Shailesh Chandra, managing director of the
passenger vehicles and electric mobility subsidiaries, told Reuters that cell
prices have been rising over months and he expects them to remain high for
about a year.
"Immediate impact seems to be about a
20 percent kind of an increase which will have short-term pressure. This should
moderate within a year and then start coming down," he said.
Chandra did not comment on whether this
would affect the company's sales or profitability but said that demand for
"green personal mobility" was rising sharply and he expected to
offset some of the costs by increasing the use of locally sourced components in
its cars.
Automakers globally are facing inflationary
pressures due to surging costs of nickel, cobalt and lithium that are used in
making batteries — the most expensive part of an electric vehicle (EV) — as
demand outstrips supply.
This has been made worse by Russia's
invasion of Ukraine, and analysts say it threatens to slow the trend of falling
battery prices which could hamper the broader adoption of EVs, especially in
price-sensitive markets like India.
In India's nascent EV market, electric cars
make up only 1 percent of total car sales. High battery prices and an
insufficient charging network are the main reasons why there are few takers,
and why more carmakers are yet to launch electric models.
Spot prices for lithium carbonate, which is
typically used to make lithium-ion batteries, surged to over $70,000 per tonne
in March 2022 from about $10,000 a year earlier, according to data from
industry forecaster Benchmark Market Intelligence.
"Going forward this inflationary
impact is expected to continue," said Manish Dua, senior analyst at
Benchmark.
Tata recently raised the price of its Nexon
electric SUV in India by over $300 — a 2 percent rise for the base model,
following similar moves globally by Tesla Inc and China's BYD.
Even so, Tata, which has over 90 percent
share of India's electric car market, expects sales of its electric cars to
grow over four-fold this fiscal year from 4,200 units last year.
The EV maker sources lithium-ion batteries
for its cars from Tata AutoComp Systems, which has a joint venture with China's
Guoxuan Hi-Tech to produce them locally.
Chandra said as battery recycling gains
pace there will be access to raw materials beyond mines and that will offset
some of the cost pressures.
"Short term spikes will happen. It is
good to focus on the secular long term trend which will keep going down,"
he said.
© Reuters