Amara Raja is evaluating the establishment of a dedicated battery pack manufacturing facility for passenger electric vehicles (EVs) following discussions with multiple automakers, signalling an expansion of its EV activities beyond its current focus on two- and three-wheelers.

The company stated that a dedicated passenger vehicle battery pack plant was not included in the original Phase 1 blueprint for its Amara Raja Giga Corridor in Telangana. However, ongoing discussions with passenger vehicle manufacturers have prompted the company to assess the feasibility of such a facility. It added that customer nominations could potentially materialise during the current financial year, although discussions have not yet been finalised.

The proposed facility would complement Amara Raja's existing battery pack assembly operations, which currently account for a substantial portion of its lithium-ion business. Battery packs are expected to continue contributing the larger share of revenue in the near term as domestic cell manufacturing gradually ramps up.

The announcement comes as Amara Raja Advanced Cell Technologies inaugurated its Customer Qualification Plant (CQP) at the company's Giga Corridor in Divitipally, Telangana. The facility represents a capital investment of Rs. 5 billion (US$ 52 million) and forms part of the company's broader Rs. 95 billion, 16 GWh factory development programme.

Designed with an initial production capacity of 60MWh, the facility will employ more than 100 people and serve as an intermediate stage between laboratory-scale research and high-volume commercial production. The plant will manufacture lithium-ion cells in both cylindrical and prismatic formats across multiple chemistries. Its reconfigurable infrastructure enables original equipment manufacturers (OEMs) to test, validate and approve sample cells under manufacturing conditions that mirror future commercial-scale operations before high-volume production lines are commissioned.

The CQP is part of Amara Raja's Phase 1 capital expenditure programme, which exceeds Rs. 15 billion within the Giga Corridor. Initial cell batches produced at the facility are scheduled to be supplied to automotive and industrial customers for formal validation beginning in August 2026. The company stated that operational learnings from the CQP will support the transition to its first commercial cell manufacturing facility, designated Giga 1, which remains on track to begin production around the middle of next year. The initial facility will have a manufacturing capacity of 2 GWh and has been designed for expansion to 6 GWh. Amara Raja continues to target a total manufacturing capacity of 16 GWh under its commitments to the Telangana government and noted that the campus infrastructure can support higher capacity in the future, subject to market demand.

As part of its localisation strategy, the company stated that every new cell chemistry will first be validated at the Customer Qualification Plant before progressing to gigafactory-scale production. This pilot-scale approach is intended to minimise manufacturing defects and reduce scrap rates before mass production begins, helping the company avoid the learning curve experienced by several overseas battery manufacturers.

The initial cell production programme will focus on nickel manganese cobalt (NMC) chemistry, reflecting current demand from the electric two-wheeler segment. However, the company expects most future capacity additions to be based on lithium iron phosphate (LFP) chemistry as passenger vehicle manufacturers increasingly adopt the technology. Future production lines will also remain flexible enough to accommodate emerging chemistries, including sodium-ion batteries, should commercial demand emerge.

Speaking during the inauguration of the Customer Qualification Plant, Jayadev Galla, Co-founder and Chairman of Amara Raja Group, and Vikram Gourineni, Executive Director of Amara Raja Group, acknowledged that battery cells manufactured in India are likely to carry an initial cost premium of approximately 20%-25% compared with equivalent Chinese products.

According to the company, Indian manufacturers are not expected to match Chinese pricing immediately when domestic gigafactories commence production. However, the company expects the cost gap to narrow over time as manufacturing scales increase, local supply chains mature and government-backed localisation initiatives progress.

The company explained that battery pack assembly is already relatively competitive in India because the most expensive component, the battery cell itself, continues to be largely imported. As a result, local battery pack assembly does not currently face the same degree of cost disadvantage as domestic cell manufacturing. The greater challenge lies in localising cell production, where China benefits from decades of manufacturing scale, deeply integrated supply chains and cost advantages in raw materials, processing and manufacturing equipment.

Amara Raja stated that the estimated 20%-25% cost premium should be viewed as an initial benchmark rather than a fixed figure, noting that economics are evolving as more companies announce investments across India's battery materials value chain.

The company added that several Indian firms are investing in battery materials, a development expected to increase domestic participation in the battery supply chain. However, battery manufacturing equipment remains heavily dependent on China. While alternative equipment suppliers exist in countries such as Japan and South Korea, the company noted that these alternatives currently involve higher costs, longer lead times and lower manufacturing capacities compared with Chinese suppliers.

Referring to a recent analysis by a market research firm, the company noted that battery cells manufactured in Southeast Asia are estimated to carry a cost premium of approximately 10% compared with China, while production in Europe and the United States could be approximately 40% more expensive. India is expected to fall somewhere between those benchmarks, although the company did not provide a broader industry estimate.

According to Amara Raja, improving cost competitiveness will depend on several factors, including higher production volumes, increased localisation of battery materials, government policies and sustained domestic demand. The company added that investments by battery manufacturers are likely to encourage more suppliers to establish operations in India, potentially improving economies of scale across the value chain.

Despite the anticipated initial cost disadvantage, Galla and Gourineni stated that domestic cell manufacturing remains important for India's EV industry. They stated that the objective extends beyond reducing import dependence to building domestic manufacturing capability in a technology that is increasingly regarded as important by major economies.

The executives also pointed to geopolitical developments as a factor reshaping the global battery industry, with many countries seeking to establish domestic manufacturing capabilities rather than remain reliant on imports. In that context, they stated that India's battery manufacturing ecosystem is expected to continue developing, even if locally manufactured cells initially remain more expensive than Chinese imports.

Galla stated that the technical capabilities being developed at the Customer Qualification Plant are intended to support the establishment of a domestic battery ecosystem amid shifting global energy supply chains.