The automaker said it would be able to achieve only 50-60% of its planned production of its two-wheelers and 75% of its three-wheelers.
06 Aug 2025 | 14863 Views | By Kiran Murali
The ongoing supply crisis for heavy rare earth magnets from China is impacting Bajaj Auto, which has already cut its electric two-wheeler production by as much as 50% in July. The company anticipates a similar production reduction for August and September, according to a senior company official.
“Our impairment ...
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The ongoing supply crisis for heavy rare earth magnets from China is impacting Bajaj Auto, which has already cut its electric two-wheeler production by as much as 50% in July. The company anticipates a similar production reduction for August and September, according to a senior company official.
“Our impairment of production started towards the end of June. In July, the production was affected to the extent of 50%. We were expecting the output to be zero in August, but it is not going to be so. August production will be better than July production, though we will still be at about 50-60% of the plan,” Bajaj Auto’s Executive Director Rakesh Sharma said.
Rare-earth magnets play a critical role in the automotive industry. These magnets are important, particularly for EVs, due to their higher performance in small form factors, enhanced energy efficiency and critical functionality in both powertrains and digital systems.
China produces 60% of the world’s rare earth elements and controls around 90% of the global refining capacity. China's suspension of magnet supplies since April has put automakers on high alert, as they scramble to secure supplies and keep production running.
Bajaj Auto was one of the first automakers to raise the alarm about the rare earth magnet supply crisis, warning of potential production losses months ago. According to Sharma, the company is now actively working on two key solutions - replacing the heavy rare earth magnets with more available light rare earth magnets, and developing new magnet technologies that do not rely on rare earths at all.
The impact of the magnet supply was reflected in the sales numbers of electric two-wheeler makers during July. Electric two-wheeler registration declined both on a year-on-year and month-on-month basis during July. Bajaj Auto, which is the second-largest electric two-wheeler marker, saw its registrations decline 15% in July to 19,650 units from June.
While the critical shortage of magnets initially threatened to bring Bajaj Auto's electric scooter production to a complete standstill in August, the automaker has found a temporary workaround. By successfully substituting with light rare earth magnets, Sharma said the company managed to achieve 50-60% of its planned output for July and so far in August, averting a total production loss.
“The situation is better than what we were facing in July. We will be able to achieve 50-60% of the planned production of two-wheelers and 75% of three-wheelers in the immediate term, let us say August and September, depending on the clearances,” Sharma added.
Other automakers, including TVS Motor, Ather Energy and Ola Electric, have also flagged the shortage of heavy rare earth magnets and are working on alternatives. Ather Energy foresees an impact of up to a seven-day supply to dealers during the July–September quarter of this financial year.