At a time when the global auto industry is scrambling to secure rare earth materials amid China’s stringent export curbs, a recent Nuvama report reveals that the Indian automobile sector is more insulated than commonly perceived. This may contradict all the buzz surrounding the rare earth magnet crisis, but the report details why the Indian market will remain protected from this shortage.
India’s EV market is in early stages
There’s a lot of buzz around India’s electric vehicle industry, with new models rolling out faster than you can say “range anxiety,” and auto companies are making more announcements than a cricket commentator during an IPL final. The sales numbers pour cold water on all this as the hype around EVs and hybrids may be outpacing reality. Per the Nuvama report, these vehicles remain minor players, accounting for only a small fraction of total vehicle sales.
Here’s a reality check. EVs have managed to grab only 3% of the four-wheeler passenger market and 7% of the two-wheeler segment. These numbers might not make for a blockbuster opening weekend, but it’s a 25% CAGR in EV sales from 2023 to 2025. The EV sector is gaining momentum, but its growth falls short of industry expectations.
With 95% of vehicles in India still running on good old internal combustion engines, Nuvama says the rare earth magnet (REM) crisis is less of a villain here than in other markets. Yes, REMs do make a cameo in ICE vehicles, about 0.1 kg per car, but that number shoots up in EVs and hybrids, where usage jumps to 0.8 kg and 0.5 kg, respectively. So, while the world is busy panic-buying rare earths like they’re the last paneer tikkas at a wedding buffet, India’s auto sector is mostly sitting back, munching popcorn, and watching the drama unfold.
EV delays loom as rare earth export curbs bite
Permanent Magnet Synchronous Motors (PMSMs) are the beating heart of electric vehicles, powered by rare earth elements. But with China tightening its grip on rare earth exports, the EV sector is bracing for a slowdown reminiscent of being stuck in Mumbai traffic, as progress will be slow, and customers should prepare for longer waits to get their new EVs.
What about big players like Mahindra and Tata Motors? They have inventories stashed away and will weather the storm. The real drama could unfold among the two-wheeler companies like Ola Electric and Ather Energy. So, while China’s export curbs have the whole EV world in a twist, India’s major automakers are bracing for impact, and the two-wheeler companies are about to find out if they can keep the wheels turning, or if they’ll be left spinning in the pits.
Speaking to Express Drives, Gaurav Vangaal, Associate Director, Light Vehicle Production Forecast, Indian subcontinent at S&P Global Mobility, explained, “The current situation remains stable, with some EV car supply being impacted but still manageable. Automakers and suppliers are proactively exploring alternatives, such as adjusting product mixes and sourcing from other Tier 2, Tier 3 suppliers. We’re anticipating that electric vehicles will be the first to feel the effects.”
