Tata Motors says 20% rise in battery cell cost leading to short-term pressure

Tata Motors stated the cost of battery cells has increased by around 20 per cent globally due to the rise in prices of raw materials mainly lithium. Tata Motors mentioned this is putting short-term pressure on it.

According to a report by Reuters, the Managing Director of the passenger vehicles and electric mobility subsidiaries Shailesh Chandra said cell prices have been rising over months and it is being expected to remain high for about a year. “Immediate impact seems to be about a 20% kind of an increase which will have short-term pressure. This should moderate within a year and then start coming down," he was quoted saying in the report.

However, Chandra did not share if this global price increase would affect the automaker's sales or profitability. He did add the company expects to offset some of the costs by increasing the use of locally sourced components in its cars. He also said the demand for green mobility is increasing which will be able to cushion some of the stresses.

Tata recently increased the price of its Nexon EV base model and Tigor EV, following similar moves globally by Tesla and China's BYD. Tata Motors is expecting sales of its electric cars to grow four-fold this fiscal year from 4,200 units last year.

Currently, India's EV market is in a nascent stage where electric cars make up only 1 per cent of total car sales. The high cost of batteries and insufficient charging infrastructure are the main reasons behind the few takers of EVs. Also, the ongoing Russia-Ukraine war has worsened the situation. The report added the surge in prices of raw materials such as nickel, cobalt and lithium that are used in making batteries used to make EV batteries can affect price-sensitive markets like India. International automakers are also taking the hit due to this conflict.