Reliance Industries Ltd has halted plans to manufacture lithium-ion battery cells in India after the company could not get access to Chinese technology. According to sources in The Economic Times, the Mukesh Ambani-led oil-to-telecom company was preparing to start cell production this year. After this news, the shares of Reliance Industries fell by more than 1 percent during morning trading. It was in talks to acquire cell technology license from Chinese company Xiamen Hethium Energy Storage Technology, but the deal stopped due to Beijing’s ban on foreign technology transfer. Now Reliance is focusing on the assembly of Battery Energy Storage Systems (BESS), which will be the containers for its renewable energy projects.
Challenges increased due to China’s strictness
China has increased surveillance on clean energy technology deals so that it can maintain its strategic edge. Due to this, foreign companies are facing difficulty in starting local production in India. Reliance’s troubles show that Indian companies are not able to make progress in achieving Prime Minister Narendra Modi’s carbon-zero target by 2070 without better relations with China. A company spokesperson said that there has been no change in their plans and BESS, battery pack and cell production have always been a part of their plans.
Impact on Giga Factory ambitions
In August, Mukesh Ambani told shareholders that the battery gigafactory would start operating in 2026. The halt in cell production may not cause immediate financial loss, as the company’s earnings mainly come from oil refining and consumer business, but it poses a challenge to Ambani’s green energy ambitions. In 2021, they had announced a four giga factory with an investment of $10 billion, to provide a new direction away from fossil fuels. Company experts believe that moving forward without Chinese technology will increase costs and be more risky, especially when there is a glut of batteries in the global market. Technologies from Japan, Europe and South Korea were found to be expensive and less competitive on a large scale in India.
impact on the entire industry
Many companies in India Inc are in the race to increase battery storage capacity, but are facing technical hurdles. Companies like Adani Group and JSW Group are also emphasizing on battery pack and container assembly instead of cell production.