Mumbai: Even as it takes a measured approach toward entering the emerging electric vehicle space in the country, India’s largest car maker Maruti Suzuki has started localisation of cells and will be exporting lithium-ion batteries worth ₹1,500 crore a year to Europe in the next three years.
A resolution on related party transactions in the FY22 annual report shows
will export battery packs to Suzuki’s European subsidiary Magyar Suzuki and the amount will not exceed ₹1,500 crore in a financial year for the period beginning from FY23 to FY25. The peak value of export will be realised in the third year as the production progresses.
Rahul Bharti, the head of investor relations at Maruti Suzuki, said
is the first company in India to export lithium-ion batteries from cells made in India.
“We will be purchasing these batteries from fellow subsidiary TDSG, Suzuki’s JV with Denso and Toshiba in Gujarat, for both in-house use and export to Europe,” he said. “Since both the purchase and the export come under the ambit of related party transactions, under the Sebi rules we have moved a resolution to seek minority shareholder approval.”
This allows strong backward integration for Maruti Suzuki and enables it to keep the cost low and price accessible for its EVs when it enters the market in 2025. Immediately, these batteries will be used in hybrid vehicles that will hit the roads this fiscal year.
Maruti Suzuki has become the first company in India to produce made-in-India battery cells and is receiving encouraging orders for its export of battery packs.
The batteries will be shipped mainly to Magyar Suzuki – the Hungary-based unit of Suzuki Motor, according to the company’s disclosure on related party transactions.
To be sure, Maruti has already been exporting battery packs for the export market for the previous few months.
The exported Li-Ion battery would be installed in e-hybrid vehicles produced by Magyar Suzuki.
In 2021, Magyar Suzuki produced 107,874 units, of which two-thirds were hybrids, according to Magyar Suzuki’s website.
The battery pack exported by Maruti Suzuki will be produced at the factory of TDS Lithium-Ion battery Gujarat Private Ltd (TDSG). The TDSG is a collaboration between Toshiba, Denso and Suzuki Motor Corp. Maruti Suzuki will be purchasing batteries and the annual amount will not exceed ₹2,500 crore a year beginning from FY23.
Maruti Suzuki will be responsible for sales of TDSG batteries as of now, while battery makers TDSG will have their entire focus on production and developing new technologies.
Through this, Maruti Suzuki will be able to generate potential revenue of about ₹800 crore per annum and it would be able to earn a trading margin.
The contract in the related-party resolution is mentioned for the three years. However, it would continue beyond three years and add incremental revenue opportunities for the maker of Brezza and Baleno. The incremental income from the export of battery packs will further buttress export revenue, which more than doubled in the last fiscal year.
Battery packs produced by TDSG will also be used in a strong hybrid variant of the Grand
and aid in bringing down its cost of batteries as localisation content increases.
Maruti Suzuki, in a post-earnings conference, said that nearly 45-50% of booking for the Grand Vitara is originating from the top variants of the model.
The Grand Vitara will be manufactured at the Bidadi plant of Toyota
from the beginning of August 2022 using series-parallel strong hybrid technology. Toyota Kirloskar will be manufacturing a strong hybrid mid SUV with a traction motor and power splitter already being localized to bring down the cost of a strong hybrid.
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