South Korea's LG Energy Solution (LGES) is engaged in discussions with India's JSW Energy to establish a joint venture for manufacturing batteries for electric vehicles and renewable energy storage.

The collaboration is expected to require an investment exceeding USD 1.5 billion, according to two media sources. The two companies have signed a preliminary agreement to form an equal partnership.

LGES will contribute the technology and equipment necessary for battery production, while JSW Energy will provide the financial investment, as noted by one of the sources.

The discussions include plans to establish a manufacturing facility in India with a total capacity of 10 gigawatt-hours.

Approximately 70% of this capacity is expected to be utilised by JSW for energy storage and electric vehicles, while the remaining 30% will be allocated to LGES, both sources confirmed.

"LGES sought a partner in India, and JSW is interested as it plans to launch its own brand of electric vehicles, starting with buses and trucks, followed by cars," stated the second source.

The agreement remains non-binding, and both companies anticipate concluding the negotiations in the coming months, according to the sources.

"We are exploring various potential business options and closely monitoring market conditions," LGES said in a statement, adding that no specific plans for India have been finalised. JSW Energy declined to comment.

In 2023, media reported that LGES and JSW had entered early-stage discussions to collaborate on battery manufacturing in India.

For LG Energy Solution (LGES), a supplier to Tesla, General Motors, and Hyundai, the proposed joint venture provides an opportunity to establish a manufacturing presence in India. The company already supplies batteries to electric scooter manufacturers such as Ola Electric and TVS Motor within the country.

This initiative would enable LGES to reduce the risks associated with manufacturing in a market where the electric vehicle industry is still in its nascent stages. Additionally, a global slowdown in demand for electric vehicles has prompted LGES to scale back its capital expenditure plans for 2025, making this venture a strategic move to strengthen its position in India.

For JSW, led by chairman Sajjan Jindal, who has publicly declared his ambition to develop electric vehicles, the partnership presents an opportunity to secure a reliable local supply of batteries. This move is also expected to lower production costs for its forthcoming range of EVs.

In 2023, JSW entered into a joint venture with China's SAIC Motor, acquiring a 35% stake in SAIC's Indian subsidiary, MG Motor. JSW is currently involved in supporting MG Motor's expansion efforts in the country.

"JSW has proposed a 25-year agreement to LGES," said the second source, noting that JSW continues to engage with other battery manufacturers as well.

The companies aim to have the plant operational by the end of 2026 and expect to reach a final decision within the next three to four months, according to the first source.

If the joint venture proceeds, it will represent a significant boost for the Indian government's efforts under Prime Minister Narendra Modi to incentivise local manufacturing of clean vehicles through substantial financial incentives.

India's electric car market is currently led by domestic manufacturers such as Tata Motors and MG Motor, while the electric scooter segment is dominated by brands such as Ola, TVS, and Bajaj Auto.