After Bajaj Auto, TVS Motor — the country’s largest electric two-wheeler maker — has warned that China’s export curbs on rare earth magnets could trigger major production cuts and potentially bring India’s electric two-wheeler manufacturing to a grinding halt.
“This EV supply chain disruption is certainly going to pose a short- to medium-term challenge,” said Sudarshan Venu, MD, TVS Motor, in an interview with a private news channel.
Terming the development “concerning,” Venu said the impact of the export restrictions will begin to reflect in industry-wide production numbers by June or July.
Venu also added there could be output halts and even potential price hikes in the medium term as manufacturers scramble to find alternative sources. “We are trying to de-risk, but there is a huge price impact which needs to be borne by someone. There will be a cost increase to the customer,” he noted.
He also stressed the urgent need for India to localise its EV supply chain. “On one hand, we are launching products, we’ve invested significant capex, and volumes have grown — but this is definitely a challenge. The industry needs to work through this and develop an R&D ecosystem in India so we can scale sustainably,” Venu said.
TVS retained its leadership in the electric two-wheeler (E2W) segment for the second straight month, clocking a 107% year-on-year growth in May. The company sold 24,562 units of the iQube electric scooter, capturing 24% market share in a month when the industry recorded its second-highest sales ever — 1,00,270 units.
In its monthly sales update for May, TVS Motor said its electric vehicle portfolio grew by 50% year-on-year to 27,976 units in May 2025. “While EV sales continue to grow steadily, disruptions in the EV supply chain, particularly concerning magnet availability, are expected to pose challenges in the short to medium term,” it said.
TVS Motor’s warning comes less than a week after Bajaj Auto referred to the rare earth magnet curbs as a “dark cloud on the horizon” during its Q4FY25 earnings call. Executive Director Rakesh Sharma warned that the shortage of rare earth magnets, which are a critical component in EV motors, could severely impact production by July if supply issues continue.
“The rare earth situation is a very difficult one. An onerous process has been hammered together for import approvals,” Sharma said. “As we speak, supplies and stocks are getting depleted. And if there’s no relief or shipments, then July production will be seriously impaired.” He , however, noted that the challenge is not unique to Bajaj Auto. “I think such is the case with the entire auto industry.”
In April, China suspended exports of key rare earth elements, metals, and magnets. The move has disrupted global supply chains across sectors — from electronics to autos and aerospace. China controls 92% of global rare earth magnet production followed by Japan (7%) and Vietnam (1%), both of which use it predominantly for domestic consumption.
Beijing now requires an end-use declaration confirming that the material will not be used for military purposes, along with certifications from multiple Indian ministries, the Chinese embassy and a final clearance from the Chinese authorities. Industry estimates suggest that over 30 applications were filed by Indian automakers but no clearances have been granted so far. “Chinese authorities have said it could take 40 to 45 days from the time an application is made, but that loop hasn’t closed yet,” Sharma said.
Meanwhile, a joint delegation comprising members of the Society of Indian Automobile Manufacturers (SIAM) and the Automotive Component Manufacturers Association of India (ACMA) are yet to receive clearance from either government for a proposed meeting with Chinese officials, to raise concerns over the issue.
