Ashok Leyland, India’s second-largest commercial vehicle maker, has signed a long-term, exclusive partnership with China’s CALB Group to develop and manufacture next-generation batteries in India.
The deal is framed around localisation—building out domestic capability for battery packs first and, potentially, cells later—so that Ashok Leyland can serve its own electric trucks and buses as well as outside customers over time. The company has guided for more than ₹5,000 crore of investment spread over the next 7–10 years.
What exactly was announced?
On September 1, 2025, Ashok Leyland said it would invest over ₹5,000 crore to develop and manufacture batteries in India for both automotive and non-automotive uses, including energy storage systems (ESS).
The company simultaneously unveiled an exclusive partnership with CALB, described as one of China’s leading battery technology firms. The announcement positions Ashok Leyland to supply batteries not only for its commercial-vehicle lineup but also for its EV subsidiary Switch Mobility and, later, for external demand.
Two days later, the company issued a short clarification that tightened some key details:
- No direct investment from CALB is envisaged; 2) the ₹5,000-crore spend will be phased over up to a decade; 3) production is targeted to begin in 2027; 4) the factory location is still under discussion with various state governments; and 5) the initial scope is importing cells and assembling battery packs, with subsequent steps to be finalised as the programme progresses.
Trade media covering the agreement added that battery localisation will start with LFP (lithium-iron-phosphate) packs, with Ashok Leyland planning an initial outlay in the range of ₹300–600 crore over the first 2–3 years to stand up battery-pack manufacturing capacity; a future move into cell production remains an option.
Why CALB—and what will each side do?
CALB is among the world’s significant EV battery suppliers, serving a range of Chinese automakers and expanding internationally. In India, however, Ashok Leyland has clarified that the capital commitment comes from Ashok Leyland, not CALB, which helps sidestep regulatory complexity while still letting the Indian OEM tap CALB know-how and a vetted cell supply in the early stages.
The companies also flagged a Global Centre of Excellence to push R&D on battery materials, recycling, battery-management systems (BMS), and advanced manufacturing processes—a signal that the roadmap isn’t just assembly, but capability creation.
Timelines, investment phasing, and the first products
From a timeline standpoint, the first production is aimed for 2027. Before that milestone, management expects to spend in the low hundreds of crores to get LFP battery-pack lines operational, with the larger ₹5,000-crore figure representing a multi-year investment arc that could eventually include cell manufacturing if the business case holds.
Brokerages following the company estimate captive demand of roughly 4–6 GWh over the next 4–5 years, primarily to serve Ashok Leyland’s own vehicles and Switch Mobility buses, with non-captive volumes and ESS opportunities to follow.
The plant location is unresolved; Ashok Leyland says discussions with several state governments are underway. That matters because incentives, infrastructure, and logistics footprints (including access to ports for imported cells and to OEM customers for packs) will influence both cost and speed to market.
Why localising batteries is such a big lever
Batteries are the single most expensive component in an electric bus or truck—often up to 40% of the vehicle’s cost. Moving assembly, integration, and eventually more of the value chain into India can compress costs, cut foreign-exchange exposure, and shorten lead times.
For a commercial-vehicle OEM, those gains translate directly into more competitive total cost of ownership (TCO) propositions for fleet buyers, which is crucial in a segment where uptime and rupee-per-kilometre economics dominate purchase decisions.
Localisation also insulates the company from supply-chain shocks that can hit imported modules, and it enables tighter application-specific engineering—tuning pack form factors, thermal management, and BMS to India’s duty cycles (stop-start urban bus routes, dusty environments, high ambient temperatures, and mixed grid quality for depot charging). With a partner like CALB, Ashok Leyland can source proven cell formats and chemistries and focus its local talent on pack design, safety validation (e.g., thermal propagation mitigation), diagnostics, and serviceability—all critical to commercial operations.
Beyond Vehicles: Energy Storage and Non-Captive Sales
While the first wave targets Ashok Leyland’s own EVs and Switch Mobility fleets, the company’s roadmap explicitly calls out non-automotive opportunities. Grid-scale storage and C&I (commercial & industrial) energy storage are growing use cases in India, and LFP—with its cycle life and thermal stability—fits many of these deployments. A domestically engineered pack platform, built around a reliable cell supply, could therefore extend the addressable market well beyond buses and trucks.
That, in turn, diversifies revenue and improves utilisation of manufacturing assets. It also places Ashok Leyland inside a broader energy transition story where storage is needed to integrate renewables and stabilise microgrids—an area policymakers are actively trying to accelerate.
How Does This Stack up Against India’s EV Supply-Chain Shift
Ashok Leyland’s move puts it in company with other Indian firms racing to reduce dependence on imported cells and assemble more of the EV bill-of-materials at home. Reuters notes that many Indian EV makers still import cells primarily from China and South Korea, but a wave of domestic manufacturing commitments is changing that picture.
Ashok Leyland’s programme joins efforts from legacy battery firms and automakers building cell and pack capacity, as the market scales from early pilots toward mainstream adoption.
Financial markets appear to like the direction: brokerages have been constructive on the investment case, emphasising that initial spending is disciplined (pack assembly first) and that deeper cell localisation would be pursued only if returns justify it. They also highlight the exclusive nature of the CALB tie-up for India and the near-term focus on serving internal demand before branching out.
The Fine Print To Watch
- Capital discipline & phasing. The company has deliberately structured this as a phased investment, with no direct CALB funding and a careful ramp from packs to any possible cell lines. That reduces execution risk and lets the business test product-market fit and cost curves before committing the full envelope.
- Chemistry choices. Starting with LFP makes sense for buses and many trucks due to safety and cycle-life advantages. The team’s R&D centre will be important for cell-to-pack integration, thermal strategies, and second-life or recycling pathways.
- Location & incentives. A state that can provide land, power reliability, skilled labour, and logistics advantages (for both import of cells and domestic distribution) will materially affect cost per kWh and time-to-market. Location remains TBD.
- Timeline realism. The 2027 start target provides a clear horizon. Given global competition for equipment and talent, hitting that timeline will require early vendor lock-ins and parallel workstreams on quality systems, safety certifications, and customer validations.
Summary
Ashok Leyland’s partnership with CALB is not about importing a black box—it is about building an Indian battery business step by step, beginning with LFP pack assembly for captive needs, then scaling outward into broader automotive and energy-storage markets as capabilities and volumes grow.
The ₹5,000-crore commitment over a decade signals seriousness, but the phased approach and explicit 2027 production target show management understands the operational complexity of batteries. If executed well, the move can push down EV costs for buses and trucks in India, create valuable domestic IP around packs and BMS, and plug Ashok Leyland into one of the most important value pools of the electric era.