Subsidies Do Not Help Manufacturers In The Long Run, Says Battrixx Managing Director Anand Kabra On EV Production

As the government focuses on the adoption of electric vehicles (EVs) in the country, there has been a push to develop an indigenous manufacturing ecosystem in the sector. Several companies are working to develop their EVs and battery packs which power such vehicles. 
 
Battrixx, a division of Kolsite Group’s Kabra Extrusion Technik Ltd, is one such company which manufactures battery packs. The Rs 1,000-crore Kolsite Group has eight manufacturing locations in the country and has been operating since 1960s. In an exclusive conversation with Outlook Business, Anand Kabra, Managing Director of Battrixx, talks about the budding EV manufacturing ecosystem in the country, FAME and PLI schemes and the overall government support for the development of EV sector. 

Edited Excerpts:
 
Given the government’s push for adoption and production of electric vehicles in the country, what’s your opinion on the manufacturing ecosystem developing in this sector? 

With the government pushing for the adoption and production of EVs in the country, the message for the battery industry is very positive. India is a low-cost market. Yet, the entry level models need an upgrade. And for this, the companies must invest in capital, testing facilities, equipment and automation for battery manufacturing. 

So, there are several variables to account for before the EV ecosystem becomes wholesome in India. Under PM Modi’s leadership, the government has taken several steps to develop and promote the EV ecosystem in India. The Faster Adoption and Manufacturing of Electric Vehicles (FAME-II) scheme has been remodelled for consumers, the Production-Linked Incentive (PLI) scheme for Advanced Chemistry Cell (ACC) has been revamped for suppliers and a PLI scheme for Auto and Automotive Components valued at Rs 26,000 crore has been launched for manufacturers of electric vehicles. 

The government’s push for EVs has already yielded positive results. With the demand for EVs on the rise, a new major industry is likely to evolve, which will bring in more jobs and boost GDP.  The projected rise in the number of EVs on the road has opened up doors for the manufacturing of advanced batteries and this could be one of the largest economic opportunities for the country in the present times. A supportive policy environment is helping attract more investments and aiding EV market growth. 

How has demand evolved in the sector over the past few years — both from the consumers’ and manufacturers’ side? 

Electric vehicles are one of the driving forces in the new global energy economy that is rapidly emerging—and they are bringing about a historic transformation of the car manufacturing industry worldwide. 
 
In 2022, over half of India’s three-wheeler registrations were electric, demonstrating their growing popularity. In a developing economy like India, EVs offer an affordable way to get access to mobility. But, for this to be effective, their electrification is important to support sustainable development, which means a combination of effective policies and private sector investment is needed. For manufacturers, the trends are encouraging as this is having a positive knock on effects for battery production and supply chains. 

What role does Battrixx play in the manufacturing ecosystem of electric vehicles in the country? 

Battrixx focuses on the very things that can save the planet. The company’s sharp focus on green energy systems and solutions is perfectly in keeping with its green philosophy. We are proud that what we do will make the difference between a vibrant, or a bleak future. 

Our green energy solutions aren’t even a futuristic concept. Already, e-vehicles are being seen around geographies that place value on higher purpose. Our Battery Management Systems power these e-vehicles, while our Energy Storage Solutions light up homes and workspaces. 
 
In effect, what we create at Battrixx is not just alternative energy solutions, but building blocks for a green and happy future. 
 
Electric vehicles are being seen as more than just fuel savers—they have the potential to improve quality of life, especially in the polluted and chaotic urban regions. Electric vehicles could also become the stepping stones to smart vehicles that can make cityscapes more efficient and safer. 

Such futuristic concepts are tantalizingly within reach, but require committed participation from all stakeholders concerned—governments, regulatory bodies, car manufacturers and battery-makers. 

To meet ever-evolving customer demands, Battrixx constantly upgrades or acquires new technology and this innovation is powered by a state-of-the-art, in-house R&D centre. 

In our relentless pursuit of the future, we remain steadfastly committed to providing green energy solutions that will help India in its goal of reducing both emission and dependence on fossil fuels. 

Battrixx focuses on not just the carbon footprint, but also impact what we leave on earth—driving range, EV life, high cost of batteries, safety, reliability and recycling at the end of battery life. These are the obstacles our customers face. Our response remains the same: Engineer solutions that meet these challenges head-on. 
 
