Bajaj Auto cuts electric 2-W production by half amid rare earth shortage

China’s curb on rare-earth magnet export has started to hit the automakers in India, as Bajaj Auto has halved its electric two-wheeler production plan for August and September. The Pune based two-wheeler major has also slashed the electric-three wheelers production by up to 75 per cent for these months.

 

Executive Director Rakesh Sharma told reporters in post-earnings call that they have already cut their e-2W production by as much as 50 per cent in July, and anticipates a similar production cut for August and September also.

 

“Our impairment of production started towards the end of June. In July, the production was affected to the extent of 50 per cent. We were expecting the output to be zero in August, but it is not going to be so. August production will be better than July production, though we will still be at about 50-60 per cent of the plan,” he said.

 

The Chinese government put certain restrictions on rare earth magnets, critical for electric vehicle production, around April. Sharma said that their vendors had put up applications before the Chinese authorities. Around 30 applications were submitted in May but after that there is no visibility on when these could be approved.

 

China controls 90 per cent of the world’s rare earth refining capacity and also produces 60 per cent of the world’s rare earth elements. Bajaj Auto was one of the first auto majors in India who had raised an alarm about the supplies.

 

The company is now actively working on two alternative plans, one idea is to replace the heavy rare earth elements (HRE) with light rare earth elements (LRE) which are more readily available; and secondly work on developing new magnet technologies that do not rely on rare earths at all as a longer term solution.

 

 

Moreover, the company is also looking for alternative sourcing other than China, but Sharma said that it could take six to nine months to work something out.

 

Meanwhile, July sales numbers of e-two wheelers have already been impacted as a result of rare earth shortage, the industry said. Retail numbers are yet to be released.