Hindalco looks to take 'direct' route for growing EV industry
ECONOMY & POLICY

Hindalco looks to take 'direct' route for growing EV industry

Hindalco Industries, the world's largest aluminium rolling and recycling company, is looking at a bigger play in the auto component business by leveraging the growing electric vehicle (EV) industry, said people aware of the company's plans. Towards this, the Aditya Birla Group metals flagship is devising ways to become a direct supplier to automakers as part of a broader strategy to strengthen its aluminium "downstream businesses (value added products)," the people said. EVs, which utilise many aluminium parts since the metal is lighter than steel, will be the centrepiece of its new strategy. To fast-track the plan, Hindalco is also scouting for acquisitions in this space, the people said.

"The company is trying to get closer to customers and instead of being a supplier to a tier 2-3 supplier, it's looking to be a supplier to the auto manufacturers. In addition to helping in moving up the value by becoming a direct supplier of precision parts from a mere material supplier, it would also help the firm boost its margins," one of the persons said.

Hindalco initiated its revamped strategy in 2022, embarking on a $ 6.1 billion capex expansion plan over a five-year period. This includes spending $735 million to add 260 kilotonnes to its downstream capacity through organic expansions till FY27.Carving out a business unit for the personal mobility segment focused on EVs and related components in the value chain was one of the initial steps. At the same time, it set up dedicated business units for commercial vehicles, and building and construction as part of strengthening downstream business.

The target sectors offered a lot of headroom for growth owing to their very low per capita aluminium consumption compared to the global average. To serve the personal mobility segment, Hindalco has set up a facility in Chakan, Pune for producing aluminium battery enclosures. It is collaborating with automakers - which are also its customers - to jointly develop other critical parts for EVs, said the person cited earlier. In 2023, it set up a dedicated facility for Tata Motors to design and build the first-ever all-aluminium cargo body for the new generation Tata Ace EVs.

Hindalco has also identified certain parts such as aluminium extrusions-based motor housing, all aluminium handlebar, passivated aluminium coils and sheets, etc for EVs. Last December, the company announced it is investing ?800 crore to build a new plant near Sambalpur in Odisha to enhance capacity of fine quality aluminium foil used in rechargeable batteries for EVs and energy storage systems. The facility will initially produce 25,000 tonnes of the product which forms the backbone of lithium-ion and sodium-ion cells, it said. By 2030, Hindalco sees demand for battery grade aluminium foil in India to grow manifold to 40,000 tonnes, primarily driven by mushrooming growth in gigafactories for advanced cell manufacturing. Hindalco is expected to be a major beneficiary of the growing demand for aluminium and related products fuelled by sectors such as auto, packaging, building and construction.

Hindalco Industries, the world's largest aluminium rolling and recycling company, is looking at a bigger play in the auto component business by leveraging the growing electric vehicle (EV) industry, said people aware of the company's plans. Towards this, the Aditya Birla Group metals flagship is devising ways to become a direct supplier to automakers as part of a broader strategy to strengthen its aluminium downstream businesses (value added products), the people said. EVs, which utilise many aluminium parts since the metal is lighter than steel, will be the centrepiece of its new strategy. To fast-track the plan, Hindalco is also scouting for acquisitions in this space, the people said. The company is trying to get closer to customers and instead of being a supplier to a tier 2-3 supplier, it's looking to be a supplier to the auto manufacturers. In addition to helping in moving up the value by becoming a direct supplier of precision parts from a mere material supplier, it would also help the firm boost its margins, one of the persons said. Hindalco initiated its revamped strategy in 2022, embarking on a $ 6.1 billion capex expansion plan over a five-year period. This includes spending $735 million to add 260 kilotonnes to its downstream capacity through organic expansions till FY27.Carving out a business unit for the personal mobility segment focused on EVs and related components in the value chain was one of the initial steps. At the same time, it set up dedicated business units for commercial vehicles, and building and construction as part of strengthening downstream business. The target sectors offered a lot of headroom for growth owing to their very low per capita aluminium consumption compared to the global average. To serve the personal mobility segment, Hindalco has set up a facility in Chakan, Pune for producing aluminium battery enclosures. It is collaborating with automakers - which are also its customers - to jointly develop other critical parts for EVs, said the person cited earlier. In 2023, it set up a dedicated facility for Tata Motors to design and build the first-ever all-aluminium cargo body for the new generation Tata Ace EVs. Hindalco has also identified certain parts such as aluminium extrusions-based motor housing, all aluminium handlebar, passivated aluminium coils and sheets, etc for EVs. Last December, the company announced it is investing ?800 crore to build a new plant near Sambalpur in Odisha to enhance capacity of fine quality aluminium foil used in rechargeable batteries for EVs and energy storage systems. The facility will initially produce 25,000 tonnes of the product which forms the backbone of lithium-ion and sodium-ion cells, it said. By 2030, Hindalco sees demand for battery grade aluminium foil in India to grow manifold to 40,000 tonnes, primarily driven by mushrooming growth in gigafactories for advanced cell manufacturing. Hindalco is expected to be a major beneficiary of the growing demand for aluminium and related products fuelled by sectors such as auto, packaging, building and construction.

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