March 10, 2020

This aerospace engineer’s company is clocking a turnover of $5M in the EV-battery manufacturing space

Original article published in Your Story – SMB Story

However, with degrees from top-notch institutes such as IIT Kanpur, Stanford University, and Harvard Business School under his belt, Rajat was soon bitten by the startup bug.

He initially joined a company Kintana, which was developing enterprise software. The company was then acquired by Mercury Interactive and later by Hewlett Packard (HP).

It was while working with portfolio companies of a private equity fund in India as an entrepreneur, that Rajat came across electronic waste management which set the ball rolling for launching his company Lohum Cleantech.

Disrupting the EV sector

He says, “Lohum Cleantech germinated from my experience in electronic waste management which in simple terms means how to extract gold from electronics.”

Rajat says a lot of batteries were coming into the waste stream. He says he wanted to utilise his experience as an engineer, in filling the gaps in the Electric Vehicles (EV) sector. He also started pondering over the inclusion of lithium-ion batteries.

Lithium-ion batteries are rechargeable batteries used in portable electronic equipment like mobile phoneslaptops, and electric vehicles.

Today, several electric vehicles use lithium-ion battery packs in their electric vehicles from Mahindra Electric to Nissan Leaf and Tesla Model S and X.

“Almost 50 percent of the cost of the vehicle is that of the battery,” says Rajat, adding, “This becomes a key area for the electric vehicle manufacturer to tackle.” To fill this gap, he founded Lohum Cleantech in 2017 in Noida with the aim of manufacturing lithium-ion batteries for two-wheelers and three-wheeler electric vehicles with the capability of customising for other electric vehicles including L5, as per need.

The manufacturing unit is located in Greater Noida and another one is underway in the same location. Lohum Cleantech provides lithium-ion batteries to several EV players in the market like Neelam Cycles and Bounce. The USP of Lohum Cleantech lies in the fact that it aids EV companies in maximising the battery life cycle and encourages them to save resources. It has manufactured and distributed over 1,000 batteries since its inception.

To make a quality product which is cost-effective is always a big challenge for Indian manufacturers. Rajat says, “When we started the company, we were clear from day one that our strength lies in our technology.”

The first challenge they faced was to figure out how to extract raw materials (Cobalt, Nickel Sulphate, Graphite, and Manganese Sulphate) from a dead battery. Second, to make a battery pack which is cheap, and third, manage 45 degrees Centigrade temperature conditions in Delhi.

Explaining how he overcame the first challenge, Rajat says, “It was solved by gathering a team which had worked extensively in cobalt and nickel mines.” The second problem was solved technologically by extending the use of first life battery packs (through refurbishing and repurposing). And then the government solved it further by introducing the Faster Adoption and Manufacturing (Hybrid) of Electric Vehicles (FAME 2) subsidy.

The cost of each battery pack of a three-wheeler is Rs 56,000 and the government is giving a discount of Rs 40,000 under the FAME 2 scheme. So, the cost for the buyer comes down to Rs 16,000 which is much less than Rs 25,000, that is the cost of lead-acid batteries which the lithium-ion ones plan to replace.

Need for li-ion batteries

Rajat says over the years, the EV sector in the country has gained momentum and it now aims to align itself with the government’s vision only sell EVs by 2030.

How are they helping the economy achieve it? Rajat says, two things are needed. “First, we need to make batteries which are economically and technically viable for the country. Second, we need to secure raw materials if we really want to compete in this domain in the longer run.”

The internal combustion engine vehicles are not just harmful to the environment but is also a burden on the economy because it comes at the cost of importing. Lithium-ion batteries are close substitutes to oil. They are environment-friendly.

In addition, when the used batteries are completely dead, Lohum Cleantech extracts chemicals such as Cobalt, Nickle Sulphate, Graphite, and Manganese Sulphate from them which are used as raw material to produce cells which the battery pack is comprised of. Domestic manufacturing will help in securing the raw materials, the industry of which is largely controlled by the Chinese

Lithium-ion batteries are also replacing lead-acid batteries which are used in Indian e-rickshaws. These batteries are not as cost-effective as they last for only six months. Lithium-ion batteries, on the other hand, last for at least three years. They also have greater energy density. An e-rickshaw typically has 400-500 cells in one battery pack and a two-wheeler has 200-250 cells in its battery pack. A Tesla model has around 7,000 cells in its battery pack.

Lohum Cleantech manufactures battery packs for two-wheelers and three-wheelers and is yet to enter the four-wheel domain.

Rajat says they have spent 1,500 R&D cycles to achieve what they have. The company says they will be hitting north of $5 million in revenue this year.

There is immense potential in this sector. Rajat says the day is not far when everything from medical devices to robotics will be powered by lithium-ion batteries. He also believes that EVs can contribute enormously in employment generation. His only suggestion to those entering this space is, “Do what you are doing without looking too much at the West.”

Lohum Cleantech is a pioneer in this field. ISRO has signed an MoU with BHEL to produce lithium-ion batteries. Also, while players such as Amar Raja Batteries Ltd and HBL Power Systems are planning to commence production, EON Electric Ltd has already begun production of lithium-ion batteries.