Impact of rare earth magnet shortage from China; Bajaj, Ather and TVS to reduce production
The impact of China's ban on the export of precious metals (rare metals from the earth's crust) is starting to be seen in the Indian EV market. The country's top electric two-wheeler companies, Bajaj Auto, Ather Energy and TVS Motor, are going to reduce production.
According to an ET report, Indian companies have been facing a shortage of rare earth magnets imported from China for the last 4 months. These magnets are very important for electric motors and without them, there is a problem in making electric vehicles. Due to the reduction in production, the prices of electric two-wheelers may increase.
Electric two-wheeler manufacturing companies
- Bajaj Auto: Bajaj, India’s second biggest electric two-wheeler company, will make fewer vehicles now. Their Chetak model is already facing some problems.
- Ather Energy: This Bengaluru company will reduce its production by 8-10%.
- TVS Motor: Even though TVS has been number one in sales for the past 3 months, it also has to cut down production. A company spokesperson said that there is a shortage of magnets, which is creating problems for making EVs now and shortly.
- Ola Electric: Ola will not reduce its production. They have magnets stocked for 5-6 months and are planning to make more vehicles. A company spokesperson said, “Our production is not affected.”
These 4 companies manufacture 80% of the electric two-wheelers sold in India.
Central government in talks with China
The automobile industry and the central government are in talks with China to resume the supply of magnets. Apart from this, talks are also underway for supplies from countries like Vietnam, Indonesia and Japan, but no solution has been reached yet. In June, the Society of Indian Automobile Manufacturers (SIAM) warned that if supplies do not resume soon, manufacturers may have to reduce production.
If China's restrictions remain in place, electric vehicles will become more expensive.
If China's restrictions remain in place, its impact will be seen on electric vehicle manufacturing companies globally. The price of raw materials will increase, due to which the price of vehicles may also increase. Its impact will be seen gradually in all markets, including India. Experts in India have warned that if imports from China do not start soon, production at electric and ICE vehicle factories may stop.
Manufacturers in India have 6 to 8 weeks of supply.y
According to a report by Business Standard, electric vehicle (EV) makers in India only have enough rare earth materials (REM) to last 6 to 8 weeks. TVS Motor's Managing Director, Sudarshan Venu, told CNBC-TV18 that production could be affected in June or July because of restrictions from China. If that happens, it may cause problems for EV companies in India.
Where are rare earth materials used in vehicles?
Rare earth materials are particularly used in electric vehicles. They are used to make compact and high-performance magnets for permanent magnet electric motors.
Made of elements such as neodymium, dysprosium and terbium, these magnets make the motors smaller, lighter and more efficient than other alternatives, which is essential for improving the range and performance of EVs.
They are also used in auto components such as catalytic converters used in ICE vehicles. In addition, these metals are used in many systems, from sensors to displays used in both EV and ICE vehicles.
China accounts for about 70% of the rare earth mini.ng
Notably, China accounts for about 70% of rare earth mining globally and about 90% of production. Amid the escalating trade war with the US, China recently banned the export of 7 precious metals (rare earth materials).
China has also blocked shipments of magnets, which are needed to assemble everything from cars and drones to robots and missiles, at Chinese ports. These materials are critical to the automobile, semiconductor and aerospace businesses.
Exports will only be made through special permits
.On April 4, China made a rule to stop the export of 7 rare metals. Now, these metals and the special magnets made from them can only be sent out of China if they get special permission.
Companies importing magnets from China will have to provide an 'end-use certificate'. It will have to state whether the magnets are for military purposes or not.
