Battery manufacturing pause exposes deeper fault lines shaping battery industry

Reliance Industries Limited has paused its initiative to manufacture lithium-ion battery cells in India after negotiations with China’s Xiamen Hithium Energy Storage Technology fell apart. The breakdown followed China’s recent tightening of export controls on lithium battery components and overseas technology transfers, which now require government permits. What appears on the surface as a licensing setback actually exposes the deeper fault lines now shaping the battery industry — where technology, geopolitics, and cost competitiveness are inseparable, says GlobalData.

Madhuchhanda Palit, Senior Automotive Analyst at GlobalData, comments: “This pause matters because battery cells sit at the heart of India’s green transportation ambitions. Under the 2022 PLI (Production Linked Incentive) framework of India, companies must meet strict milestones on manufacturing scale and local value addition within defined timeframes. Without access to mature, cost-competitive cell technology, these targets become structurally difficult, not operationally delayed. Reliance’s decision to refocus on assembling battery energy storage systems (BESS) for its renewable projects reflects an industry-savvy adjustment — progressing where integration is possible while upstream technology access remains constrained.”

Crucially, this is not an isolated experience. A similar dynamic has unfolded in the US. In 2024, Ford Motor Company’s BlueOval Battery Park in Michigan, designed around CATL’s LFP technology, similarly became entangled in political and regulatory concerns. Ford responded by reshaping the project—downsizing capacity, restructuring ownership to retain full control, and even exploring a shift from EV applications to grid-scale energy storage. Different geography, same underlying issue: reliance on Chinese battery technology now carries strategic and political risk.

Palit continues: “As a result of China’s dominance in lithium chemical refining and anode production—and its resulting technological edge—building a battery plant outside China is projected to cost roughly a third more than within it. This cost gap explains why global players sought Chinese partnerships despite known geopolitical exposure.”

With a recalibration by governments and manufacturers worldwide, alternative chemistries such as sodium-ion batteries are gaining traction due to material abundance and reduced geopolitical concentration. Parallelly, Western economies are investing heavily in solid-state research to bypass current lithium-ion dependencies altogether. Reliance’s acquisition of UK-based Faradion in 2024 to secure sodium-ion technology fits squarely into this global pattern — securing a long-term hedge rather than a short-term substitute.

Palit concludes: “Reliance’s setback does more than highlight a missed business arrangement — it reveals how essential control over advanced technology has become in the EV battery race. Self-reliance today depends as much on geopolitical strategy and access to know-how as on financial investment. The pull toward localization, alternative chemistries, and diversified global partnerships isn’t just strategic — it’s necessary. While India’s path to battery sovereignty has just encountered a roadblock, it also underscores the urgency of building resilience in supply, technology, and alliances.”