Li-ion Battery Supplier Neuron Energy Targets 10x Growth in 5 years

Lithium-ion battery maker Neuron Energy is planning to diversify its business by expanding its energy storage system (ESS) business, even as the company targets to grow its revenue by nearly 10x over the next five years.

Neuron Energy, which is likely to record revenue of Rs 130-150 crore this year, is known for its lithium-ion batteries and chargers.

The company's batteries are used in electric two-wheelers, three-wheelers, light commercial vehicles, electric cars, and drones. Moving forward, the company also plans to expand into larger vehicles, such as buses and trucks.

The company imports lithium-ion cells from China and assembles them to make batteries in its Kapashera, and contract manufacturing in Noida, and Pune plants.

Currently, around 95% of Neuron Energy’s revenue comes from the electric mobility segment, leaving only 5% for the energy storage system.

The company’s Co-founder and CEO Pratik Kamdar said the company expects to more than double its revenue next year to over Rs 300 crore, and reach Rs 1,500 crore by 2030. By then, he said, he would expect the mobility business to contribute 50-70% of the top line and ESS to chip in 30-45%.

To achieve this growth, the battery solution provider is in the process of setting up a new plant with an annual production capacity of 2 GWh, spread across five acres in Pune by April this year.

Moreover, the revenue estimates are purely for the domestic market, and do not account for any upside from exports, which it hopes to start soon. Among the initial markets it is targeting to enter by 2026 are the Middle East and Africa.

“Export would be a good market, especially in the Middle East and Africa, where Indian products are well accepted,” Kamdar said.

“The demand for ESS is increasing in the Middle East. When it comes to Africa, it's both ESS and mobility. [In Africa,] they are shifting from lead to lithium when it comes to power backup applications. There is a significant amount of penetration of [electric] three-wheelers and two-wheelers in the African markets. So keeping that in mind, I think both the markets would give us an opportunity,” Kamdar explained.  

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Export plans notwithstanding, most of the growth will come from the steady shift from ICE to EV in India. “The demand for EVs is growing rapidly, with sales of electric two-wheelers soaring,” he said. He added that the adoption of electric rickshaws has also been swift.

Looking ahead, the company predicts that more than 50% of light commercial vehicles (LCVs) and three-wheeler cargo and autos will go electric in the next three to four years.

However, he believes pricing and supply chain pressures still pose hurdles for the faster adoption of EVs as the industry is heavily dependent on China for battery cells and other critical components.

Another factor contributing to the high prices of lithium-ion batteries is taxes. Kamdar explained that while electric vehicles are taxed at 5% GST, the batteries, despite being a critical component, are taxed much higher at 18%. This has caused capital to be stuck in GST credits for many original equipment manufacturers (OEMs). Manufacturers pay 18% GST when purchasing batteries, but can collect only 5% GST when selling the complete electric vehicle – including the battery. This generates GST credits in favor of the manufacturer with the tax authorities, but these may not be easy for the OEM to utilize.

Meanwhile, the central government is pushing to make India the largest exporter of lithium-ion batteries by the end of this decade. To achieve its target of setting up a manufacturing capacity of 100-150 GWh per year, the government has rolled out a Rs 18,100-crore production-linked incentive (PLI) scheme for advanced chemistry cells (ACC).

In order to bolster the domestic production of EV batteries and support the growth of India’s electric vehicle market, the Centre recently announced plans to exempt basic customs duty on 35 additional capital goods used in lithium-ion battery manufacturing along with duty exemption on the scrap of lithium-ion batteries and critical minerals like cobalt and copper.