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Drive Down EV Prices: 4 Tips for Local Battery Manufacturing Success

Here are a few suggestions on how local players and the government can significantly reduce prices through various mechanisms.

May 01, 2024. By Aishwarya

Over time, people have become more conscious of their vehicle choices, increasingly considering electric vehicles (EVs) as alternatives to internal combustion engine (ICE) vehicles. However, the upfront cost of EVs remains a barrier, with batteries comprising almost 50 percent of the expense, making them pricier than conventional ICE vehicles. Thus, reducing EV prices necessitates cutting battery costs.

So, what's the solution? Indigenization holds the key, where manufacturing EV batteries locally can lower prices, making EVs more accessible and accelerating the transition to sustainable transportation solutions.

Here are a few suggestions on how local players and the government can play a significantly role in reducing prices through various mechanisms:

Cut Costs, Boost Quality: Local manufacturing of EV batteries can significantly reduce production costs due to the elimination or reduction of import duties, transportation costs, and potential delays in shipping and customs. Lower production costs can directly translate to lower prices for the end consumer. Indian startups like Tresa Motors focus on R&D to develop everything in-house, including their battery packs, which most companies typically outsource. They aim to collaborate with local players to drive the "Made in India" promise forward.

Manufacture Locally: Establishing local manufacturing facilities can lead to economies of scale, where the cost per unit decreases as production volume increases. As the domestic industry matures, companies can streamline their operations, invest in more efficient technologies, and negotiate better deals with suppliers, further driving down costs.

Encourage and welcome Government Incentives and Subsidies: Governments often provide incentives for the development and indigenization of critical technologies like EV batteries. These may include tax breaks, grants, or subsidies that reduce the overall cost of battery production. Such incentives make it financially viable for companies to invest in local manufacturing, ultimately lowering prices for consumers. The new EV policy aligns with the vision of promoting sustainable mobility solutions and contributing to the 'Make in India' initiative by easing import duties for a limited number of EVs, encouraging global manufacturers to establish manufacturing facilities in India and promoting a robust ecosystem for electric vehicles in the country.

Collaborate and Compete: Local EV players can collaborate with global giants, acquire technical know-how, and enhance their capabilities in areas such as battery manufacturing, charging infrastructure, and component localization. The establishment of a local battery manufacturing industry can increase competition, driving down prices. As more players enter the market, competitive pressure can lead to more efficient production methods, innovation, and ultimately, lower prices for consumers. This will invite more players to enter the market, further stimulating competition and innovation.
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