ShreeMetalPrices: Should Indian Automakers also Start Purchasing Mining Companies in their Hunt for Lithium, Cobalt, and Nickel?


Indian manufacturers may run into difficulty if they decide to mass market EVs due to low investments in the batteries supply chain as demand for EVs rises. As several four-wheeler manufacturers try to introduce affordable EVs into the market, India is likely to witness significant growth in the two and three-wheeler segments, where EV adoption has already grown quickly.

General Motors, based in the US, has revealed ambitions to enter the mining industry by investing $69 million in Queensland Pacific Metals, a nickel and cobalt miner. The automaker hopes to establish a raw materials source for its auto-battery industry with this approach.

In addition to GM, Tesla has expressed interest in purchasing mines to supply its battery production facilities with lithium. In 2014, it even made an attempt to acquire the lithium mining startup Simbol Materials.

According to reports, Simbol invented a method for removing lithium from Salton Sea, a body of salt water in California. Tesla was really willing to spend $325 million again for business, split between cash and Tesla stock, indicating that it was highly enthusiastic about the potential of the technology.

To show prospective clients and investors the validity of its process, Simbol had built up a demonstration facility. However, the deal fell through, and Simbol struggled and eventually filed for bankruptcy.

Tesla has continued to develop effective lithium extraction technology despite being an automaker. And has teamed up with mining firms to put the procedure into practise. Tesla has also partnered in New Caledonia’s nickel mine.

Surprisingly, there were just two such deals prior to 2021. Indicating that automakers anticipate a rapid uptick in the number of electric vehicles on the road.

International Automakers Mining Partners.

The first agreement was reached in 2017 when Great Wall Motors decided to invest in the Australian Pilbara Minerals Lithium project. The second deal featured Toyota purchasing a 15% share in Orocobre, which was building the South American lithium mine Olaroz.

BMW has also been creating lithium extraction methods for its mining partners to use. Volkswagen has been working on creating battery packs for its cars and has even revealed IPO intentions for its battery subsidiary. The luxury automaker has already financed in Lilac.

Volkswagen said in April that it would invest into existing Canadian mine and mine owners to ensure a steady supply of raw materials. The German automaker has already established a joint venture to extract nickel in Indonesia with Huayou Cobalt & Tsingshan, a steel producer.

To obtain supplies at a discount, BYD invested in the lithium mining company Chengxin Lithium. Each manufacturer is developing different battery technology with a focus on high power, extended ranges, and low cost.

Automobile manufacturers desire to have some degree of control over the whole auto-parts production. System since product flaws can be very expensive due to recalls and legal actions. Several American & Japanese players have used the acquisition of substantial shares in vendor companies as one of their strategies to guarantee that a careful check on quality and cost is always guaranteed.

Indian Automakers Hunt for Lithium Supplier.

Indian automakers have refrained from investing in vendors and, as of now, are not developing technology for battery production.

Almost no established carmaker has revealed any intentions to enter the battery production industry. With the exception of a few fully electric vehicles manufacturers, Ather Energy & Ola Electric.

Due to the scarcity of lithium, nickel, and cobalt, India continues to be mostly reliant on China and Hong Kong for Battery cells. Ola Electric is the only automaker recognised by the governm ent under the Production Linked Incentive (PLI) scheme. Which was established with investments totaling Rs 18,100 crores.

For Indian manufacturers trying to mass market EVs in the face of surging demand. Low investments in the battery production chain could signal difficulty. As several four-wheeler manufacturers try to introduce affordable EVs into the market.

India is likely to witness significant growth in the two and three-wheeler segments, where EV adoption has already grown quickly.