How Rare Earth Squeeze is Disrupting EV Two-Wheeler Production
The shortage of rare earth magnets, caused mainly by China’s export restrictions, is disrupting India’s electric two-wheeler production. Key companies like Bajaj Auto, Ather Energy, and TVS Motor have cut output due to limited supply of these essential magnets used in electric motors. To cope, firms are testing alternatives and redesigning motors, aiming to continue growth despite the supply challenges. This shortage highlights the need for India to develop new technologies and reduce dependence on imports for its growing electric vehicle industry.
MARKET NEWS
9/17/20251 min read
Electric two-wheeler (e2W) manufacturers and their suppliers are at odds over the scarcity of rare earth magnets, as businesses struggle to obtain essential components amid China's export restrictions. Since China, the world's largest supplier, tightened regulations in 2025, it has become more difficult to obtain these magnets, which are essential for Permanent Magnet Synchronous Motors (PMSMs), used in electric scooters and bikes. This supply shortage poses a serious danger to India's quickly expanding electric two-wheeler sector by threatening production halts and delivery delays.
Prominent producers like Bajaj Auto have already been impacted; the shortfall has resulted in a considerable reduction in the production of electric scooters like the Chetak. To lessen reliance on limited supplies, Bajaj is actively testing substitutes, such as light rare-earth magnets that do not require heavy rare-earth components. Similar adaptation efforts are being made by other e2W manufacturers, like Ather Energy, who are investigating supply diversification and testing lighter rare-earth magnets.
Delivery and launch schedules during important festival seasons may be impacted by the months-long production slowdown. To deal with the limited supply of rare earth magnets, automakers and suppliers are working to secure inventories and redesign motors. Despite the limitations, businesses are hopeful that supply will improve by fiscal 2026 and that output will return to normal.
In addition to increasing disputes over allocations and prices between suppliers and manufacturers, this rare earth shortage has led to the development of rare earth-free motor technology. To completely avoid the supply issue, Indian companies like Simple Energy are leading the way in the development of motors free of heavy rare earth elements.