Tata Motors Rides Out Rare Earth Crunch; Rivals Brace For Supply Shocks

Tata Motors has said its electric vehicle (EV) production remains unaffected by the global shortage of rare earth magnets — a key component in EV motors — even as competitors prepare for possible disruptions. The company attributes its resilience to diversified sourcing, long-term supplier contracts, and, in some cases, motor technologies that reduce dependence on these critical materials.

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In an earnings call, P B Balaji, CFO, Tata Group said, “Absolutely no impact on production so far, as far as rare earths are concerned, nothing in the foreseeable future.”

Rare earth magnets, made using metals such as neodymium and dysprosium, are vital for permanent magnet synchronous motors (PMSMs), which power many modern EVs due to their high efficiency. The current shortage has been fuelled by China’s tighter export controls — the country dominates global rare earth processing — and surging demand from EV and renewable energy sectors. Prices have spiked, and lead times for procurement have lengthened.

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Industry watchers say Tata Motors’ preparedness could give it an edge at a time when other automakers may not be as insulated. Mahindra & Mahindra, which entered the EV segment with its XUV400 and now has the BE 6 and the XEV 9e, could feel the pinch if its sourcing remains reliant on rare-earth-heavy designs, though the company has said it does not expect any disruptions soon. Global players in India, such as Hyundai and MG Motor, may also face cost escalations or slower rollouts if the shortage persists.

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

Some manufacturers may be forced to explore alternative technologies, such as induction motors that avoid rare earths, or pass on higher costs to customers. The company’s EV portfolio — led by the Nexon EV, Tiago EV, and the Punch EV — has cemented its leadership in India’s electric passenger vehicle space. Uninterrupted production amid a global crunch could help it capture additional market share, especially if rivals face bottlenecks.

Also Read: Are Rare Magnets Rare, And Why Is India Dependent On China for them?

With the government pushing for 30% EV penetration by 2030 and incentives for domestic manufacturing, the rare earth magnet crisis could accelerate efforts toward local supply chain development and alternative motor designs. Tata Motors’ ability to weather the storm may prove to be a decisive advantage in India’s rapidly evolving EV race.