Rare Earth magnets are an important prerequisite for EV production.
29 May 2025 | 7664 Views | By Darshan Nakhwa & Ketan Thakkar
Bajaj Auto’s Executive Director Rakesh Sharma warned that the shortage of rare earth magnets—a key component in electric vehicle motors—could significantly impact the company’s production plans by July if supply bottlenecks persist.
“The rare earth situation is a very difficult one. An onerous process has been hammered together for ...
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Bajaj Auto’s Executive Director Rakesh Sharma warned that the shortage of rare earth magnets—a key component in electric vehicle motors—could significantly impact the company’s production plans by July if supply bottlenecks persist.
“The rare earth situation is a very difficult one. An onerous process has been hammered together for import approvals. This involves end-use declaration about the usage of the rare earth not being in military use. And requires certification from multiple Indian ministries, the Chinese embassy, and ultimately, export clearance from Chinese authorities,” Sharma said during a media briefing on Thursday.
Despite more than 30 applications already submitted by the Indian auto industry, no clearances have been received yet. “Chinese authorities have said it could take 40 to 45 days from the time an application is made, but that loop has not yet got closed,” Sharma said.
“As we speak, supplies and stocks are getting depleted. And if there is no relief and there are no shipments, then July production will get seriously impaired,” he said, adding that this challenge is not unique to Bajaj Auto. “I think such is the case with the entire auto industry.”
The auto industry’s supply chain for rare earth magnets is almost entirely dependent on Chinese imports. Sharma explained that while there are rare earth deposits in India and other parts of the world, but the extraction and refining requires investment and learning. “It’s not as if there is an immediate substitute possible,” he said.
Alternate strategies—such as replacing rare earth magnets with other materials—are also complex and time-consuming. “Those components have to be developed and validated for performance, which obviously cannot be achieved in the short term. Unfortunately, there is no short-term solution dangling there,” Sharma said.
He also acknowledged that developing self-reliant solutions will take time and considerable investment. “There is no easy solution to becoming self-reliant or less dependent on one source. These will have to be very consciously worked on and we don't even know exactly the kind of cost implications this will have. It's a very new area which has got opened up and as things progress, I'm sure the haze will clear and we will get to a better understanding.”
Financially, Bajaj Auto’s executive admitted the crisis poses a risk to the electric vehicle segment. Nevertheless, Sharma expressed hope that either the current approval processes will yield results soon, or that alternative supply chains and technological substitutions will evolve over the course of the year. “We’re hoping that through process simplification, execution, and development of alternatives, some mitigation will be had,” he said
Recently, SIAM and ACMA have asked the Indian government to expedite permits and push Beijing to release shipments of rare earth magnets. In April, China, which processes over 90% of these magnets globally, implemented new rules requiring import permits—initially seen as a response to U.S. tariffs. However, the impact is now rippling across global automotive supply chains.