Tata Motors Says 20 Percent Rise in Battery Cell Cost Increasing Pressure

Tata Motors, India’s top-selling electrical carmaker, mentioned the price of battery cells had elevated by round 20 p.c due to a world surge in uncooked materials costs, primarily lithium, placing stress on the corporate in the short-term.

Shailesh Chandra, managing director of the passenger autos and electrical mobility subsidiaries, advised Reuters that cell costs have been rising over months and he expects them to stay excessive for a few yr.

“Immediate impact seems to be about a 20 percent kind of an increase which will have short-term pressure. This should moderate within a year and then start coming down,” he mentioned.

Chandra didn’t touch upon whether or not this could have an effect on the corporate’s gross sales or profitability however mentioned that demand for “green personal mobility” was rising sharply and he anticipated to offset a few of the prices by growing using regionally sourced parts in its automobiles.

Automakers globally are going through inflationary pressures as a result of surging prices of nickel, cobalt and lithium which are used in making batteries — the most costly a part of an electrical automobile (EV) — as demand outstrips provide.

This has been made worse by Russia’s invasion of Ukraine, and analysts say it threatens to sluggish the development of falling battery costs which might hamper the broader adoption of EVs, particularly in price-sensitive markets like India.

In India’s nascent EV market, electrical automobiles make up just one p.c of whole automotive gross sales. Excessive battery costs and an inadequate charging community are the primary explanation why there are few takers, and why extra carmakers are but to launch electrical fashions.

Spot costs for lithium carbonate, which is often used to make lithium-ion batteries, surged to over $70,000 (roughly Rs. 53.2 lakh) per tonne in March 2022 from about $10,000 (roughly Rs. 7.6 lakh) a yr earlier, in response to information from business forecaster Benchmark Market Intelligence.

“Going forward this inflationary impact is expected to continue,” mentioned Manish Dua, senior analyst at Benchmark.

Tata not too long ago raised the value of its Nexon electrical SUV in India by over $300 (roughly Rs. 22,800) — a 2 p.c rise for the bottom mannequin, following comparable strikes globally by Tesla Inc and China’s BYD.

Even so, Tata, which has over 90 p.c share of India’s electrical automotive market, expects gross sales of its electrical automobiles to develop over four-fold this fiscal yr from 4,200 items final yr.

The EV maker sources lithium-ion batteries for its automobiles from Tata AutoComp Methods, which has a three way partnership with China’s Guoxuan Hello-Tech to supply them regionally.

Chandra mentioned as battery recycling features tempo there will likely be entry to uncooked supplies past mines and that may offset a few of the value pressures.

“Short term spikes will happen. It is good to focus on the secular long term trend which will keep going down,” he mentioned.

© Thomson Reuters 2022


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