The Real Surprise Hidden in Reliance’s CATL Talks: It’s a Quiet Retreat, Not a Reboot
The CATL story isn’t a Reliance comeback. It’s the third stop on a route that’s getting shorter each time. Two years ago, Mukesh Ambani told shareholders Reliance would manufacture its own battery cells at Jamnagar. Then it would license the technology. Then it would assemble cells from imported kits. Now, per Bloomberg, it’s negotiating to buy finished battery system components from CATL — the same Chinese giant whose earlier tech-transfer talks with Reliance already collapsed once. Every step has moved further from “make in India” and closer to “package in India.”
What Actually Happened
- Bloomberg reported on May 18-19, 2026 that Reliance Industries is in early-stage talks with CATL and other global suppliers for battery system parts.
- The components are intended for the Jamnagar battery energy storage system (BESS) facility, India’s largest planned storage complex.
- This time, the conversation is about sourcing parts — not transferring technology to manufacture cells in India.
- The talks follow the January 2026 collapse of Reliance’s licensing arrangement with Xiamen Hithium Energy Storage Technology.
- The Hithium pullback was triggered by Beijing’s October-November 2025 export controls on battery technology transfers.
- CATL itself had earlier discussed a tech-transfer arrangement with Reliance — those talks also fell through.
- Reliance has officially affirmed that its battery manufacturing plans remain on track and that the 2026 timeline is unchanged.
The Main Argument: Three Quiet Steps Down the Value Chain
Reliance’s battery strategy has walked down three rungs in under three years, and almost nobody has framed it that way.
Rung 1 — August 2025 AGM: Anant Ambani told shareholders the 40 GWh battery gigafactory would begin operations in 2026, with a roadmap to 100 GWh. The plan was indigenous cell manufacturing, using technology licensed from a Chinese partner.
Rung 2 — January 2026: Hithium walks. Reliance categorically affirms that plans are intact, but the strategic focus visibly shifts toward BESS assembly. That is a fundamentally different business. Assembly is essentially packaging imported cells into containerised systems for grid use. The cells — the value-dense part — come from somewhere else.
Rung 3 — May 2026: The CATL conversation is now about components, not technology, not cells. Just parts that feed into the larger storage systems Reliance plans to integrate.
The math gets uncomfortable. Cell manufacturing typically captures the dominant share of total BESS value — depending on chemistry and integration, often half or more. Pack assembly captures a smaller slice. System integration adds a thin margin on top. By migrating from “make cells” to “buy parts and integrate,” Reliance is potentially conceding the most valuable part of its showcase clean-energy bet.
None of this is captured in the headline “Reliance in talks with CATL.”
Supporting Evidence: The Numbers Behind the Climbdown
The Acquisitions Graveyard
Since 2021, Reliance has spent approximately $290 million acquiring battery technology assets:
- Faradion (UK sodium-ion pioneer) — roughly $170 million in 2022
- Lithium Werks (lithium iron phosphate technology) — $61 million in 2022
- Ambri (US liquid-metal battery startup) — filed for bankruptcy in May 2024 after Reliance declined bridge financing
- Altigreen (commercial EV maker) — reportedly halted manufacturing in 2024
The patents are real. The commercial output is thin. Faradion’s commercialisation pathway depends on the Jamnagar gigafactory, which is reportedly a year behind schedule.
The PLI Penalty Box
Reliance was awarded a slice of India’s 50 GWh Production-Linked Incentive (PLI) for Advanced Chemistry Cells in 2024, alongside Ola Electric and Rajesh Exports. The scheme has a ₹18,100 crore outlay. To date, no PLI-ACC incentives have been disbursed — manufacturers have not been able to meet the 50% domestic value-addition requirement.
Industry reports cited by independent outlets peg Reliance’s gigafactory at roughly a year behind schedule, with daily PLI-related penalties accruing.
If Reliance leans further into assembly using imported cells, hitting the 50% domestic-content threshold becomes structurally harder. Either PLI eligibility lapses, the rules get diluted to accommodate the new reality, or another partner has to fill the cell-side gap.
India’s BESS Math Doesn’t Wait
The Central Electricity Authority estimates India needs around 411 GWh of energy storage by 2031-32 — roughly 236 GWh from BESS and 175 GWh from pumped hydro. Currently, only about 219 MWh of BESS capacity is commissioned. The gap is not a rounding error; it is three orders of magnitude. Grid-scale tariffs have already fallen 65% from 2022 to 2024, the tenders are flowing, and whoever cannot make or reliably source cells at competitive cost will lose ground.
Adani Already Knocked on the Same Door
Gautam Adani visited CATL’s headquarters in 2025 and toured the company’s automated energy storage production lines. Both of India’s largest private clean-energy bidders are now circling the same Chinese supplier — for the same components — while Beijing tightens controls on what can leave the country. That is not a Reliance-specific weakness. It is a structural Indian one.
The Honest Risk Section: Where This Argument Could Be Wrong
Four credible counter-arguments deserve airtime.
Counter 1: This is pragmatism, not retreat. China dominates the bulk of global battery cell production. Trying to build a domestic cell ecosystem from scratch in 18 months was never realistic. A staged approach — assemble first, vertically integrate later — is what most global majors have done.
