India's EV Boom Strains the Partnership That Powers It

India's electric vehicle market is growing fast. Sales of EVs, from scooters to cars, have jumped in the last two years. But this boom is putting a new kind of pressure on the companies that make them. The old way of doing business, where carmakers simply bought batteries from suppliers, is no longer enough. Now, they need to work together more closely, and that is not always easy.

Take the example of a recent partnership between a large Indian automaker and a Chinese battery firm. The deal was meant to secure a steady supply of lithium-ion cells for the automaker's new EV models. But sources say the talks were tough. The automaker wanted a lower price per kilowatt-hour, while the battery maker insisted on a long-term commitment. In the end, they settled on a five-year deal, but with a clause that allows renegotiation if technology improves faster than expected.

This is just one story. Across the industry, similar negotiations are happening. The reason is simple: batteries are the most expensive part of an EV, making up about 40% of the cost. And with global demand for batteries soaring, suppliers have the upper hand. They can pick and choose who they work with. That leaves Indian companies, which are relatively new to the EV game, scrambling to secure their supply chains.

Why the Old Model Doesn't Work

In the past, automakers would buy batteries off the shelf, like they bought headlights or seats. But EVs are different. The battery is not just a component; it is the heart of the vehicle. It determines the range, the charging speed, and the safety. So, automakers need to be involved in the design and development of the battery from the start. That requires a level of collaboration that many are not used to.

"It's a shift from a transactional relationship to a strategic one," says Rohan Sharma, an analyst at a Delhi-based consulting firm. "Automakers have to share their future plans, their sales forecasts, even their engineering secrets. That makes some people uncomfortable."

Sharma points to the example of a leading Indian EV maker that had to recall a batch of scooters last year because of battery fires. The problem was traced back to a faulty cell from a supplier. The automaker had not done enough testing, trusting the supplier's word. Now, that company has set up its own battery testing lab and insists on auditing its suppliers' factories.

New Partnerships, New Problems

Some companies are going further. A few Indian firms are forming joint ventures with battery makers to build cells locally. This is a big step, as it involves sharing technology and investing in expensive factories. But it also brings new challenges. How do you split the profits? Who owns the intellectual property? What happens if one partner wants to exit?

One such joint venture, between a Mumbai-based conglomerate and a Korean battery giant, has been in the works for over a year. The two sides have reportedly clashed over the location of the plant. The Indian company wants it in Maharashtra, close to its existing factories. The Korean firm prefers Gujarat, which offers better incentives and has a port for exporting. The talks are still ongoing.

Government policy is also playing a role. The central government's production-linked incentive scheme for advanced chemistry cells has pushed companies to localize production. But the rules are strict. To qualify for the subsidy, a company must set up a plant with a minimum capacity of 5 gigawatt-hours and achieve a certain level of domestic value addition. That is a tall order for many.

Despite these hurdles, the industry is moving ahead. Sales of EVs in India are expected to cross 2 million units this fiscal year, up from 1.5 million last year. And with the government targeting 30% EV sales by 2030, the pressure on partnerships will only grow. As one industry veteran put it, "The boom is real, but so is the struggle. We are all learning to dance with a new partner."