Bajaj, Ather, TVS Slash EV Production Amid China Rare Earth Magnet Shortage

Friday, July 4: India’s electric two-wheeler industry is facing a significant slowdown in production, with major players like Bajaj Auto, Ather Energy, and TVS Motor Company preparing to reduce output. This disruption stems from a prolonged shortage of heavy rare earth (HRE) magnets from China, a critical component for electric traction motors in EVs. The shortage, now in its fourth month, threatens to derail the sector’s robust growth trajectory seen in the first quarter of FY26.

Production Cutbacks by Major Players

• Bajaj Auto, India’s second-largest electric two-wheeler manufacturer, is reportedly cutting its output by a substantial 50%.
• Bengaluru-based Ather Energy is expected to trim production by 8–10%.
• TVS Motor, which has been the market leader for the past three months in electric two-wheeler sales, is also planning significant cutbacks due to the magnet shortage.

A TVS spokesperson confirmed the ongoing supply chain disruption and stated the company is actively working on mitigation strategies. Rakesh Sharma, Executive Director at Bajaj Auto, added that their R&D and procurement teams are developing alternative solutions, which are already in advanced stages.

Ola Electric Unaffected, May Even Ramp Up

In contrast to its competitors, Ola Electric stands as the only major player unaffected by the current shortage. The company had preemptively stockpiled rare earth magnets and possesses sufficient inventory to sustain production for the next five to six months. Consequently, Ola Electric is even considering a marginal increase in its production for July. This resilience comes despite the company slipping to third place in sales rankings for the second consecutive month.

Sector-Wide Impact Looms if Standoff Continues

The combined sales of Bajaj, Ather, TVS, and Ola Electric account for a substantial 80% of India’s electric two-wheeler market. In Q1 FY26 alone, the segment recorded an impressive 34% year-on-year growth, reaching approximately 298,000 units, according to government data from the Vahan portal. However, industry executives warn that if the constraints in HRE magnet supply continue, this significant momentum could be severely undermined.

Discussions are ongoing between Indian automakers, the central government, and Chinese authorities to resolve the issue, but progress has been slow. Unless imports from China resume or viable alternative sourcing arrangements are established with countries like Vietnam, Indonesia, or Japan, the broader EV segment faces the risk of widespread disruption. India is heavily reliant on China for rare earth magnet imports, with over 80% of its supply originating from Chinese processors.

Outlook

With inventories dwindling for most manufacturers and no immediate resolution in sight, the Indian electric two-wheeler industry is at a critical juncture. The prolonged shortage of heavy rare earth magnets poses a significant threat to production targets, potentially stalling the ambitious growth trajectory of India’s electric mobility sector. Further delays in addressing these supply chain challenges could force more manufacturers to throttle back output, impacting the nation’s broader electric vehicle adoption goals.

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