In the short term, the automaker said it has reasonable inventory levels and sourcing of magnets from two countries to keep deal with the current rare earth magnet supply crisis.
14 Jul 2025 | 2527 Views | By Yukta Mudgal and Kiran Murali
Amid China's restrictions on the supply of rare earth magnets, India’s major electric two-wheeler maker Ola Electric plans to introduce rare earth-free motors in its two-wheeler from the October-December quarter of this financial year. The company said rare earth elements pose a major long-term risk for auto OEMs.
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Amid China's restrictions on the supply of rare earth magnets, India’s major electric two-wheeler maker Ola Electric plans to introduce rare earth-free motors in its two-wheeler from the October-December quarter of this financial year. The company said rare earth elements pose a major long-term risk for auto OEMs.
“For the last couple of years, we have been developing rare earth free motors. We accelerated this program in April when the rare earth cuts happened and have already productionised our rare earth free motors which will be coming into our products starting next quarter,” Ola Electric said in a letter to shareholders on Monday.
Rare-earth magnets, due to their smaller sizes and higher efficiencies, are widely used in EV powertrains and in digital systems across the auto industry. Over the years, China has managed to monopolize the supply chain of rare earths – producing 60% of the world’s rare earth elements and controlling around 90% of the global refining capacity.
In April, China implemented stricter rules on exporting rare-earth elements and related magnets, requiring import permits, impacting global automotive supply chains and other industries.
The import approvals from China are now difficult and complex, mandating an end-use declaration confirming the magnets will not be used for military purposes, along with certifications from multiple Indian ministries, the Chinese embassy, and final export clearance from Chinese authorities.
“Because we engineer and manufacture the motor, motor controller and software all in house we have multiple strategies to manage this disruption,” the company said. He noted that the automaker has reasonable inventory levels and sourcing of magnets from two countries to keep deal with the current rare earth magnet supply crisis in the short term.
“And since we are not reliant on intermediary motor suppliers, we have been able to change over quickly and ramp up other sources of rare earth magnets,” the company added.
Recently, other major electric two-wheeler makers – Bajaj Auto and TVS Motor – have already voiced their concerns about suspension of magnet supplies from China publicly and warned of potential disruption in production.
Several auto component makers in India, and globally, are actively developing and researching for an alternative to replace rare-earth magnets in the long-term. Auto component companies like Mahle, Valeo, Sterling Gtake, Sona Comstar, Greaves Cotton, Chara Technologies and Attron Automotive are all working on an alternative to rare-earth magnet motors or other systems.
While magnet-free motors or rare-earth-free magnets offer a path to reducing dependence on critical materials, many industry experts say these technologies come with their own set of challenges for mainstream adoption, especially in high-performance applications like electric vehicles.
Issues like lower power density, lower efficiency, and increased size and weight of motors are the major concerns, and those alternative technologies are yet to see any large-scale commercial usage.
Meanwhile, India is considering rolling out a Rs 1,345-crore scheme to incentivise domestic magnet production. The incentives for rare earth elements as part of a broader strategy to diversify the country's supply chain and mitigate its substantial dependence on Chinese sources.