How Lithium Deposits Can Build India’s Electric Vehicle Stack

The Geological Survey of India’s recent announcement of a find of substantial amounts of lithium deposits in the Reasi district of Jammu is excellent news for India. However, India would do well to heed the lessons of other nations that have been caught in the natural resources trap and not waste this find if, environmental concerns notwithstanding, we decide to mine the lithium ore.

India has always been a country that has needed to import energy. According to the Petroleum Planning and Analysis Cell of the Government of India, India’s net imports of petroleum products in December 2022 totalled $11.9 Bn. 

Extrapolating this, it means that at current rates for the ‘India basket’ for crude oil, India will spend between $120-150 Bn annually on petroleum energy imports. This number has been slightly mitigated due to the war in Ukraine and India importing over 10x more crude oil from Russia than the previous year at significant discounts. Ironically, Indian refiners have also been selling processed crude products (petrol and diesel) to European Union nations at the same time.

Until recently, the need to become more self-sufficient in energy was seen as a way to reduce the massive outflow of foreign exchange each year. This has been coupled with the need to be less beholden to a clutch of Middle-eastern ‘petro-states’ such as Qatar and Saudi Arabia. But, the shift towards electric vehicles has been another major driver for India to decarbonise the economy. 

India’s Pledge To Become Carbon-Neutral By 2070

The Prime Minister’s statement in Glasgow during the COP Summit pledging that India will become carbon-neutral by 2070 leaves little wiggle room. After all, the Western world grew on the back of cheap and plentiful carbon during the twentieth century. Similarly, now that India’s single-most important requirement is its economic prosperity, it must have sustainable growth, particularly as India will suffer the most from the impact of carbon-driven temperature rises. 

Already, summer temperatures along with high AQI, have been described as ‘unbearable’ and ‘unlivable’. India cannot afford to miss the targets for carbon neutrality, and the mobility sector, whether freight or passenger transport, will play a vital role here, particularly with the transition to electric vehicles.

Of course, we already have several examples of shared mobility companies moving towards electric cars and two-wheelers. Part of this transition is being driven by policy, like the Delhi government’s draft aggregator policy mandating a transition to an all-electric fleet for taxi companies, food delivery and ecommerce companies by April 1, 2030. If you live in a major metropolitan area such as Delhi-NCR, Mumbai or Bengaluru, chances are that your ecommerce delivery or food order comes on an electric vehicle. Interestingly, the driver for this transformation has not been for altruistic reasons of reducing emissions, but the massive cost benefits of EVs over ICE.

China’s Lithium Reserves Fueling EV Transition

That said, the truth of the matter is that we currently import a significant portion of components for every electric vehicle from abroad, particularly China. Battery cells constitute between 30-50% of the value of an electric vehicle. It is remarkable how China’s single-minded focus on shifting towards electric vehicles has allowed them to create a number of global champions in the space, particularly companies like BYD, which is an end-to-end EV company, developing everything from the cells to the final vehicles and the charging network.

China’s transition to EVs was aided by having significant lithium resources of its own in its north-western provinces and also securing mining rights in Australia and South America. Furthermore, China invested in raw material processing and refining capabilities, controlling nearly 60% of the global capacity for processing raw lithium into battery-grade products. 

Finally, when Chinese companies recognised the unsustainable nature of the Lithium Nickel Manganese Cobalt (LiNMC) chemistry, owing in part to skyrocketing Nickel prices and difficulties in obtaining Cobalt, companies such as BYD made significant strides in developing Lithium Ferro-Phosphate (LFP) battery chemistry. A cheaper technology that had its shortcomings was also resolved over time.

India’s EV Stack Must Have A Strong Infrastructure

This should be the major lesson India must draw from the lithium find. Finding a resource is not enough. We must develop an entire chemical, engineering and manufacturing ecosystem around it. For example, India was wise enough to develop excess crude refining capacity, and as a result of Russian sanctions, Indian refiners have exported processed crude products such as petrol and diesel to Europe in recent months. However, the need to develop these resources should not be for opportunistic reasons, but for India to own the entire stack for the future of EV mobility, and this lithium discovery in Jammu provides us with an excellent opportunity to help us achieve that. 

We have already taken huge strides in developing software solutions like advanced battery management software (BMS) systems that run electric cars in Hi-Tech City in Hyderabad and Whitefield in Bengaluru. We should now design and manufacture the cells in India, as well as establish centres of excellence in electrochemical engineering, which will allow us to develop new battery chemistries, possibly with different materials, or more sustainable chemistries. India already has a significant automotive industry, which will produce nearly four million passenger vehicles in FY2023, and we should leverage this to build the key components of the electric vehicle stack in India.

As a result, finding lithium should not be regarded as the be-all and end-all; rather, it should be regarded as the starting point. We cannot afford to waste this once-in-a-lifetime opportunity, and the government, educational institutions, large corporations, and start-ups all have a role to play.