Electric two-wheeler manufacturing loses charge amid rare earth shortage

Industry racing to fast-track magnet-free designs, diversifying sourcing

A global squeeze on heavy rare earth magnets has reduced the Indian electric two-wheeler output, with the country’s EV industry racing to fast-track magnet-free motor designs and diversifying sourcing to keep assembly lines moving.

 

Among major players, Bajaj Auto has already slashed production by up to 50 per cent in July and warned of continued curbs through August and September. Hero MotoCorp has said that it has managed to secure supplies for both ICE and EV models for Q2, while TVS has  indicated that they are managing daily production through locally sourced higher-sized magnets. Among newer entrants, Ather CEO Tarun Mehta clarified that while there is no full halt in production, the supply gap is affecting deal demand fulfilment in Q2.

 

Admitting the production slowdown, Rakesh Sharma, executive director of Bajaj Auto, in post-earnings call, said, “Our impairment of production started towards the end of June. In July, output was hit by 50 per cent. We expected zero production in August, but it will be slightly better, though still at 50–60 per cent of plan.” 

 

Rare earth magnets are critical to EV motor production and China produces 60 per cent of global rare earth production and controls 90 per cent of the refining capacity.

 

TVS Motor’s CEO and Director, K N Radhakrishnan, said the company is managing daily output through available stocks and locally sourced higher-sized magnets while exploring alternative strategies.

 

“In the medium- to long-term, we are working on heavy rare earth metals free, ferrite-based, magnet-free designs and sourcing from alternate countries. The aim is to build a more resilient company and country on magnets,” he said.

 

Hero MotoCorp, meanwhile, acknowledged the supply crunch as a serious industry-wide challenge, but assured investors it has secured rare earth magnets for both ICE and EV models through Q2FY26. “Key components such as EV motors, engine speed sensors, wheel speed sensors, and bank angle sensors are covered for now,” the management noted, while confirming that work is underway to develop long-term alternatives.

 

Industry voices remain divided on the extent of the impact. Experts note that while Bajaj and TVS anticipate cuts, Ather Energy expects only a one-week lag, and Ola Electric claims to be unaffected due to its magnet-less motor design, which will enter production around the festive season.

 

“Most electric two-wheeler OEMs are bracing for some impact in Q2 as the rare earth magnet crunch continues. Some have flagged outright production cuts, others expect short delays, while a few are turning to ferrite motors or alternate suppliers which could push up freight costs. Even if production doesn’t fall sharply, the cost curve may rise for many players,” said Sanket Kelaskar of Ashika Group. 

Bracing for impact

• TVS Motor said the firm is managing daily output through available stocks and locally sourced higher-sized magnets
• Bajaj Auto has slashed output by up to 50% in July, warned of continued curbs through August, September
• Ather said that while there is no full halt in production, supply gap is affecting deal demand fulfilment in Q2
• Hero Moto acknowledged the shortage as serious, but said it has secured magnets for both ICE and EV models through Q2