The government is also exploring new chemistries, such as sodium-ion, solid state battery and advanced new chemistry, where dependence on China will lessen. Battrixx is venturing into a new technology era by exploring sodium-ion and other technologies for collaborations with global partners and localization in India. 

There has been a lot of talk about supply chain resilience and reducing dependence on external markets. In this context, how do you see the EV sector performing? Is it a case of EV development becoming dependent on China? 

Today, EV batteries account for more than one-third of the vehicle’s total cost. Many of the raw materials required for lithium-ion batteries—including lithium, manganese, cobalt, steel, nickel and copper—are increasingly in short supply, which means automakers must look for cheaper and more readily available alternatives. 

For instance, battery manufacturers are already experimenting with sodium, sulphur, solid-state and lithium-air batteries to reduce dependence on more scarce materials. Some automakers are rushing to develop smaller batteries, requiring fewer materials and running more efficiently, while others are focusing on implementing more robust recycling practices. 

China has developed a dynamic 360° strategy to achieve its EV targets—a strategy that includes all aspects of electrification, from sourcing ground materials to production, to distribution, to sales and marketing. It includes incentives for consumers, OEMs and charging providers. 

However, the latest discovery of large lithium reserves in Rajasthan’s Degana is big news because, combined with the estimated 5.9 million tons of lithium found in Jammu and Kashmir, the new-found resources have the potential to change India’s trajectory towards becoming an energy-independent nation. 

India, the third-largest oil importer in the world, currently procures 80 per cent of its oil needs from other countries, which puts a significant strain on the nation’s foreign exchange reserves. By developing its lithium reserves, India can reduce its dependence on imported oil and save billions of dollars in foreign exchange. It isn’t just oil where India loses forex, but is completely dependent on foreign imports for its requirements of lithium, mainly imported from China. This, in the near future, with the reserves found in India, can have a very positive outlook on the EV sector. 

Continuing about the government’s policy, the Ministry of Heavy Industries has said it has no plans yet to introduce FAME-III scheme. How do you see this development? 

In my opinion, every scheme is floated with a specific purpose and it’s only when it is in operation that we get to see the advantages and disadvantages. The government has reason enough not to float FAME-III as it must have studied the effects of such earlier schemes. 
 
Subsidies, in my opinion, in the long run, do not help manufacturers as complacency sets in, affecting innovation. Ultimately, the technological advancement is compromised. If manufacturers get subsidies, they may not want to work upon product efficiency to pull down product cost. 

Subsidies are also not a long-term solution to ensure sustainability. If the EV industry grows rapidly and requires more funding, the question arises whether governments can maintain doling out such subsidies—and how long. If the desired outcomes, such as cost efficiency and an improved product, are affected and EVs cannot compete with fuel-driven vehicles, the effort is lost. 

Subsidies can also hinder incentivising startups or research organisations with bright new ideas if they are not effectively targeted towards companies. The fear of established manufacturers getting the most benefits looms large. 

The government is mostly coming up with a policy to upgrade old commercial vehicles to electric for gathering more carbon credits. Battrixx’s new high-voltage technology—a ‘Make in India’ initiative—will help boost the industry in this respect. 

How has the production-linked incentive scheme been for the EV sector? Is there any other support you are looking for from the government in future? 

I think the Production-Linked Incentive Scheme proposed for RV manufacturers is a welcome step. This, besides boosting employment, has many advantages over FAME. 

The most important reason why the government is prioritising the PLI scheme is that it will help improve the production processes and product quality and, thus, meet the government standards. The consumer directly gets the benefit as more efficient and reliable EVs lead to reduced cost of running the vehicles. 

As manufacturers are getting incentives for all R&D and innovations, besides better battery technologies, they will put in more efforts because the end result is a better product to suit the demands of the emerging market. 
 
Second, PLI is a long-term scheme that ensures enough time for manufacturers to secure investments, plan production and supply chain strategy and gain a strong foothold in the global market. This helps the industry grow and develop in a steady environment over time. As the incentives are directly linked to production, the more the manufactures produce, the more incentive they receive.  
 
Third, PIL schemes boost innovation. With a focus on intensive R&D, better manufacturing technologies come into play. The end result is a unique market space for several players, less dependence on expensive imports and creating more jobs locally. 
 
With increased efficiency, better production and innovative methods, the PILs ensure that the cost of EVs is within reach of consumers. It’s a win-win situation for manufacturer and consumer.