India’s largest EV carmaker Tata Motors is proactively de-risking its electric vehicle supply chain as rare earth magnets, critical for EV motors, emerge as the next big global bottleneck. While production remains unaffected for now, Group CFO P.B. Balaji confirmed that both Tata Motors and JLR are moving quickly to avoid future disruptions.
“I think all options on the table, including redesigning, including lighter ones, including different sources, including different substitutes being put in place. The learnings coming from the semiconductor crisis has meant that we have been off the blocks quite fast. And that has helped us cope with this quite well, both here (at Tata Motors) and in JLR. And that is what we are executing,” Balaji said during the Q1 FY26 earnings call.
For now, Tata Motors says it is not flagging any disruption in production or launch timelines. But with global tensions escalating over critical mineral supply chains—driven in part by China’s dominance—Balaji made it clear the company isn’t taking any chances.
Rare earths are essential for electric motors and largely controlled by China. Any geopolitical flare-up could trigger shortages or price spikes. Tata’s response will include diversifying suppliers, redesigning components, and building internal resilience.
Balaji also addressed the tariff hit at JLR, which took a £250 million knock due to U.S. duties, but expects relief from new trade agreements. Despite headwinds, the company is sticking to its full-year margin and cash flow guidance. With new trade deals now in place, tariffs are set to reduce significantly (to 10% for UK-origin cars and 15% for EU-origin ones) in upcoming quarters, JLR still expects to land within its FY26 EBIT margin guidance of 5–7%.
Experts point out that a rare earth crunch could come at a delicate time for the British luxury brand. JLR is in the midst of a high-stakes rebranding, with an ambitious new line of electric Jaguars set to debut in the next few years.