Manufacturers Bajaj, TVS, and Ather to temporarily halt production due to the scarcity of rare earth magnets used in electric two-wheelers.

India's electric vehicle (EV) industry is facing a significant challenge due to a shortage of rare earth magnets, a crucial component in EV motors. The shortage, primarily originating from China, has led to production cuts for several EV manufacturers, potentially slowing the transition to cleaner transportation in India.

Bajaj Auto, one of the leading players in the electric two-wheeler market, is planning to reduce production by nearly 50% due to the scarcity of rare earth magnets. This disruption extends beyond the two-wheeler industry, affecting manufacturers such as Maruti Suzuki, Mahindra, and Toyota, who have raised concerns about the shortage.

The crisis centres on heavy rare earth magnets, which are essential for EV production. Without these magnets, EV production becomes virtually impossible. The electric two-wheeler market has been experiencing robust growth, with sales jumping 34% in the first quarter of FY26 to nearly 3 lakh units. However, the shortage could severely impact this sector if it persists, as the four manufacturers controlling approximately 80% of India's electric two-wheeler market are affected.

Rajiv Bajaj, the chairman of Bajaj Auto, had anticipated this problem two months ago, warning that China could cripple India's entire EV industry within weeks. His concerns seem to be materialising, as TVS Motor, the top seller of electric two-wheelers for three consecutive months, is also scaling back manufacturing. The exact change rate has not been reported.

Ather Energy is cutting output of electric scooters by 8-10% due to the same shortage. However, Ola Electric, another major player in the market, is the only manufacturer not affected by the shortage. The company had stockpiled magnets in advance and plans to potentially increase production in July with inventory lasting five to six months.

In an effort to alleviate the shortage, Indian authorities are exploring alternative suppliers in Vietnam, Indonesia, and Japan. Sona Comstar, India's biggest rare earth magnet importer, is also planning domestic manufacturing. The Indian government has sent a high-level delegation to China to resolve the issue, but detailed current status information is limited in available sources.

Tata Motors, like Ola Electric, claims to remain unaffected by the rare earth magnet shortage. The electric vehicle industry in India is experiencing robust growth, and this challenge could potentially create a significant obstacle for its continued expansion.

As the world moves towards cleaner and more sustainable forms of transportation, it is essential to address and resolve such issues to ensure a smooth transition. The rare earth magnet shortage threatens to create a significant obstacle for India's electric vehicle revolution, and efforts are underway to mitigate its impact.

Manufacturers Bajaj, TVS, and Ather to temporarily halt production due to the scarcity of rare earth magnets used in electric two-wheelers.