After remaining largely unaffected in May and June thanks to pipeline inventory, sales of electric 2-wheelers have started to show the impact of Chinese export blockade of rare earth magnets.
22 Jul 2025 | 494 Views | By Anurag Chaturvedi & Glenn Noronha
In the first half of 2025, India's electric two-wheeler market was on an unstoppable trajectory. With well over five lakh units registered, the momentum seemed set to propel the industry towards the coveted one-million-unit mark for the year. June alone contributed over 94,000 units, fuelled by strong consumer demand and ...
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In the first half of 2025, India's electric two-wheeler market was on an unstoppable trajectory. With well over five lakh units registered, the momentum seemed set to propel the industry towards the coveted one-million-unit mark for the year. June alone contributed over 94,000 units, fuelled by strong consumer demand and attractive government subsidies, painting a picture of a segment in its prime.
However, the industry now faces an unexpected, and seemingly insurmountable roadblock: a complete shutdown of the supply of key magnets used in EV manufacturing by China.
While the first three months of the blockade – April to June – passed by relatively uneventfully, July is turning out to be a different story, involving disappointed customers and frustrated dealers.
Registration data from the Vahan portal reveals a troubling trajectory when extrapolated across the full month.
Data reveals a sharp slowdown in sales of market leader TVS Motor Co, and a noticeably slowdown in the sales numbers of No.2 Bajaj Auto. The two players accounted for more than 50% of the e2wheeler market in June.
TVS’s daily sales has fallen by nearly 30% in July so far compared to June, and the company is likely to record full-month sales of only 17,174 units if it maintains the current run-rate rate, going by VAHAN numbers. According to the government portal—which excludes data from Telangana—the company had sales of 23,801 units in June, its highest ever.
Similarly, the No.2 player, Bajaj Auto, has sold only 13,308 units so far in July, giving it a per-day run-rate of 619 units. This points to a decline of 19.5% compared to June’s per-day sales.
No.3 Ola Electric, has also seen a decline so far in per-day sales in July, going by VAHAN. So far in July, the company sold 10,006 units, or 465 units per day. VAHAN showed 18,368 registrations of Ola vehicles in June.
The disruption has come at a particularly inopportune moment for the top two brands, who had been in the middle of a sharp ramp in sales and manufacturing that began in the second half of 2024.
The above numbers are translating into disappointment for thousands of EV customers across the country, particularly those walking into the showrooms of the top two brands—TVS and Bajaj.
TVS dealers in Mumbai present a mixed picture. Across four dealerships visited, all reported limited model availability with delivery timelines stretching 10 to 15 days post-purchase. A dealer from Mumbai mentioned that they were aware of the issue, and said: ”Based on the stock I have available, I will be able to provide it based on the unit you require, with a waiting period of one and a half months."
Similar disruption was seen in Bajaj's Chetak dealerships in Mumbai. Three dealers visited were uniformly unaware of the geopolitical situation affecting their supply chains. However, a major dealer with multiple showrooms across Mumbai revealed that it is facing issues with display units.
"We haven't received fresh inventory for nearly a month,” the dealer said, adding that waiting times could stretch to a month. “Despite this, we still receive three to four enquiries per showroom for the electric Chetak."
Meanwhile, an official at a Ola Electric showroom in Mumbai claimed that deliveries for the Ola S1 series of scooters were unaffected since manufacturing of these scooters happens entirely in India.
Interestingly, the disruption at the bigger players seems to have opened an opportunity for smaller brands, particularly Ather Energy and Hero MotoCorp.
Hero Moto Corp. dealerships in Mumbai do not seem to have any issues when it comes to deliveries, according to our checks. For the Vida V2 Pro series, deliveries were available within one or two days for the red-coloured version.
Meanwhile, Ather Energy’s dealers in Mumbai mentioned a waiting period of 10-14 days for their scooter lineup.
Not surprisingly, both of these brands have seen an improvement in their per-day sales in July, according to VAHAN data. While Ather’s per-day sales rose marginally to 349.2 units from 348.8 units in June, Hero MotoCorp’s per-day sales jumped to 274 in July from 255 in June.
The root of this disruption traces to China’s control over rare earth metals. Industry sources confirm a deliberate squeeze on the export of neodymium (Nd) and dysprosium (Dy), essential elements for the high-efficiency permanent magnet synchronous motors (PMSM) that power most premium E2Ws.
This has choked the global supply of these critical magnets, directly impacting the established, multi-tiered supply chains of TVS and Bajaj. Their reliance on global component suppliers for motors has left them acutely vulnerable, while rivals with more integrated or agile sourcing have navigated the disruption more effectively.
Company responses have been measured. In a statement to an interview back in early June, TVS Managing Director Sudarshan Venu highlighted the "significant risk to India's electric vehicle output from China's rare earth magnet export restrictions," noting that the company was actively seeking alternative supply sources.
Bajaj Auto acknowledged production challenges in its quarterly earnings call, with executives indicating that rare earth availability had become a "critical bottleneck" affecting manufacturing schedules. The company has increased inventory buffers for critical components, accepting higher working capital requirements to maintain production stability.
OLA Electric's response has been the most aggressive, with the company announcing plans to transition to rare earth-free motors during the October-December quarter. Chief Executive Bhavish Aggarwal recently stated that the company was "fast-tracking development of magnet-free motor technology" to reduce dependence on Chinese supply chains.
This supply shock has exposed the Achilles' heel of the Indian EV story. While the immediate focus is on navigating the production crunch of Q3 2025, the real race has now begun: the race to build a resilient, self-reliant component ecosystem right here in India.