Are LFP cathodes and silicon-graphite anodes the best for cost efficiency in EV batteries? Sunit Kapur, CEO of Epsilon Advanced Materials, discusses this with EFY’s Nitisha Dubey, comparing their advantages over Chinese market players.
Q. How do anode and cathode improvements impact EV battery performance?
A. The anode and cathode constitute nearly 65% of the battery cell’s value. These components are crucial as they facilitate the flow of current and significantly influence the cell’s physicochemical properties and the physical properties of the materials used in the cell. Both play pivotal roles in the battery’s life cycle and energy density.Technological advancements in anode and cathode manufacturing are essential for improving battery performance. The cathode’s chemistry is evolving from nickel manganese cobalt (NMC) to lithium iron phosphate (LFP), especially in developing regions like China, India and parts of Europe. Adding magnesium to LFP can enhance the battery’s life cycle and discharge capacity.For the anode, traditional graphite materials are processed without chemicals, using thermal treatment to create active graphite anode materials. Although silicon anodes can significantly increase discharge capacity, they are much more expensive. Therefore, a balanced approach involves adding a small percentage of silicon composite (around 5-7%) to graphite to improve discharge capacity while managing costs.
Q. What are the differences between anode and cathode manufacturing processes in batteries?
A. The manufacturing processes for anodes and cathodes are distinct, with some similarities but notable differences. While various methods exist, 94% to 95% of graphite anode processing occurs in China, where natural graphite is often chemically purified. Unfortunately, China has faced challenges in consistently adhering to environmental norms, particularly in managing and discharging hydrofluoric acid. In contrast, we use thermal purification, an air-based process that avoids using chemicals. There are different methods for cathodes, such as the dry and hydrostatic processes. We use the hydrostatic process, which is water-based. This patented process demonstrates better homogeneity and performance for LFP and LMFP technologies than the dry process. Our pilot plant in Germany is set to commercialise this proven process, highlighting the significant differences in anode and cathode manufacturing.
Q. What sets your thermal process apart from traditional methods used in China?
A. There are no major synthetic graphite manufacturing operations outside China, and many suppliers rely on thermal treatment there. While all use thermal processes, our method is more closed-loop than China’s, as shown by our life cycle assessment (LCA), which measures our carbon footprint. This is crucial for the sustainability of products like battery electric vehicles (BEVs) and their impact on energy transition. To address sustainability concerns, we conducted an LCA for our plant in India, showing our carbon footprint is 78% lower than a similar plant in China. While Chinese plants have a high carbon footprint of around 28 kg of carbon dioxide per kilogram of synthetic graphite, ours is in the low single digits. Additionally, when we expand to Finland, our footprint will be 6-7% lower, achieving an 84% reduction compared to China. We anticipate a 70% lower carbon footprint in the US due to a 50/50 mix of renewable and non-renewable energy sources. As local energy companies aim for carbon neutrality within two decades, our footprint will further improve. The significant advantage over Chinese manufacturers is our substantially lower carbon footprint. While manufacturing outside China is still emerging, we are ahead of the competition with a commercial-scale plant in India. As the first anode manufacturer in India and among the first to be qualified in the US, Epsilon leads with low-carbon graphite manufacturing, outpaces Chinese competitors.
Q. How do you source your raw materials?
A. There are three different materials for the anode: needle coke, mesocoke (synthetic graphite), and natural graphite. Needle coke is derived from petroleum, mesocoke is synthetic, and natural graphite comes from flake graphite mined from the earth. We produce our precursor. Our company originated as part of a large steel complex, where we obtain coal tar as a byproduct of steel production. This coal tar is taken to Epsilon Carbon, our parent company, where it is distilled to create various grades of pitch. We sell this pitch to industries such as aluminium manufacturing, but a special grade of this is reserved for our battery materials business. We treat this special pitch to create our precursor, which is a key differentiator in our production process. Additionally, our graphite manufacturing process is versatile and can use all three types of precursors: mesocoke produced in-house, needle coke from petroleum refineries, and natural graphite from mines. This flexibility makes our process unique. However, for cathode production, we need to source lithium hydroxide externally.
Q. What are your sources for lithium hydroxide?
A. We source our lithium hydroxide differently based on the destination and regulatory considerations. For shipments to the US, we purchase from Australia due to the free trade agreement between Australia and the US, allowing us to qualify for the Inflation Reduction Act if processed in India before shipping to the US. For other markets without such requirements, we source from China. For lithium iron phosphate (LFP), we aim to source iron phosphate locally, as it is a byproduct of steel production, which aligns with our strategy to utilise local resources.
