31 May 2025
EV Industry in India May Slow Down Due to Key Component Shortage
Bajaj Auto has shared a serious warning about a possible halt in electric vehicle (EV) production in India. Rakesh Sharma, Executive Director of Bajaj Auto, said that the company may face major production issues by July 2025 due to a shortage of rare earth magnets. These magnets are a key part of electric motors and are mostly imported from China.
Why Rare Earth Magnets Matter in EVs
Rare earth magnets are very important for running electric motors. These magnets are small but powerful and are used in almost all electric vehicles, including scooters, rickshaws, and cars. Without them, the electric motor cannot work properly.
At present, India depends almost completely on China for the supply of these magnets. However, in April, China introduced strict new rules for exporting these products. These rules were first seen as a reaction to trade tensions with the United States, but now they are affecting the entire global auto industry, including India.
Difficult Import Approval Process Causing Delays
The new import process has become long and complicated. Companies must give a declaration that the magnets will not be used for military purposes. After that, they need approval from multiple ministries in India, the Chinese embassy, and finally, export permission from Chinese authorities.
Sharma explained, “The rare earth situation is very difficult. It requires approvals from many departments. Even after submitting applications, no clearance has been given yet.” He added that though over 30 applications have already been submitted by the Indian auto industry, there has been no progress.
Chinese officials said it might take 40 to 45 days to approve an application, but so far, the process has not moved forward.
Supplies May End Soon If Situation Doesn’t Improve
Currently, the supply of rare earth magnets is reducing quickly. Sharma said that if no new shipments arrive, Bajaj Auto's EV production may stop by July.
“As we speak, supplies and stocks are getting depleted. If there is no relief and no shipments, then July production will get seriously impacted,” Sharma stated. He also mentioned that this is not only a problem for Bajaj Auto but for the entire Indian automobile sector.
No Quick Alternatives Available for EV Makers
Though India has some rare earth mineral resources, extracting and refining them is not easy. It needs a lot of time, special technology, and large investment. Sharma said, “It’s not as if there is an immediate substitute possible.”
Trying to develop motors without rare earth magnets is also a slow process. New parts must be made and tested for performance and safety. Sharma said, “Such developments cannot be done quickly and there is no short-term solution available right now.”
Industry Requests Government to Step In
Meanwhile, Indian automobile industry bodies like SIAM and ACMA have asked the Government of India to help. They want the government to speed up the approval process and talk to Chinese authorities to clear shipments soon.
Sharma said that the company is hopeful that either the approval system will start working soon or other options will develop over time. “We’re hoping that through process simplification, execution, and development of alternatives, some mitigation will be had,” he added.
Sharma also said that becoming self-reliant is important, but it will take time. He mentioned that nobody yet knows how much cost and effort this change will need. Still, companies are slowly starting to understand the problem better as it unfolds.
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