India Contemplates A Lithium-ion Battery 'Breakup' With China Amid EV Sales Spurt

A senior official has revealed that a section within the Indian government is discussing plans to review India’s dependence on China for lithium-ion batteries used in electric vehicles (EVs).

What Happened? According to Economic Times sources, the change in plan is being mulled after India’s total lithium-ion imports surged to $2.31 billion (₹18,958.75 crore) from April 2022 to January 2023, with around 75% of the imports coming from China.

The move is aimed at reducing India’s reliance on China for this critical component of EVs, said the official speaking to ET. The discussions have taken on greater significance following reports that China is considering the prohibition of exports of certain rare-earth elements and high-performance magnets, which are used in EV motors, thus strengthening its monopoly in EV motor manufacturing.

Why it Matters? According to a recent report by the Global Trade Research Initiative, there is a need for a life cycle impact evaluation of the EV sector on jobs, pollution levels, imports, and economic growth. The report highlighted that EV manufacturing in India will increase the country’s dependence on China for raw materials, mineral processing, and battery production.

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The report also states that China has bought the largest lithium mines in Australia and South America, processing more than 60% of the lithium produced globally, as well as 65% of cobalt and 93% of manganese.

The auto component industry has also expressed its concerns regarding the high dependence on China, with an executive stating that although India now notionally has lithium reserves, industry risks cannot be ignored.

India, therefore, needs to consider exploring other green sources to power its future vehicles and reduce its dependence on China for this critical component. A strategic shift towards alternative sources could be beneficial for the economy, employment, and overall environmental goals.

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