Getting charged up 

Getting charged up 

Context:

Union Minister of State with Independent Charge for Power, Coal, New and Renewable Energy and Mines, recently announced that only electric vehicles (EVs) will be sold in India from 2030.

Introduction:

• The current National Electric Mobility Mission Plan (NEMMP) has set a sales target of only 5-7 million EVs and hybrid electric vehicles annually by 2020.
• The Indian automobile market, which include two, three-and four-wheeler, is expected to clock an annual sales figure of around 23 million by 2030.

Key points:

• The transition would require a battery capacity of about 400 GWh (gigawatt hours) each year, equivalent to increasing the current global EV battery production by a factor of five, just to cater to the Indian EV market.
• This gigantic demand for batteries is an ideal opportunity for the domestic manufacturing industry and job creation.
• India has missed several such opportunities to be integrated in the global value chain for solar cells and wafers and electronics manufacturing due to a lack of suitable policy support.
• The annual EV battery market is expected to be around $30-55 billion and India cannot afford to fulfil the demand solely through imports.
• Among battery technologies available in the market, variants of lithium-ion batteries such as lithium-titanate, lithium-cobalt, and lithium-sulphurare predominantly used in electric vehicles.
• Study on India’s critical non-fuel minerals by the Council on Energy, Environment and Water(CEEW), manufacturing lithium-ion batteries would require critical minerals such as cobalt, graphite, lithium and phosphate.

Lithium:

• Lithium is used in pharmaceuticals, ceramics and glass, metallurgy and lubrication industry,though in much  smaller quantities.
• 95% of global lithium production comes from Argentina, Australia, Chile, and China.
• The recent demand surge in the electric mobility market has already resulted in a twofold increase in lithium prices from $4,390 per tonne in 2013 to $ 9,100 per tonne  presently.
• It is estimated by the CEEW that India would require about 40,000 tonnes of lithium to manufacture EV batteries in 2030, higher than the current annual global lithium production of 32,000 tonnes.
• China and the U.S., which have ambitious electric mobility targets, are way ahead in the race to secure lithium supplies.
• China, with the second largest reserves of lithium, is making strategic moves to control the majority of international lithium mining assets.
• China’s Tianqi Lithium holds a majority share in the expansion of the Talison Lithium plant in Australia, which would make it the single largest producer of lithium.
• U.S. based lithium mining companies have already secured mines in Chile, and also hold significant shares in several upcoming mining projects in Australia.
• China and U.S. will control a large share of the lithium production capacity.
• India has long-term trade relations with lithium-producing countries in Latin America through preferential trade agreement (PTAs).
• A recent extension of the PTA with Chile provides India some tariff concessions for lithium carbonate imports.

India’s focus:

• India need to further diversify the supply risk by including lithium in existing PTAs or establishing new PTAs with other lithium-producing countries.
• There is need to formulate policies incentivising domestic public and private mining companies to invest in overseas lithium mining assets.
• India should also focus on creating a vibrant battery research and development ecosystem domestically.
• Research should focus on developing alternative technologies containing minerals with low supply risks and battery recycling techniques to recover associated minerals and materials.
• Constantly pushing research and development for substitutes and alternatives are vital to secure electric mobility.

Conclusion:

Research and smart trade agreements are needed to realise India’s ambitious electric vehicles target. To meet India’s demands amid a global surge in electric vehicle demand, the entire mineral supply chain needs to be overhauled and expanded.