Context: India has quadrupled its imports of lithium-ion (Li-ion) batteries and more than tripled its import bill on the product, vital for powering a range of devices from cellphones to electric vehicles.
- Indian manufacturers source Li-ion batteries from China, Japan and South Korea and the country is among the largest importers in the world.
- The Indian Space Research Organisation (ISRO) manufactures such batteries but volumes are limited and they are restricted for use in space applications.
- In June 2018, Central Electro Chemical Research Institute (CECRI) in Tamil Nadu’s Karaikudi, under the Council of Scientific & Industrial Research (CSIR) and RAASI Solar Power Pvt Ltd signed a Memorandum of Agreement for transfer of technology for India’s first lithium-ion (Li-ion) battery project.
- To promote indigenous development of such batteries, the Union Cabinet in 2019 approved a programme, called a National Mission on Transformative Mobility and Battery Storage in the NITI Aayog (chaired by CEO NITI Aayog) to “drive clean, connected, shared, sustainable and holistic mobility initiatives.”
- Electric vehicles are expected to account for a significant share in the growth of the Li-ion battery demand in India though reports say this is unlikely at least until 2025, because electric cars are still significantly costlier than their combustion-engine counterparts.
- The government has announced investments worth $1.4 billion to make India one of the largest manufacturing hubs for electric vehicles by 2040.
What’s so special about lithium?
- In a lithium-ion battery, lithium metal migrates through the battery from one electrode to the other as a lithium ion.
- Lithium is one of the lightest elements, and it has the strongest electrochemical potential of any element.
- This enables a lithium-based battery to pack a lot of energy storage in a small, light battery.
- As a result, lithium-ion batteries have become the battery of choice in many consumer electronics such as laptops and cell phones.
Lithium-ion Batteries Gain Momentum
- Because of the inherent advantages in lithium-ion batteries, sales have grown exponentially since the turn of the century. This has helped drive down costs consistently.
- However, one country has seized the momentum and established a commanding market lead over its competitors in this space. But it’s not the U.S., where much of the critical research and development that created the lithium-ion battery took place.
China in the Driver’s Seat
- China is home to 73% of the global lithium cell manufacturing capacity, followed by the U.S., far behind in second place with 12% of global capacity.
- Note: Top producers of lithium in the world as in 2019:
- Australia: 51,000 MT
- Chile: 16,000 MT
- China: 8,000 MT
- China has a major advantage of cheap labour, which has allowed it to dominate many manufacturing industries.
- But China also has more lithium reserves and much greater lithium production than the U.S. (so at least two reasons)
- The soft, silvery metal lithium is also known as “white petroleum.”
- Japan’s Sony was the company that first commercialized the technology, but China was able to catch up because of its ability to manufacture the batteries at larger scales and sell them for cheaper.