Bajaj, TVS, Ather To Cut Short Production Owing To Rare Earth Magnet Crisis

According to reports, India's leading electric two-wheeler manufacturers are being forced to slash production after a four-month shortage of rare earth magnets from China. Bajaj Auto, Ather Energy, and TVS Motor are all cutting output to ensure that they can continue delivering electric scooters for the longest period or as long as there is stock of rare earth magnets.  

Bajaj Auto plans to reduce production by nearly 50%, whilst Ather Energy will cut output by 8-10%. TVS Motor, which has topped EV sales for three consecutive months, is also scaling back manufacturing, but an exact change rate has not been reported. Only Ola Electric remains unaffected, having stockpiled magnets in advance and potentially increasing production in July with inventory lasting five to six months.

(Also Read: India's Biggest Rare Earth Magnet Importer Sona Comstar Plans Domestic Manufacturing)

The crisis centres on heavy rare earth magnets, essential components in electric vehicle motors. Without these materials, EV production becomes virtually impossible. Rajiv Bajaj had anticipated this problem two months ago, warning that China could cripple India's entire electric vehicle industry within weeks.

These four manufacturers control approximately 80% of India's electric two-wheeler market, meaning the shortage could severely impact the broader EV sector if it persists. The timing is particularly damaging as 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.

(Also Read: India Plans ₹5,000 Crore Incentive Scheme to Boost Domestic Rare Earth Magnet Production)

The Indian government has responded by sending a high-level delegation, including officials and automotive industry representatives, to China to resolve the impasse. Additionally, authorities are exploring alternative suppliers in Vietnam, Indonesia, and Japan, though progress remains limited.

The disruption extends beyond two-wheelers, with car manufacturers including Maruti Suzuki, Mahindra, and Toyota also raising concerns. Only Tata Motors, like Ola Electric, claims to remain unaffected by the shortage. This supply chain crisis threatens to create a significant obstacle for India's electric vehicle revolution, just as it gains momentum, potentially slowing the transition to cleaner transportation. 

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