Suzuki, Toshiba, Denso to make EV batteries in India
JV to be set up this year, manufacturing to start at the earliest
Suzuki Motor Corp., parent of India’s largest car maker Maruti Suzuki India Ltd, on Friday said that it will form a joint venture with two Japanese firm Denso Corp. and Toshiba Corp. to produce lithium-ion batteries for electric vehicles in India.
The joint venture company will be established in 2017 and shall start manufacturing at the earliest. The initial capital expenditure will be 20 billion Japanese yen ($184 million).
“The joint venture company will be capitalized at 2 billion Japanese yen, with the planned participation ratio of SUZUKI 50%, TOSHIBA 40% and DENSO 10% respectively,” Suzuki Motor said in a statement.
“The battery pack manufacturing joint venture by the three companies will realize stable supply of lithium-ion battery packs in India in the course of promoting sustainable cars in the country and will contribute to ‘Make in India’ initiative by the Indian Government,” Suzuki Motor said in a statement.
The move will be crucial for the success of India’s electric vehicle pursuits as it will bring down the cost of batteries and prop up sales of electric vehicles in a country, where vehicular pollution has come under severe scrutiny from the Indian judiciary, government as well as nongovernment organizations. Curhelp rently, lithium ion batteries account for 50% of the cost of an electric vehicle, making them in exorbitantly expensive as compared to traditional cars, and they are mostly imported from China.
Pawan Goenka, managing director of Mahindra & Mahindra Ltd—which has pioneered electric vehicles in India—said anything that builds an ecosystem for electric vehicles in the country is “delightful”.
“We would welcome such a move. We are doing our bit by building powertrains, vehicles. Anybody who contributes to charger, batteries, we will be very happy to see that as they will build the ecosystem for the country. If Suzuki aims to bring down the battery costs, that’s very delightful,” Goenka said.
In India, higher attention is being paid to environment, and new CO2 standards for automobiles is planned to be introduced. In the Indian automotive market where compact cars are the mainstream models, introduction of sustainable technology suitable for such affordable cars is required. Such steps will also India bring down its dependence on fossil fuel. The country imports around 80% of oil that it consumes. India’s energy import bill is expected to double from around $150 billion to $300 billion by 2030.
To be sure, India has an ambitious plan to sell six million electric vehicles by 2020 and the Narendra Modi-led government has expressed its desire to have an all-electric fleet of vehicles by 2030.
Currently, electric vehicle sales are low in India and rose 37.5% to 22,000 units in the year ended 31 March 2016 from 16,000 in 2014-15; only 2,000 of these were cars and other four-wheelers, according to lobby group Society of Manufacturers of Electric Vehicles.
But Abdul Majeed, partner and national auto practice leader at Pricewaterhousecoopers, believes that electric vehicles will become a trend in the country.
“Reality today is that regulators and environmentalists are so active that manufacturers have a very small window left. They can’t continue to be on a wait and watch mode,” Majeed said, adding that cost of batteries and charging infrastructure are two big challenges for the success of such vehicles.
“Once too many vehicles come on the road, infrastructure will be created. But the bigger challenge is the battery cost, if that comes down, rest will follow,” he added.