Amara Raja Energy & Mobility Ltd intends to invest more over Rs 1,000 crore in its New Energy Business during the fiscal year 2026, as it continues to prioritise research and development and lithium-ion (Li-ion) cell manufacturing.
Recognising the increased need for Li-ion batteries, India’s largest lead acid battery producer is establishing a Gigafactory in Telangana for Li-ion battery production through its New Energy Business arm, at an estimated cost of Rs 9,500 crore.
The cumulative investment in the Li-ion cell business by the end of this financial year will be around Rs 1,200 crore, and will further invest a minimum of Rs 1,000 crore in the next financial year, depending on payments for equipment, Amara Raja CFO Delli Babu told investors in a post-earnings call.
The Gigafactory is likely to have a capacity of 16 GWh cell Li-ion capacity and 5 GWh battery pack capacity over the next 10 years. The first phase of the battery pack plant was inaugurated recently with a capacity of 1.5 GWh.
The Gigafactory will initially start commercial production of cells based on Nickel Manganese Cobalt (NMC) chemistry, mainly for two-wheelers, by the end of 2026. The company is also looking at a 4-6 GWh initial capacity for lithium iron phosphate (LFP) chemistry-based cell manufacturing capacity.
Though Li-ion cells based on NMC and LFP are popular in the electric vehicle industry, LFP cells are preferred globally, considering their thermal stability, longer life cycle and lower costs. The concerns of comparatively lower density with LFP batteries are being addressed through new technologies and innovations.
The management believes LFP will occupy almost 75-80% of the overall requirements of the market going forward, while NMC will be a smaller portion. The company’s capacity allocation at the Gigafactory will also be in line with this.
Amara Raja has a tie-up with a Chinese company, with which it has jointly developed an NMC-based 2170 cylindrical cell, and it has also partnered with Gotion-InoBat-Batteries to manufacture Li-ion cells based on LFP.
The company has also recently tied up with automakers including Ather Energy and Piaggio India to supply Li-ion batteries.
The company is currently funding its investments using its internal accruals, or own generated profits. However, at a later stage, the management might explore raising additional funds through selling shares or borrowing money.
Amara Raja’s competitor Exide Industries is also expected to invest around Rs 1,000 crore in this financial year for Li-ion cell manufacturing and battery pack solutions. The first phase of Exide’s Li-ion Gigafactory is expected to be operational next year with an initial capacity of 6 GWh.
