The more significant development is the changing distribution of profits. Battery manufacturers, excluding BYD, are now estimated to account for nearly 45% of industry profits, compared with the dominance of lithium miners during the commodity boom of 2022. The shift suggests that the ability to process materials, manufacture cells efficiently and integrate operations across the supply chain is becoming increasingly important in determining profitability.
India’s ₹18,100-crore battery manufacturing challenge
For India, the changing dynamics present a difficult challenge. The country is committing ₹18,100 crore through its production-linked incentive (PLI) programme to support advanced-chemistry cell manufacturing and reduce dependence on imported batteries. However, building manufacturing capacity is only the first step towards establishing a commercially sustainable industry.
China's competitive advantage extends beyond its installed production capacity. Its established supplier networks, manufacturing experience, technology capabilities and integration across different stages of the battery value chain can help companies improve efficiency and respond quickly to changes in demand and pricing.
🔋 CHINA'S BATTERY CHAIN IS PRINTING RECORD PROFITS. INDIA IS SPENDING BILLIONS TRYING TO COMPETE! 🇨🇳🇮🇳 Look at these two Citi charts. 👇 📈 China's battery value-chain EBIT hit a record RMB 64bn in 2Q26, up 6% QoQ. 🔋 Battery makers (ex-BYD) now capture nearly 45% of industry profits, versus lithium miners dominating in 2022. 🏭 And capex is accelerating again! This isn't just a profit recovery. It's a shift in economic power from MINES to FACTORIES. Meanwhile, India is committing ₹18,100 crore in PLI incentives to build its battery ecosystem. THE IRONY? Cheap Chinese batteries accelerate India's EV revolution but threaten the economics of India's own gigafactories. 🇨🇳 China has SCALE, TECHNOLOGY & INTEGRATION. 🇮🇳 India has AMBITION, INCENTIVES & CATCHING UP TO DO. China is fighting for market share and margins. India is still fighting to establish manufacturing scale. The question isn't whether India can manufacture batteries. It's whether India can manufacture them PROFITABLY against China. Gigawatts don't create wealth. ROIC does.
— Exencial Research Partners (@exencial_RP) October 11, 2026
Indian manufacturers, meanwhile, must develop domestic supply chains, achieve consistent production quality and raise capacity utilisation while competing with established international players. New battery plants also face substantial upfront capital requirements, making production volumes and operating efficiency critical to recovering investments.
Cheap Chinese batteries pose a dilemma for India
The availability of competitively priced Chinese batteries creates an additional dilemma for India. Cheaper imports can help domestic electric-vehicle manufacturers control costs and make EVs more affordable for consumers. However, they can also put pressure on the prices and margins of locally manufactured cells, complicating the business case for new Indian factories.
This creates a tension between the immediate benefits of affordable batteries and the longer-term objective of developing domestic manufacturing capabilities. Policy support can encourage investment, but it cannot by itself guarantee that Indian factories will match the cost structures and profitability of Chinese competitors.
Scale and capacity utilisation will determine profitability
The renewed capital expenditure visible in China's battery value chain also raises questions about the competitive environment that Indian manufacturers will encounter as their facilities scale up. Continued investment could reinforce China's position, although the eventual impact will depend on demand growth, capacity utilisation, pricing and the risk of oversupply.
The central issue, therefore, is not simply whether India can manufacture batteries domestically, but whether it can do so profitably without relying indefinitely on government support. The returns generated on invested capital, rather than announced capacity alone, will determine whether the country's battery ambitions translate into a durable industrial advantage.
As India expands its EV ecosystem, the challenge will be to turn incentives into productive capacity, competitive costs and sustainable earnings. China's experience shows that manufacturing scale can be a powerful advantage, but India's success will depend on how effectively it converts investment into commercially viable production.