Counter 2: BESS assembly is higher-margin than it sounds. System integration involves engineering, thermal management, fire suppression, EMS software, and grid-tied controls. None of that is commoditised. A focused Reliance BESS business could plausibly be profitable without owning the cells outright.
Counter 3: The PLI rules will adapt. India’s policy machinery has revised PLI terms before. A relaxation of domestic content rules, or a parallel BESS-specific incentive bracket, is a realistic possibility within 12-18 months.
Counter 4: Reliance’s denial may be the more accurate version. The company has formally stated cell-manufacturing plans remain on track. Lithium Werks and Faradion subsidiaries could fill the cell role. Bloomberg’s reporting is leak-driven and may overstate the climbdown.
All four counter-points have merit. None of them change the underlying observation: the public-facing strategy is now framed as “assembly plus sourcing,” not vertically integrated cell manufacturing.
What This Means for RIL Shareholders
Three uncomfortable read-throughs.
1. The new energy story takes longer. Mukesh Ambani has positioned new energy as the next major growth engine alongside refining, retail, and Jio. A pack-assembly business does not command the same multiples as a vertically integrated battery maker. The narrative arc, and the associated rerating tail, extends.
2. Capital intensity stays high, ROI horizon stretches. The ₹75,000 crore committed to the Dhirubhai Ambani Green Energy Giga Complex does not shrink because the value capture shrinks. Expect higher capex amortisation against a smaller initial margin pool.
3. Geopolitical risk is structural, not transient. Even successful CATL component sourcing leaves Reliance exposed to Chinese export-approval politics. The 2025 controls will not be the last.
For long-only RIL holders, none of this is a trigger to exit. For the new-energy thesis specifically — the part of the story that justified some of the conglomerate-discount premium — the timeline has slipped meaningfully.
3 Things to Watch Over the Next 30 Days
- AGM August 2026 language. Watch whether Anant Ambani revises the 40 GWh and 100 GWh timelines or restates them verbatim. A restatement without fresh milestone numbers is itself a signal.
- PLI scheme modifications. Any official notification adjusting domestic-content rules, extending deadlines, or carving out a BESS-specific incentive bracket means the rules are being rewritten to fit Reliance’s new reality — not the other way around.
- CATL deal structure. Look closely at whether the eventual agreement is a supply contract, a joint venture, or a licensing arrangement. Each structure carries radically different implications for value capture and technology access.
The Bottom Line
The CATL talks are not a bombshell. They are closer to a confession.
Reliance set out to build battery cells in India. It now plans to buy them. The Jamnagar complex remains real, expensive, and operational. But the version of it that justified “next jewel” valuation language is being quietly reshaped into something humbler — a clean-energy integrator that depends on Chinese suppliers it cannot always rely on.
Whether that turns out to be prudent retreat or strategic failure depends on what comes next. For now, the burden of proof has shifted from “show us the gigafactory” to “show us the cell line.”
Frequently Asked Questions
1. What is the Reliance-CATL deal about?
Reliance Industries is in early-stage discussions to buy battery system components from CATL and other global suppliers for its Jamnagar facility. The parts are intended for battery energy storage systems (BESS), not for electric vehicles.
2. Is this a confirmed partnership?
No. Bloomberg’s reporting cites sources familiar with private discussions. No agreement has been signed and there is no certainty that talks will result in a partnership.
3. Why did the earlier Hithium deal fall apart?
Xiamen Hithium reportedly withdrew from technology-licensing talks with Reliance in January 2026, after Beijing imposed new export controls on battery technology transfers in late 2025. Reliance denied that the broader battery plan was paused but acknowledged a refocus on BESS assembly.
4. Will this affect Reliance’s PLI incentives?
Possibly. India’s PLI-ACC scheme requires 50% domestic value addition. Assembling cells imported from China is structurally harder to qualify under that threshold than making cells domestically. As of early 2026, no PLI-ACC incentives have been disbursed to any awardee.
5. Is Reliance still going to manufacture battery cells in India?
Officially yes — the company has affirmed cell manufacturing remains part of its plan. Operationally, recent reports suggest the cell-manufacturing component has been deprioritised near-term in favour of BESS assembly using imported cells.
6. How big is the India BESS opportunity?
The Central Electricity Authority estimates India will need around 411 GWh of energy storage by 2031-32, with roughly 236 GWh from BESS. As of mid-2025, only about 219 MWh of BESS capacity was commissioned in India — less than 0.1% of the 2032 target.
7. How should RIL shareholders read this?
No immediate impact on earnings — most Reliance revenue still comes from oil-to-chemicals, retail, and Jio. But the new energy narrative, which the market had partly priced in, now has a longer and likely lower-margin trajectory.
Disclaimer (SEBI compliance): This article is for informational and analytical purposes only and does not constitute investment advice or a solicitation to buy or sell any security. Stock market investments are subject to market risks; please read all related documents carefully before investing. Investors are advised to consult a SEBI-registered investment adviser before making any investment decision. The publication and author do not hold any position in the securities mentioned at the time of publication unless explicitly stated. Data referenced is sourced from publicly available reports including Bloomberg, Business Standard, BusinessToday, IEEFA, and the Central Electricity Authority, and may be updated subsequently. Past performance is not indicative of future results.
