Rare Earth Magnet Crisis Looms, Bajaj’s EV Output At Stake

China’s restrictions on rare earth magnet exports have begun to cause troubles for India's automobile sector, with Bajaj Auto potentially halting electric scooter production in August. 

Managing Director Rajiv Bajaj warned that the month could mark a ‘zero production’ period for the company.

Bajaj Auto, India’s second-largest electric scooter maker by volume, has cut EV production by 50 per cent this month despite reaching full capacity in June using existing stocks. The shortage affects its Chetak electric scooter and GoGo three-wheeler, Rajiv Bajaj told Economic Times.

As a main player in electric scooters and three-wheelers, Bajaj is experiencing a major setback. 

Rajiv Bajaj explained that the high demand, especially with the festive season nearing, has been severely affected by the scarcity of rare earth magnets, unlike smaller producers with lower volumes. 

He added that this could dent market leadership, earnings, and profitability, given the EV segment’s recent gains. For the medium term, he suggested exploring alternative magnets or non-Chinese sources, given China’s dominance in supply.

The curbs threaten India’s EV growth, with Bajaj’s potential halt underscoring supply chain vulnerabilities. 

As a price-sensitive market, India relies on affordable components, but global shortages could inflate costs. Without local alternatives, the auto sector’s expansion may stall, urging policymakers to seek diversified supply chains.

Also read: India Keeps EVs, Small Cars Out Of Duty Cuts. Here's Why