Reliance Industries Limited has hit the brakes on its plan to manufacture lithium-ion battery cells in India after talks with China’s Xiamen Hithium Energy Storage Technology collapsed. The breakdown comes in the wake of China tightening export controls on lithium battery components and overseas technology transfers, now requiring government permits.
What appears as a licensing hiccup, analysts say, exposes a deeper truth: in the global battery industry, technology, geopolitics, and cost competitiveness are inseparable.
“This pause matters because battery cells sit at the heart of India’s green transportation ambitions,” said Madhuchhanda Palit, Senior Automotive Analyst at GlobalData.
“Under the 2022 PLI (Production Linked Incentive) framework of India, companies must meet strict milestones on manufacturing scale and local value addition within defined timeframes. Without access to mature, cost-competitive cell technology, these targets become structurally difficult, not operationally delayed.
"Reliance’s decision to refocus on assembling battery energy storage systems (BESS) for its renewable projects reflects an industry-savvy adjustment—progressing where integration is possible while upstream technology access remains constrained.”
Reliance is not alone. In the US, Ford’s BlueOval Battery Park in Michigan, originally designed around Chinese CATL LFP technology, ran into similar political and regulatory headwinds in 2024. Ford responded by downsizing capacity, restructuring ownership to retain control, and exploring a shift from EVs to grid-scale energy storage. Different countries, same lesson: dependence on Chinese battery technology now carries strategic risk.
“As a result of China’s dominance in lithium chemical refining and anode production—and its resulting technological edge—building a battery plant outside China is projected to cost roughly a third more than within it,” Palit noted. “This cost gap explains why global players sought Chinese partnerships despite known geopolitical exposure.”
The industry is already pivoting. Alternative chemistries, like sodium-ion batteries, are gaining traction due to abundant materials and lower geopolitical risk. Western economies are heavily investing in solid-state battery research to sidestep lithium-ion dependencies.
Reliance’s acquisition of UK-based Faradion in 2024 to secure sodium-ion technology fits this trend—aimed at a long-term hedge, not a stopgap.
“Reliance’s setback does more than highlight a missed business arrangement—it reveals how essential control over advanced technology has become in the EV battery race,” Palit said.
"Self-reliance today depends as much on geopolitical strategy and access to know-how as on financial investment. The pull toward localization, alternative chemistries, and diversified global partnerships isn’t just strategic—it’s necessary. While India’s path to battery sovereignty has just encountered a roadblock, it also underscores the urgency of building resilience in supply, technology, and alliances.”
