Bajaj Auto may halt production of its electric vehicles (EVs) in August due to a critical shortage of rare earth magnets, making it the first Indian automaker to suspend manufacturing in response to China’s recent export restrictions. Managing Director Rajiv Bajaj revealed the development in a recent interview, warning that the company could face a “zero month” for its flagship electric scooter Chetak and its electric three-wheeler GoGo.
Bajaj Auto, India’s second-largest electric scooter manufacturer by volume, was able to maintain full production levels in June due to existing inventory. However, with supply pipelines disrupted by China’s decision to restrict the export of rare earth magnets, the automaker was forced to slash production by half in July — and is now staring at a possible complete halt in August.
China’s Magnet Export Curbs Disrupt Global Supply Chain
China remains the world’s leading supplier of rare earth magnets, a critical component not just for EVs but also for a wide range of industries — from internal combustion engine (ICE) vehicles and renewable energy systems to consumer electronics, aerospace, and defence applications. The country’s move to tighten control over exports of these materials has sent ripples across global manufacturing sectors, particularly in EV production where these magnets are essential for electric motor functionality.
Industry-Wide Implications and Government Appeal
Rajiv Bajaj has called on the Indian government to provide greater clarity on the evolving supply situation and to share a short-term outlook with industry stakeholders. “The uncertainty is impacting not just our operations but the entire EV sector,” he said.
The disruption has added urgency to the auto industry’s ongoing demand for more flexible norms under India’s Production-Linked Incentive (PLI) scheme. Currently, EV makers must meet progressively increasing Domestic Value Addition (DVA) thresholds to qualify for PLI benefits — a requirement that becomes significantly harder amid global component shortages.
When asked whether efforts to ease these DVA norms have made any progress, Bajaj said there has been “no conclusive information” from the relevant government ministries or regulatory authorities.
Mounting Pressure on India’s EV Ecosystem
The potential production halt highlights India’s vulnerability in critical EV supply chains and underscores the need for localised manufacturing of key components such as rare earth magnets. Despite initiatives to reduce reliance on imports, India continues to depend heavily on China for vital raw materials and components for clean energy technologies.
Industry experts warn that unless domestic capabilities for magnet production are rapidly developed, India’s ambitious EV transition goals could face recurring disruptions.
Conclusion
As Bajaj Auto braces for a likely standstill in EV output, the episode serves as a wake-up call for India’s electric mobility mission. The government’s next steps — in terms of both policy clarity and supply chain resilience — could determine whether the nation can maintain momentum in its shift toward sustainable transportation.
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