Bajaj, Ather, TVS to Scale Back EV Production Due to China Supply Issues

Bajaj, Ather & TVS may cut EV output due to rare earth magnet shortages from China.

Leading electric vehicle (EV) manufacturers in India, including Bajaj Auto, Ather Energy, and TVS Motor Company, are likely to cut down their electric scooter production. This potential reduction is due to ongoing disruptions in the supply of heavy rare earth (HRE) magnets from China. These companies have been facing this challenging situation for the past four months, which has now led to the possibility of production cuts.

Impact on Manufacturers

Bajaj Auto, a major player in the Pune region, is expected to be the most affected by the shortage of HRE magnets. The company has indicated that it might reduce its production by half. Ather Energy is also planning to decrease its electric scooter manufacturing by 8-10 percent because of the scarcity of these rare earth magnets. TVS Motor Company, which has been a leader in the electric two-wheeler segment for the last three months, will also scale back its production to manage this shortage.

Why Rare Earth Magnets Are Crucial

Rare earth magnets are essential components used in the electric traction motors of EVs. A spokesperson from TVS Motor stated, “The disruptions in the EV supply chain, particularly concerning magnet availability, continue to pose challenges in the short to medium term. We are working actively to mitigate the prevailing challenges.”

Rakesh Sharma, Executive Director at Bajaj Auto, commented, “We’ve started to see some production disruption on the Chetak line. Our R&D and procurement teams are working on alternatives, which are now in advanced stages of development.” An Ather Energy spokesperson did not provide a comment on the matter. It is important to note that four key EV brands—Ola, Ather, TVS, and Bajaj—together account for 8 out of every 10 electric scooters sold in the Indian market.

Ola Electric Claims No Impact

In contrast to its competitors, Ola Electric, another Bengaluru-based EV startup, has stated that it will not be affected by the HRE magnet shortage. The company claims to have enough stock of rare earth magnets to last for at least five to six months. Ola Electric even mentioned that it might increase its production in July to some extent. Despite this, the company is also exploring alternative solutions to prepare for any future challenges.

An Ola Electric spokesperson confirmed, “There is no impact on production because of the rare earth magnets,” but declined to give further details. Meanwhile, top officials from the Indian government have been in discussions with their Chinese counterparts to ensure that supplies are restored as soon as possible. Additionally, auto brands are also reaching out to other suppliers in countries like Vietnam, Indonesia, and Japan to diversify their sourcing.

Analysis

The potential production cuts by major Indian electric scooter manufacturers like Bajaj, Ather, and TVS highlight the vulnerability of the EV supply chain to global material shortages. The reliance on heavy rare earth magnets, primarily sourced from China, poses a significant challenge to the industry's growth. While Ola Electric claims to be unaffected in the short term, the broader issue underscores the need for localized production and diversified sourcing of critical components. This situation could impact the pace of EV adoption in India and emphasizes the importance of robust supply chain management for sustainable growth in the electric mobility sector.