Tata Group declines participation in the EV Battery PLI Scheme

Tata Group declines to participate in EV Battery PLI Scheme

Tata Group has declined to participate in the EV Battery PLI Scheme introduced by govt. of India.
According to the group, the ‘risk-return’ equation was not working for them. Ten enterprises, both national and international in size, react with offers for double the manufacturing capacity.

The Tata Group, a significant stakeholder in the country’s clean energy transition, has decided not to participate in the government’s enormous Rs 18,100-crore EV Battery PLI Scheme for the development of electric vehicle batteries in the country. The Tata Group discovered that the segment’s return on risk appears to be negative to them.

PB Balaji, Chief Financial Officer of Tata Motors, apprises, “We had considered this extensively and, when we looked at the conditions of this particular PLI scheme, we found that the ‘risk-return’ equation was not working out for us and, therefore, we decided to stay away from it after having done the humongous amount of work.” Balaji said this in the post-earnings discussions.

The PLI scheme is largely for the storage of advanced chemistry cell (ACC) batteries. Its goal is to have a 50-gigawatt-hour manufacturing capacity (GWh). In light of its international commitments, the administration is optimistic about promoting the adoption of electric vehicles and reducing reliance on fossil fuel-based transportation.

The Central Government had received an overwhelming response to the project a month ago — in January – with as many as ten enterprises tendering. Reliance New Energy Solar, Hyundai, Ola Electric, Mahindra & Mahindra, Larsen & Toubro, Amara Raja Batteries, Exide Industries, Rajesh Exports, India Power Corporation, and Lucas-TVS were among the companies who participated. The bids were for a capacity of 130 GWh, which was more than twice the amount of manufacturing capacity that was to be given.

“The initiative received a promising response from local as well as foreign investors, as bids received are 2.6 times the manufacturing capacity to be awarded,” the Ministry of Heavy Industries said. The government has approved the ‘National Programme on Advanced Chemistry Cell (ACC) Battery Storage’ to achieve a manufacturing capacity of 50-gigawatt hours (GWh). The plan has a budgetary outlay of Rs. 18,100 crore.

According to the ministry, the ACC PLI program is projected to save the country money by reducing crude oil imports by a significant amount and increasing the share of renewable energy on the national grid.

The manufacturing facility would have to be built in two years, and the incentive would be paid out over a five-year term on the sale of Indian-made batteries.

In India, the Tata Group is the market leader in electric vehicles. Tata Motors currently controls more than 80% of the four-wheeler EV market. By 2025, the business plans to grow its EV lineup to include ten new electric vehicles. Similarly, Tata Chemicals, another division of the corporation, is leading the charge in terms of interest in making electric vehicle batteries. The business is planning to build a new plant in Gujarat to produce lithium-ion batteries.

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