Q. Who is your target audience primarily?
A. While our main target is battery cell manufacturers, we also prioritise the battery energy storage sector.
Q. What type of manufacturing facility do you have, and how does it operate?
A. We began this journey in 2020 with the establishment of a pilot plant, and earlier this year, we successfully scaled up to a commercial facility. This plant demonstrates our ability to produce at scale and serves as a vital training ground for our workforce.
As we expand our operations, we are simultaneously developing three greenfield plants, with projects advancing in India and the United States. Our Indian facility plays a crucial role in equipping our team with the skills and experience needed for the upcoming US installation. We will deploy some of our experienced personnel to the US while maintaining a synchronised schedule across the projects in both countries.
In terms of workforce planning, our hiring for our US facility is expected to begin at around early 2026, approximately six to eight months before it becomes operational, ensuring that we have the right teams in place to drive our growth forward.
Q. How do the scale and equipment of the pilot line differ from the commercial-scale plant?
A. Our customer qualification plant validates our materials before we move to full-scale production. These commercial-scale facilities are designed to handle significantly larger capacities. We currently run six to seven distinct processes depending on the product, each involving multiple steps. These steps range from milling and shaping to carbonisation, calcination, and granulation.
To prepare for mass production, we have already installed the necessary equipment for each process at the qualification plant. Although the capacity of this equipment varies—from 1000 to 2500 tonnes—our graphitisation process, which operates at temperatures up to 3200°C, presents a bottleneck. At this facility, we can graphitise up to 200 tonnes, with the potential to scale to 500 tonnes if required, while our finishing, shaping, coating, and milling equipment can handle 2500 tonnes.
As we expand to our larger plants in India and the US, we will scale this infrastructure significantly—installing twelve times the equipment for full-scale commercial production. This includes expanding the graphitisation furnace to three times its current capacity, allowing us to meet the demands of mass manufacturing efficiently. The foundation is already in place; it is now about multiplying our capabilities to match the growing demand.
Q. Is there a specific criterion you will follow for hiring trainees?
A. The approach varies by country. We aim to incorporate diploma engineer trainees (DETs) who will undergo training. In India, we seek candidates with a minimum level of education before transitioning to our plant in the US. The required education level for manufacturing or supervisory roles in the US is typically a high school diploma. In contrast, India produces a higher number of engineering graduates. To address these differences, we have partnered with a local college in the US to train their students, preparing our workforce before the plant becomes operational. This training will include both classroom instruction and practical experience. In India, we will utilise our customer qualification plan and demo facilities to train our team.
Q. Are you targeting specific colleges in India for recruitment?
A. As part of our commitment to nurturing talent and innovation, we have established a strategic partnership with top institutions in the country. This collaboration has enabled us to bring a new wave of highly skilled graduate engineering trainees into our parent company and the battery materials division. By sourcing talent from such a prestigious institution, we ensure that we continue to build a team equipped with the expertise needed to drive our growth and industry leadership.
Q. How are you addressing the global anode material demand amid cell manufacturer and auto OEM partnerships?
A. Cell manufacturing is concentrated in Japan, Korea, and China, with major companies like CATL, Goshen, LG Energy Solution, Samsung SDI, SDK, and Panasonic. These manufacturers possess unique expertise and often partner with OEMs, such as Amar Raja, Exide, GM, Ford, and Stellantis. For example, LG’s current capacity in the US is 565 gigawatt-hours, requiring approximately 565,000 tonnes of anode material. We are establishing a 30,000-ton plant in the US and a similar plant in India. Initially, we will meet less than 6-7% of LG’s demand in the US, but we plan to expand to 60,000 tonnes and potentially build another plant there. Our qualification process involves working with cell manufacturers, while commercial negotiations are primarily with auto OEMs, who often have joint ventures with these cell manufacturers. In India, gigafactories are emerging. Ola is developing its gigafactory, and other companies like National Energy, Suzuki, Amara Raja, and Exide are also entering the scene. These battery companies are currently focused on acquiring cell manufacturing know-how from Chinese manufacturers. We are still collaborating with them to qualify our materials and establish upstream manufacturing capabilities in India.
