Ashok Leyland Clarifies Battery Investment Plans, Says No Direct CALB Funding Expected

Ashok Leyland issued clarifications on Monday regarding its battery manufacturing investment announcement, specifying that Chinese partner CALB Group will not provide direct funding for the initiative. The company emphasized that its ₹5,000 crore investment will be phased over the next decade, with production planned to commence in 2027.

The Chennai-based commercial vehicle manufacturer outlined that its collaboration with CALB will initially focus on importing battery cells, with the scope of the partnership to be determined as operations progress. The company stated that discussions with various state governments regarding the manufacturing location for battery packs remain ongoing.

The clarification comes after significant market attention following Sunday's announcement of the long-term exclusive agreement with CALB Group, China's third-largest battery manufacturer. Ashok Leyland plans to begin operations with battery pack assembly before potentially expanding into cell manufacturing.

Background

Ashok Leyland, India's second-largest commercial vehicle manufacturer, announced Sunday it will invest over ₹5,000 crore in battery manufacturing over the next seven to ten years through a partnership with Chinese battery technology company CALB Group.

The Hinduja Group flagship company signed a long-term exclusive agreement with CALB, China's third-largest battery maker, to develop and manufacture batteries for both automotive and non-automotive applications, including energy storage systems. The deal positions Ashok Leyland to serve not only its own electric vehicle needs but also external demand across India's automotive and energy storage sectors.

The investment comes as Indian carmakers are investing around ₹85,420 crore in electric vehicles and lithium-ion batteries in 2025 to meet rising demand. India's battery market is expected to reach $12.68 billion in 2025 and grow at 10.59% annually to reach $20.97 billion by 2030, driven by the government's push toward sustainable transportation.

Managing Director Shenu Agarwal said the new battery business will initially focus on the automotive sector before expanding to non-automotive areas. The company plans to establish a Global Centre of Excellence for research and development in battery materials, recycling, battery management systems, and manufacturing processes.

Meanwhile, the partnership reflects improving bilateral relations between India and China in the technology sector. CALB is simultaneously investing 2 billion euros in its first European factory in Portugal, set to begin production in early 2026, indicating the Chinese company's global expansion strategy.

Market Position

Ashok Leyland's entry into battery manufacturing adds to a growing list of companies establishing production capabilities in India. Tata Group has finalized agreements for a ₹13,000 crore lithium-ion cell factory in Gujarat with 20 GWh initial capacity, while other manufacturers are scaling up operations to meet domestic demand.

The company's existing electric vehicle portfolio through its Switch brand will benefit from the localized battery supply, potentially reducing costs and supply chain dependencies. Ashok Leyland currently operates across 50 countries with 54,000 touch points and manufactures trucks ranging from 2-tonne to 55-tonne gross trailer weight.

Chairman Dheeraj Hinduja emphasized the partnership's role in creating a localized battery supply chain to accelerate electric vehicle adoption and reduce fossil fuel dependence. The investment builds on the Hinduja Group's broader electrification strategy spanning electric vehicles, charging equipment, and vehicle financing.

CALB Group, founded as a battery technology company, supplies batteries to Chinese manufacturers including GAC, Changan, Leapmotor and XPeng and has established manufacturing bases across China, Europe, and ASEAN regions.