BAJAJ-AUTO

EV production hit by Rare Earth Supply Chain Crunch

is facing significant production challenges for its electric two- and three-wheelers due to a shortage of heavy rare earth magnets, a key component for electric motors, caused by export restrictions from China. This shortage led to a 50% hit on production in July and has delayed several planned electric two-wheeler launches. To get production back on track, Bajaj Auto has begun using light rare earth magnets as an alternative. This strategic shift has helped the company improve its production output. For August and September, the company anticipates its electric two-wheeler production to reach 60% of the previously planned output, while three-wheeler production is expected to be at 75%. Engineers are currently working to ensure that the motors using light rare earth magnets can match the performance of those using the heavier, more efficient magnets, as there is no clear timeline for the resumption of heavy rare earth magnet imports. This makes Bajaj Auto the second two-wheeler manufacturer, after Ather Energies , to pivot to this alternative. Despite the production hurdles, Bajaj Auto reported a 14% year-on-year rise in net profit to ₹2,210 crore in the June quarter. This was driven by a consolidated operating margin expansion to 21%, a 14% growth in exports, and an increase in the average selling price of its vehicles. The company's sales were also impacted in the first quarter due to the production shortfalls. The magnet shortage is a widespread issue affecting the industry, with rivals like also exploring alternatives. This comes at a critical time, as the upcoming festive season is expected to boost consumer spending on vehicles.