Is India’s EV industry really about to face a looming threat? In an interview with AutoCar Professional Bajaj Auto Executive Director Rakesh Sharma warned that the shortage of rare earth magnets, a key component in the manufacturing of electric vehicles, might be on the brink of depletion and in short supply. This could significantly impact the company’s production plans by July if supply bottlenecks keep on persisting.
Is EV Production Under Serious Threat
A rare earth situation refers to a complex issue surrounding the increasing global demand for rare earth elements (REEs), critical for modern technology, and challenges associated with their extractions , processing and supply chains. To ensure that such a situation does not hinder the production process of the Indian market a new process of improved import approvals has been established. This would require the approval of several ministries and beyond that an export clearance from the Chinese embassy.
The report from Autocar further reads that 30 applications that were already submitted by the Indian Auto industry but no clearances have been established till now. The interview further elucidates that supplies and stocks are being depleted even as we speak and there has not been a relief in sight. If a profound corrective measure is not taken, the production in July can be seriously impaired.
Dependence on Chinese Imports
The supply chain for rare earth magnets is almost entirely dependent on Chinese Imports. Although such rare earth deposits are present around the world as well, extracting them would take time and prolonged effort. And since replacing such metals requires complex and time-consuming efforts the supply chain in India could get seriously hampered if such adjustments are not made at the right time.
The industry has not raised any alarms yet, the Autocar report and interview could possibly be the first report to have detailed the jeopardy that could befall on the auto industry if necessary arrangements are not exacted. And beyond the adjustments it’s also expected that the alternative supply chains and technological substitutions evolve by the time such a situation arises.
To ensure that such a situation is delayed and profound substitutes are established SIAM and Acma have asked the Indian government to expedite permits and push Beijing to release shipments of rare earth magnets. Since China processes over 90% of these magnets globally. Such dependence along with tariffs have had a rippling effect across the global automotive supply chains.
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