Localising anode production is crucial to enhancing the resilience, competitiveness, and sustainability of India’s EV battery value chain
India has fast paced its transition towards sustainable mobility, keeping in mind the bigger climate goal to become a net-zero economy by 2070. However, a lot depends on localisation of essential components that are the driving force behind such clean mobility options like Electric Vehicles. But the reliance on imports for key components like lithium, cobalt, and graphite that power EV batteries poses significant challenges like supply chain vulnerabilities and price fluctuations, especially given the shifting geopolitical landscape.
At the core of this transformation, are the lithium-ion batteries which power EVs, accounting for about 40-50% of the vehicle cost. Among the battery components, anode, the second most valuable component after cathode, plays a critical role in ascertaining the vehicle’s performance, efficiency, and cost, apart from influencing the battery charging speed.
While the Indian government has been proactively promoting and hand holding the localisation of Advanced Chemistry Cell (ACC) through Production Linked Incentives (PLI), there is also a need to focus more on cell component localisation, according to an issue brief by the OMI Foundation. With the demand for EVs on the rise, it also becomes critical and strategically important to address the need for advanced and efficient anode materials, to put in place a self-reliant battery value chain in India.
The anode is typically composed of natural graphite or synthetic graphite and works like a conduit for lithium ions during the charge and discharge cycles of a lithium-ion battery. “During charging, lithium ions migrate from the cathode to the anode, where they become intercalated within its structure. Conversely, during discharge, these lithium ions move back to the cathode, releasing energy in the process. This movement of lithium ions between the electrodes drives the battery's performance, enabling it to efficiently store and release energy as required,” the OMI issue brief explained.
Quoting the Benchmark Intelligence, it said China controls 74% of the global supply chain of graphite anodes, with India mainly dependent on its imports. India’s EV battery supply chain is heavily dependent on countries like China and South Korea, with the former being the biggest exporter of lithium-ion cells for India.
“China and Hong Kong accounted for around 84% of the imports, while South Korea accounted for around 9% of total lithium-ion Imports in 2023-24.,” it said, adding that this dependence makes it important to enhance the sustainability and competitiveness of India’s EV battery value chain.
Fig 1: Graphite powder, used for battery paste, is pictured in a Volkswagen pilot line for battery cell production in Salzgitter, Germany, May 18, 2022. REUTERS/Fabian Bimmer/File Photo
What Makes Anode Localisation Crucial for India
The study explains that a lithium-ion cell comprises four key components - the anode, cathode, separator, and electrolyte. The anode accounts for approximately 15% of the total battery cost for lithium iron phosphate (LFP) battery chemistry. “India already possesses an established industry for producing graphite electrodes, which shares some similar processes with anode material production. Additionally, raw materials for synthetic graphite can be sourced from existing industries such as petroleum and steel,” it said.
Explaining further, it said that graphite, which can either be natural or synthetic, is the most used anode material globally due to its “low cost, abundance, high energy density, and structural stability”. Derived from the ore, the natural graphite is mined in flake form and processed into ultra-high purity carbon to convert to battery-grade graphite i.e. spherical graphite. On the other hand, “synthetic graphite derived from meso coke offers good conductivity, stability and cycle life. It also provides opportunities to tailor electrochemical performances to customer needs,” it said.
What makes it ideal for India to pursue localisation of anode is the fact that it possesses reserves of natural graphite while its synthetic counterpart can be produced from “by-products of existing industrial processes in the petroleum and steel industries”. This makes it a fit case for localising anode production. However, to meet the projected 2030 demand of 286 kilotonnes, India needs to substantially scale up its effort and put in place robust policy enablers.
Key Measures to Localise Anode Production in India
The issue brief outlines some important measures which can overcome the bottlenecks towards localisation of anode production and also help India become a key player in the global EV market. Some of them are given below:
- Providing Incentives and Support: To start off, it advocates providing capital subsidies and access to low-cost financing to offset the high expenditure needed to establish anode component manufacturing. With India likely to need 286 KT of anode production annually, “implementing tax incentives and production-linked incentives (PLIs) can stimulate investment,” it said.
- Exploration of Graphite: According to the Ministry of Mines, India has 203.6 million tonnes of graphite reserves classified in the remaining resource category, which indicates they are yet to be fully identified as mineral resources. “This highlights the need for a focused and detailed exploration of graphite reserves across the country to better assess these valuable resources,” it said.
- Anode Supply Chain: Promotion of Vertical Integration: The brief recommends encouraging vertical integration within the graphite anode supply chain by supporting the “development of anode industrial clusters that span from mining through to anode manufacturing,”including fostering battery-grade graphite processing industries.
- Research and Development: India should also invest significantly in research and development to explore advanced anode materials, apart from focussing on upstreaming technologies “to enhance the fixed carbon content of mined natural graphite and develop lower carbon foot processing technologies.”
- International Partnerships: There is also a need to put in place strategic collaborations with graphite-producing countries such as Madagascar,
Mozambique, and Brazil to ensure a “reliable and diversified supply of natural flake graphite” for anode production. “Free Trade Agreements with these mineral-rich nations and countries like the USA to facilitate the export of anodes,” is also crucial in this regard.
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