Q. What are the investment plans and production targets for anode and cathode materials?
A. We have announced a ₹90 billion investment in producing 100,000 tonnes of anode material in Karnataka. We will begin with 10,000 tonnes for cathode material and eventually increase to 100,000 tonnes, which is covered by the ₹500 billion investment we announced.
Q. Why is Karnataka chosen for anode production, and what are your plans for cathode production?
A. We chose Karnataka for our anode production due to the strong ecosystem already in place, including the precursor production and our backward integration with Epsilon Carbon, which is tied to nearby steel plants. This synergy makes Karnataka a strategic choice for anode manufacturing. As for cathode production, we are still evaluating various options and are open to exploring other states. While Karnataka has clear advantages for anode production, we remain flexible about the location for cathode production.
Q. What challenges do upstream manufacturers face in the graphite manufacturing process?
A. The graphite manufacturing process technology outside China is largely a black box, and similarly, cell manufacturing technology is closely guarded outside Korea and Japan. Cell manufacturers typically do not share their proprietary chemistry with upstream manufacturers. As a result, upstream manufacturers often have to experiment blindly, sending their products for qualification, a process that can take six to seven years. However, we believe we are among the first outside China to have our material fully qualified. This success involves significant technology improvements, such as enhancing discharge capacity, TAP density, energy density, and fast charging capabilities. Our company is at the forefront of these advancements, alongside a few other firms primarily based in the US and one in Europe. We hope for the success of all players in this space, as there is a vast market to explore.
Q. Can agreements between the US and India enhance collaboration and scalability?
A. India could benefit from a critical mineral agreement or free trade agreement with the US to enhance collaboration and scale production. In the mid to long term, companies like Epsilon, setting up facilities in the US, can help localise production. Initially, scaling up in India would be more feasible, and as Indian cell manufacturers mature and demand higher volumes, we could transition more facilities to the US. This strategy will enable greater scale and efficiency in both regions.
Q. How do free trade agreements (FTAs) impact local production, and what challenges does India face?
A. There is a free trade agreement between South Korea and the US, allowing anything supplied from South Korea to the US to be considered local production. Similarly, NAFTA (North American Free Trade Agreement) includes Canada and Mexico, meaning goods traded between these countries are also considered local. Japan and Australia are part of an FTA, and Japan is part of the Critical Mineral Agreement. However, India does not have any such agreements with the US.
Q. How does the Inflation Reduction Act (IRA) impact production localisation and tax credits for US customers?
A. The US focuses on local production through the IRA. Investing ₹90 or ₹50 billion in multiple locations is not feasible for everyone. We have announced ₹200 billion of investment over the next five to six years for three anode plants, a significant challenge. While the US expects local production to qualify for incentives, achieving the necessary scale is difficult. We are lobbying to highlight this challenge, emphasising that creating one plant in each geography is tough. Securing public funding for two plants in one area is even more challenging, as investors want to see the first plant’s performance first. We can supply from India without issue, but US customers will not qualify for the tax credit. The IRA offers several billion benefits worth around $350 billion. For example, if an auto OEM in the US buys from a country with a free trade or critical mineral agreement or from within the US, their customers qualify for a $7500 tax credit from the IRS. This is significant when purchasing a $16,000 car. However, buying from China disqualifies them from this credit. While buying from India currently qualifies, localisation requirements increase to 60% by 2026 and 80% by 2028. Most facilities will not be ready before 2026, so localising in the US is essential for customers to qualify for the tax credit.
Q. What were the key criteria for selecting your facility sites in the US, India, and Finland, and how do you address power and carbon footprint concerns?
A. In the US, we evaluated many sites, narrowed it down to seven, and ultimately selected one. A significant criterion is proximity to electric vehicles or automobile ecosystems. Our facility in North Carolina is within 57 miles of several automotive companies. Another critical factor is power and energy availability. For instance, producing 60,000 tonnes requires 240 megawatts of power to power a small city. Many states could not provide this, but North Carolina could. Other important criteria include local incentives, established industrial parks, community college support, and ease of doing business. In India, we have positive experiences in Karnataka, thanks to our existing large facility with Epsilon Carbon. The local ecosystem, with precursor production in the same location, minimises back-and-forth logistics. The area also has a well-established community and talent pool supported by our efforts and those of Jindal South West (JSW). Globally, we prioritise minimising our carbon footprint and aim for 90% renewable power in India, 50% in the US, and 100% in Finland. Our Indian facility’s carbon footprint is 78% lower than our Chinese counterparts, and our Finnish facility will be 84% lower. These are key factors in our site selection process.
