Electric 2W firms gear up to ride out China's rare earth magnet squeeze

Electric two-wheeler (e2W) makers have begun executing a multi-pronged plan to tackle the heavy rare earth magnet supply crunch from China and keep production running through the festival season starting late September, easing early fears of a shutdown.

 

Leading Indian two-wheeler manufacturer Bajaj Auto, according to senior sources, has imported light rare earth magnets (also called heavy rare earth–free magnets) from China. These are currently undergoing testing at the Automotive Research Association of India. Once cleared, the company plans to import large volumes for installation in its motor sub-assemblies in India. 

Experts say these magnets, already tested elsewhere, deliver performance on a par with heavy rare earth motors in e2Ws. Bajaj also won’t require an exemption on motors for calculating domestic value addition — a demand made by some rivals.

Ather Energy is following suit. Sources familiar with the matter say it is testing similar light rare earth magnets internally before seeking ARAI approval, with plans to introduce them in the final quarter of this year. 

TVS Motor Company Chief Executive Officer K N Radhakrishnan says the firm is exploring several alternatives, including heavy rare earth–free magnets, ferrite-based magnets, and magnet-free motors, while sourcing from multiple countries. 

Ola Electric, which has been developing ferrite-based motors, is testing them on its vehicles and aims to launch ferrite-powered products by the third quarter of calendar year 2025. Ferrite, abundant and less vulnerable to geopolitical risk, offers lower torque and power compared to rare earth magnets. 

On April 4, China effectively halted exports of heavy rare earth magnets to India under a new export control order, restricting seven materials classified as heavy rare earths. However, the 10 materials in the light rare earth category were not covered by the order. 

Indian companies are now set to import these light rare earth magnets from China for integration into locally made motor sub-assemblies. 

In the interim, Ather and others are sending their Indian-made motor sub-assemblies to Chinese suppliers to have heavy rare earth magnets installed before shipping them back — meeting immediate demand while ensuring magnets aren’t diverted to other uses, in line with China’s export rules. 

Radhakrishnan says TVS is managing with existing stock and has resized some locally available larger magnets. He added that short-term alternatives are also under review. 

Initial fears of an electric vehicle (EV) production halt in August, voiced publicly by Bajaj when it warned it might have to stop manufacturing this month, appear to have eased. 

Registration data for the first two weeks of August, ending the 14th, show 38,688 e2Ws registered, slightly above July’s 37,711 in the same period. Several companies increased registrations month-on-month — TVS by 3.5 per cent, Hero MotoCorp by 3.2 per cent, Ather by 1.2 per cent, and others like Greaves Electric Mobility, Kinetic Green, and PUR Energy (widely known by its brand name PURE — Power Using Renewable Energy). The main laggards were Bajaj, down 5.2 per cent, and Ola Electric, down 4.1 per cent. 

Ola Electric executives say the firm has secured enough heavy rare earth magnets for its full-year requirements, sufficient to power over 130,000 vehicles, all to be fitted in India-made motors. Sources at Ather say they have enough motors to cover the entire festival season without production issues. 

A Bajaj executive added that alternative sourcing has enabled them to build some EVs in August.