The rare earth crisis inflicted by China has already started to show its effect on the global automotive industry. The constraints in shipments of rare earth materials from China isn’t just affecting production of electric vehicles but combustion-powered vehicles as well. Automakers in India too haven’t escaped this crisis with rare earth shipments from China halted.
In a recent interaction with Express Drives, Suhas Rajkumar, Co-Founder and CEO of Simple Energy, addressed this concerning issue. He admitted that the rare earth crisis will start slowing down production across all segments of automobiles by mid-July. He revealed that no OEM holds stocks for more than 45 to 60 days on an average.
Mitigating rare earth crisis
“We have certain developments, which are on the positive path, and I think we should be resolving it in the next 10 days. We are keeping a close watch, and I think we can break some news on this in the next eight to 10 days, and probably Simple will have that headwind, given the situation that we are in today. Having said that, it has more to do with the licensing process for import of magnets that the Chinese government wants to implement,” said Suhas.
He, however, sounded confident that the clearances are somewhere near and authorities are currently processing the licenses and verifying the documents. So hopefully shipments will commence by mid-July.
When asked if there’s a way that the industry can mitigate this crisis with a long-term objective, Suhas replied that the long-term goal has to be self reliability. He said many OEMs, including Simple Energy, are looking at alternate suppliers in countries like Australia, Russia, Thailand, and Vietnam. However, he conceded that the supply chain isn’t ready yet and it would take at least 12-18 months to establish an alternate line of supply.
At the same time, the Indian industry is hoping to establish local rare earth processing capabilities in the country within 6-12 months. Simple is also seeking to develop rare earth-free magnet technologies within the next year. The Bengaluru-based electric two-wheeler manufacturer is also confident that it can maintain its product launches planned in the near future despite the ongoing challenges.
New product launches in pipeline
Speaking of new launches, Simple Energy is presently working on Gen 2 of the Simple One electric scooter which is bound to see several upgrades over the Gen 1.5 model and the One S, although Suhas remained guarded in his response, not divulging any specific details about the model or a tentative launch timeline for the Gen 2 but said that this unnamed scooter is expected to launch sometime this year.
However, he suggested that the upcoming model may not cater to consumers seeking a budget-friendly electric scooter, a segment currently being targeted by rival brands like TVS, Ather and Ola Electric. That said, it has been confirmed that this new electric scooter will be based on a brand new platform. He further went on to reveal that Simple plans to expand its footprint across India with 200 stores and service stations operational by the time the next electric scooter is launched, which is possibly six months from now.
Besides the Simple One Gen 2.0, the company is also working towards launching its own IPO (Initial Public Offering) within the next 14 to 18 months. Suhas revealed that proceeds from the IPO will be primarily used for Simple’s expansion strategy for its R&D and dealer network as well as optimising its plant capacities based on demand.
