From Prototype Excellence to Circular Economy: Nomura's Vision for India's EV Value Chain

India has demonstrated to the world that prototype development can be achieved at significantly lower costs, but must now focus on building a circular economy around battery materials and rare earths to sustain its EV ambitions, according to Ashim Sharma, Senior Partner at Nomura Research Institute.

Speaking at the India EV Conclave's panel discussion on deep localization, Sharma highlighted India's competitive advantages while pointing to critical gaps that need addressing. "We have shown the world that prototype development can be achieved at lower costs. From a circular standpoint, we should be focused on recycling of battery materials and rare earths, and on implementing concepts such as battery passport."

The circular economy approach is increasingly critical as EV adoption scales. Recycling should be treated as a core resource strategy as it is faster to scale, reduces environmental impact, and lowers import pressure, with urban mining potentially feeding 20-25% of lithium and cobalt demand.

Sharma's emphasis on battery passports aligns with global trends. The European Union is implementing battery passport requirements to track materials through their lifecycle, ensuring transparency and enabling efficient recycling. India adopting similar concepts could position its EV ecosystem as globally competitive and sustainable.

A recent analysis by Nomura Research Institute notes that localization levels for critical electric vehicle components such as motors and controllers remain at 30-40% in India as of 2024, indicating substantial room for improvement.

The circular economy approach is particularly important given India's resource constraints. India imports 92% of its rare earth metals from China, which controls 79% of the global rare earth metals market, making recycling and recovery essential for long-term sustainability.

The government should incentivize a circular economy ecosystem by enabling the recycling of end-of-life batteries and improving the collection efficiency of used batteries, according to expert recommendations.

India's cost advantage in prototype development stems from its engineering talent pool, lower labor costs, and growing technical capabilities. However, scaling from prototypes to mass production while maintaining quality and cost competitiveness remains challenging.

The EV industry in India has witnessed a surge in domestic production capacity, with manufacturers focusing on localizing critical components to reduce dependency on imports, particularly evident in the battery and powertrain segments.

Battery recycling represents both an environmental imperative and economic opportunity. Used EV batteries contain valuable materials including lithium, cobalt, nickel, and manganese that can be recovered and reused. Battery recycling can feed 20-25% of lithium and cobalt demand through urban mining.

The battery passport concept involves creating a digital record of each battery's composition, origin, and lifecycle, enabling traceability and efficient recycling. This requires collaboration across the value chain from material suppliers to vehicle manufacturers to recyclers.

Sharma's vision for India combines its existing strengths in cost-effective engineering with forward-looking circular economy principles, potentially creating a differentiated and sustainable EV ecosystem that doesn't merely replicate China's manufacturing-heavy model but innovates around resource efficiency and environmental responsibility.

The pathway he outlines – leveraging prototype development capabilities while building robust recycling infrastructure and implementing battery passports – could position India as a leader not just in EV manufacturing but in sustainable mobility solutions.

The India EV Conclave 2025 was presented by Chargezone, with Rosmerta Technologies as the Platinum Partner. The event is powered by IPG Automotive and Gulf Oil Lubricants India, with PTC serving as the Technology Partner. Associate Partners include Spark Minda, Radici Group, and Delta Electronics. The conclave also has trade partnerships with FADA, ASDC, and ICAT.