Ashok Leyland has unveiled a ₹5,000 crore investment plan to set up next-generation battery manufacturing in partnership with China’s CALB Group, marking a major step in India’s EV supply chain shift from dependence on imports to domestic production.
02 Sep 2025 | 12964 Views | By Shahkar Abidi
Ashok Leyland, India’s second-largest commercial vehicle maker, has announced a Rs 5,000 crore investment over the next 7–10 years to manufacture next-generation batteries for both automotive and energy storage applications in partnership with China’s CALB Group, one of the world's leading battery technology companies. This exclusive long-term collaboration ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
Ashok Leyland, India’s second-largest commercial vehicle maker, has announced a Rs 5,000 crore investment over the next 7–10 years to manufacture next-generation batteries for both automotive and energy storage applications in partnership with China’s CALB Group, one of the world's leading battery technology companies. This exclusive long-term collaboration comes as India-China relations improve, creating opportunities for technological knowledge transfer and local manufacturing.
Strategic Partnership Details and Investment Timeline
CALB Group, which currently stands as one of the suppliers to Ashok Leyland, is arguably the third-largest global battery manufacturer with a current production capacity of 90-100 GWh annually. CALB Group will not be making any investment in the partnership presently, as per the agreement.
The investment strategy by Ashok Leyland follows a phased approach, with battery pack manufacturing scheduled to begin by H1 FY27 with an initial investment of Rs 300-600 crore. The company expects a payback period of 4-5 years, benefiting from the current 15% import duty on battery packs. Manufacturing of battery cells and other components will follow over a 10-year horizon as part of the larger Rs 5,000 crore investment plan.
Captive Demand and Market Expansion Strategy
Initially, the battery manufacturing will serve captive demand from Ashok Leyland, Switch Mobility, and other Hinduja Group companies, with expected requirements of 4-6 GWh over the next 4-5 years. Switch Mobility, Ashok Leyland's EV subsidiary, currently maintains an order book of over 1,800 electric buses and targets break-even in the current fiscal year. Likewise, Switch Mobility's e-LCVs are another segment in which it is aggressively trying to penetrate the market.
Ashok Leyland's top management indicated that the strategy will later expand to serve other original equipment manufacturers (OEMs) and auto companies across passenger cars, two-wheelers, three-wheelers, and battery energy storage applications. This will allow Ashok Leyland to capitalize on the economies of scale in India's rapidly expanding EV ecosystem.
Technology Choice and Manufacturing Approach
Ashok Leyland will utilize Lithium Iron Phosphate (LFP) technology for its initial battery production. However, they may later adopt other technologies if other technological trends emerge.
LFP batteries have emerged as the preferred choice for commercial vehicles due to their superior thermal stability, lower costs, and enhanced safety characteristics.
The technology choice aligns with global trends, as LFP batteries now command 40% of the global EV battery market, representing a significant increase from 32% in 2023. For commercial applications, LFP offers 3,000 to 5,000 charge cycles under optimal conditions, making it ideal for fleet operations.
LFP's dominance is seen more strikingly among Chinese automakers, where in 2024 as much as 58% of the entire battery capacity for the EVs produced in the country consisted of LFP.
Government Policy Support and Industry Dynamics
The investment benefits from favorable government policies supporting domestic battery manufacturing. The Production Linked Incentive (PLI) scheme for Advanced Chemistry Cell Battery Storage allocates Rs 18,100 crore to establish 50 GWh of battery manufacturing capacity.
The initiative also aligns with India's broader Make in India campaign and the government's target of 30% EV adoption by 2030. With batteries constituting 30-50% of an EV's total cost, domestic manufacturing becomes crucial for achieving cost competitiveness.
Market Positioning and Future Trajectory
Ashok Leyland executives noted that some successful global battery manufacturing companies achieve margins of 18-19%, providing a benchmark for the venture's profitability potential. The company drew parallels to its historical decision to manufacture engines in-house, which generated significant long-term dividends.
The partnership with CALB brings proven expertise, as the Chinese company operates from several industrial bases in Changzhou, Xiamen, Wuhan, Chengdu, Hefei, Jiangmen, Meishan, Handan, as well as in Europe and ASEAN.
Infrastructure and R&D Development
As part of the investment, Ashok Leyland will establish a Global Centre of Excellence serving as a hub for research and development in battery materials, recycling, battery management systems, and advanced manufacturing processes. The company is currently in discussions with various states for factory locations and supporting infrastructure.
The comprehensive approach includes developing capabilities across the entire battery value chain, from raw materials to recycling, positioning the company as a key player in India's emerging battery ecosystem.
Challenges Remain
While Ashok Leyland has taken the step with a lot of thinking and strategic planning, success will eventually depend on numerous factors, including commissioning on schedule, expanding beyond captive demand, and keeping pace with fast-moving chemistries. But if the plan holds, it will nudge India’s EV supply chain from assemblage to architecture, with commercial vehicles as the proving ground.