Battery makers stare at Trump tariff blowback (2025)

India’s fast-growing EV market could absorb the diverted supply and drive down costs for local automakers, experts said, adding that also spells trouble for companies such as Amara Raja Energy & Mobility Ltd, Exide Industries Ltd, Reliance Industries Ltd and Ola Electric Ltd, which are investing billions to build battery plants.

Battery makers abroad have begun looking at markets beyond the US, said an executive in charge of the battery supply chain at a leading automaker. “Not only China, but even South Korean and Japanese firms are looking at India for their battery solutions as the EV market is growing here. It will be good news for original equipment makers (OEMs) looking to get cheaper batteries as supply and competition increases," the executive added.

Chinese EV batteries started facing 25% US tariffs in the US from November; however, Japan and South Korea have been spared so far. Last week, the US imposed a 25% tariff on all EV battery imports, plus an additional 10% on all Chinese goods, which would sharply raise their prices in the US and force them to look elsewhere. India presents a juicy target: While EV sales in the US in 2024 slowed to just over 7% from 50% the previous year, and fell 1.8% in in Europe, sales in India grew 27% to touch 1.94 million.

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Domestic players

“The Trump administration’s actions raise the threat of suppliers for EV batteries from foreign countries increasing. This will lead to cheaper competitive prices for such batteries," Subhabrata Sengupta, a partner at Avalon Consulting said. “Domestic players will find it hard to compete with cheap prices as they are just starting out, but I am sure the government will step in to help protect them."

Exide Industries plans to open its 6 GWh lithium-ion battery plant by the end of FY26. Ola Electric aims to roll out its first scooters installed with its own battery cells in the next few months. Reliance Industries’ gigafactory to manufacture lithium-ion batteries in Gujarat is expected to begin operations next year. Amara Raja Energy Mobility is also looking to start the battery plant’s commercial operations for cells by the end of 2026.

Queries emailed to the battery makers remained unanswered.

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In May 2021, India approved a ₹18,100 crore production-linked incentive (PLI) scheme for advanced chemistry cells (ACC) in the country. Firms like Ola Electric Ltd and Reliance New Energy Battery Storage Ltd (a subsidiary of RIL) got approval for incentives under the scheme.

“Given Ola Electric’s current volume run-rate, it will have to sell it to a third party over the coming quarters, or else, the company will find it difficult to install 20 GWh capacity over the next 2-3 years to meet the requirement for the eligibility of PLI incentives," wrote Rishi Vora of Kotak Institutional Equities.

Lithium-ion cells production vs import

The US trade deficit on EV batteries with China was at $16.2 billion, Japan at $1.7 billion and South Korea at $1.3 billion, a 27 March Note by Morgan Stanley analysts noted. In FY24, India imported lithium-ion cells worth about $3 billion. According to the Economic Survey 2024-25, India imports about 75% of its lithium-ion cells from China, and the rest from Japan and South Korea. Major battery makers active in the area include Panasonic, Samsung, LG, Svolt, and EVE.

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The Centre has imposed penalties on battery makers availing of PLI for missing key deadlines. On 18 March, Kotak Institutional Equities said Ola Electric may find it hard to meet the deadlines to scale production of its gigafactory.

Missed deadlines for the production of lithium-ion cells along with the threat of cheaper battery prices are not good news for the domestic ambitions for EV battery makers, which now face a steep battle against global players who enjoy a headstart in the segment.

“The ability of battery makers outside the country to undercut the Indian players on battery pricing is surely increasing. It remains to be seen how the prices are affected due to the Trump administration’s decision," said Srihari Mulgund, a partner at EY-Parthenon - Electric Vehicles & Battery Technology & Value Chain.

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