Tata Motors, JLR flag EV supply chain as a separate business risk. They don't name China, but its imprint is all over.

Mint

12 hours ago

New Delhi: Tata Motors Ltd and Jaguar Land Rover have separately highlighted risks to their electric vehicle business for the first time ever, including potential production delays and shortages, likely as a result of China's stranglehold over the EV supply chain.
Introducing a new element in their annual report's principle risks segment, titled 'electrification transition', Mumbai-based Tata Motors and its UK-based subsidiary JLR have both underscored the threat of financial losses if the transition to clean technology is not carefully managed.
'Unmanaged supply chain issues can lead to production delays and shortages," the companies said in their annual reports for 2024-25 without mentioning any specific potential trigger.
No other homegrown automaker has mentioned electric transition as a separate business risk in their annual report.
The disclosures in Tata Motors's and JLR's annual reports come as automakers globally are grappling with China's export restrictions on rare earth magnets.
India's auto sector has conveyed to the Union government that production cuts could begin as early as this month if China doesn't resume exports of rare earth magnets, which are used to make electric motors and other parts for EVs. They also flagged that while China has resumed exports of rare earth magnets to foreign companies, applications by Indian automakers remain stuck.
As per several estimates, China controls about 80% of the global lithium-ion battery market and about 90% of the global supply chain for rare earth magnets.
'There is a need for the magnets for both EVs and ICE (internal combustion engine) vehicles," Shailesh Chandra, managing director at Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, told Mint in an interview. 'Different OEMs (original equipment manufacturers, or carmakers) are in different positions with respect to the stock of the magnets."
For the long-term, Tata Motors and JLR are investing towards increasing their capacity to manufacture key components.
'To support this electrification, Tata Group's Agratas is to construct the UK's largest battery cell facility in Somerset, which will provide high-performance battery cells for our new electric models," Jaguar Land Rover noted in its annual report. 'Additionally, we are making significant continued investment in upgrading our core facilities and supply chain for electrification."
Agratas Energy Storage Solutions Pvt. Ltd is the Tata Group's battery business, with Tata Motors and JLR as its anchor customers.
Also read | China's restriction on rare earth magnets repel Indian EV players
China's shadow
Tata Motors has raised concerns even earlier about its electric vehicle business's direction in international markets, but that was due to a demand slowdown in Europe and the US.
'Given the uncertainty around the pace of EV adoption in key markets, the company may need to extend the life of its ICE platforms beyond the originally planned timeline. It may also consider launching new ICE variants in the future," analysts at Motilal Oswal wrote in a 11 March note.
In its latest annual report, Tata Motors has also highlighted its efforts to localise the battery supply chain that is currently dominated by China.
Tata Motors's lead in the electric vehicles segment is being aggressively challenged by MG Motor India, Mahindra & Mahindra Ltd, and Hyundai Motor India Ltd, with its domestic EV market share dropping to 55.4% in 2024-25 from 73.1% in FY24 and 84% in FY23.
Experts believe the looming shadow of China on the EV supply chain is an identified risk factor for automobile companies.
'Whether it's batteries or magnets, China has established a dominant lead in the supply chain, which is bound to be a risk for domestic and global OEMs," said Abhishek Saxena, former public policy expert at government think-tank Niti Aayog. 'The current magnet crisis shows that supply concentration can have a business impact."
Also read | Indian auto stuck in queue as China clears rare earth magnets for others
After US President Donald Trump in April announced reciprocal tariffs on countries across the world, China began restricting the export of rare earth magnets. The Chinese government has started asking for end-user certificates declaring that the products made using its rare earth magnets will not be used for defence purposes.
But, as per automakers, the process to obtain the certificates is long and arduous, requiring multiple layers of approvals from provincial governments in China and the Chinese commerce ministry.
'Stocks are fast depleting. So far, 30 applications have been submitted to China, but none has received final approval. The Chinese government has said that final approvals will take about 45 days," Rakesh Sharma, executive director at Bajaj Auto Ltd, said during a post-earnings media call on 29 May.
Bajaj Auto has warned about severe production cuts starting July if the rare earth magnet issue isn't resolved.