or later, considering that the government has firmly embraced electric mobility, and they want to further it.

“The logical next step is to really push localisation.”

“…the traditional internal combustion engine (ICE) category cars and their components took a longer time to achieve a very high level of localisation.

“We are still talking about 90-95 per cent of localisation in the best case scenario (for ICE cars).

“It took years. For EVs, the speed of localisation has to be much faster,” he added.

He stated that it is helpful that an EV has fewer components than an equivalent ICE car but the challenge is that a “battery is a tough one to localise”.

Tata Motors (TaMo) is one of the key electric car makers in the country.

Srivatsa stated: “I think spreading our risks in terms of where we source our core materials from is very critical.

“That is where the government can really help us, allowing us to access several fundamental components from various locations around the world.”

However, there has to be strong support from the government to help localise the other components — whether in terms of “bureaucracy” or “incentivisation” — further to the production-linked incentive (PLI) scheme that is already present.

“It is imperative that localisation has to be done fast. It has to be very well orchestrated between the industry and the government to accelerate and reach a high level as soon as possible,” he noted.

“There are two benefits. It is a geopolitical issue, so our dependence (on other countries) comes down.

“The other benefit of localisation is cost control and cost savings. So, it is a bridge we have to cross very fast,” he stated.

In June this year, Tata Motors sold 4,708 electric cars in India, recording a growth of just 2.48 per cent year-on-year (Y-o-Y), according to data released by the Federation of Automobile Dealers Associations (Fada).

JSW MG Motor sold 3,972 electric cars in India in the same month, recording a growth of 168.38 per cent Y-o-Y, according to Fada data.

Chinese auto major SAIC Motor holds 49 per cent stake in JSW MG Motor.

Plugging the gap

• According to TaMo, pushing localisation is the next logical step for the govt, having embraced electric mobility
• EVs have the advantage of having fewer components than equivalent ICE cars
• TaMo cites geopolitical and cost factors in favour of localisation
• Govt needs to move beyond the PLI scheme, and incentivise the localisation drive, it suggested