Exide, Amara Raja rush to monetize $1 billion Li-ion cell lines as investor questions mount

India’s top battery makers, Exide Industries Ltd and Amara Raja Energy & Mobility Ltd, are rushing to operationalize their lithium-ion cell lines amid investor pressure over returns on more than $1 billion in investments. Exide has invested $632 million so far, while Amara Raja has deployed $248 million and approved an additional $247 million this month. The push comes as both firms await large orders from car and two-wheeler makers, despite having secured preliminary tie-ups with Hyundai-Kia and Ather.

The two companies are taking distinct paths to generate early revenue from their plants. Exide is starting with cells for electric rickshaws and telecom towers, while Amara Raja is focusing on battery energy storage system (BESS) projects.

The delay in electric vehicle (EV) programmes has increased pressure on both companies, as Exide had planned to start the first 6GWh of its cell plant by FY25 but only did so in September 2026. Amara Raja, which had earlier expected commercial cell production by FY26, is now targeting Q2FY28 for its first 2GWh line.

Amara Raja shares are down 18% so far this year while Exide shares are up 6%. The Nifty Auto index has gained 0.15% over this period.

Alternative routes

For Exide, initial revenue is coming from lithium iron phosphate (LFP) cells, which require shorter approval cycles than the nickel manganese cobalt (NMC) cells common in electric two-wheelers. The company is deploying its 102Ah LFP cells in its own e-rickshaw battery packs and has dispatched samples to telecom operators.

Lithium ion cells that power electric vehicles are mostly imported from China. LFP cells are cheaper and longer-lasting, while NMC cells perform better but do not last as long as LFP cells.

Exide managing director and chief executive Avik Roy said the company started earning revenue from LFP cells in October, while its NMC cells are still being tested by customers.

“Performance testing has been very satisfactory. We got positive feedback,” Roy said during the company’s earnings call on 5 November. “Lifecycle testing takes time, and once lifecycle testing is over, they will do the pack and the vehicle-level testing. That is the next phase.”

Amara Raja, meanwhile, plans to start commercial operations in BESS before its EV cell business begins. The company has finished checking its machines at its 5GWh pack assembly plant and expects test runs in December, followed by commercial operations in January or February.

“We don't foresee a challenge with respect to utilization of the plant,” chief financial officer Y. Delli Babu said, pointing to demand from grid-scale storage and commercial and industrial customers. The company expects to use 50-60% of the facility’s capacity in FY28 and reach full utilization by FY29.

Its cell program remains at the customer approval stage. Amara Raja has made nearly 2,000 NMC cells at its customer qualification plant, which are being tested internally. Delli Babu said the company expects to send samples to potential original equipment manufacturers (OEMs) in the next few months. LFP cells are still being developed.

Both companies are building bigger manufacturing plants while trying to earn money soon from other uses. Exide has started a 6GWh lithium-ion cell plant in Bengaluru, while Amara Raja is developing its Giga Corridor in Divitipally, Telangana. Its bigger plan includes 16GWh of cell capacity and 5GWh of pack assembly.

Both companies first worked with Chinese technology partners to build their cell businesses. Amara Raja’s 2024 licensing deal with Gotion for LFP technology, however, faced problems after Beijing tightened rules on technology transfers, forcing the company to rely more on its own research and development. Exide's China partner is Svolt.

The two companies have also signed preliminary agreements with vehicle manufacturers, but these have yet to translate into final supply orders. Exide signed an agreement with Hyundai Motor and Kia in 2024 to develop and supply locally made LFP cells, while Amara Raja signed an agreement with Ather Energy to develop and supply NMC and LFP cells for two-wheelers.

Roy said the product roadmap under the Exide-Hyundai-Kia partnership had not been finalised and that the companies would make a joint announcement once they reached a milestone. He added that discussions had accelerated after slowing in recent months.

China cost & validation barrier

However, even after local cells become available, vehicle manufacturers may not switch suppliers immediately. Ather Energy chief business officer Ravneet Phokela told Mint in an interview in October that domestic sourcing was driven more by supply security than by cost savings, with Indian cells likely to be 20-30% more expensive than Chinese alternatives initially. “China's cost structure is very different. They have already scaled up, their yields are very high, plants are depreciated, lithium is local,” Phokela said.

He said switching cell suppliers required extensive testing and validation, making it difficult for vehicle makers to shift quickly even when a domestic option became available.

“It's not a hot-swap,” Phokela said. “There is a design, development, testing and validation cycle. It takes almost a year.”

Analyst estimates point to a gradual ramp-up. Nuvama Institutional Equities wrote in a 5 November note that Exide is targeting 20-25% utilization of its NMC capacity by Q4FY27, with further orders expected in subsequent quarters. Analysts at Anand Rathi said in a 4 November note that they expected Amara Raja’s BESS plant to reach 50% utilization of its initial 5GWh capacity within six to seven months of commercial production. They also estimated the company’s NMC cell plant would be ready by Q1FY28.