logo
Chinese motors instead of Chinese magnets? Yes, but there's a problem

Chinese motors instead of Chinese magnets? Yes, but there's a problem

Minta day ago
Automakers looking to import fully made motors to skirt China's export ban on rare earth magnets have called for lower import duties and easier local content requirements.
Passing on the duty burden on imported motors will raise vehicle prices, and manufacturers will miss out on production incentives with strict local content rules, the Society of Indian Automobile Manufacturers (Siam) wrote to the government. Production could come to a complete halt for several models if the motors aren't available.
'In the current scenario when there is a restriction on import of standalone magnets, full assembly/allied components/sub-assemblies will have to be imported which shall attract a basic customs duty (BCD) of 15% leading to increase in cost of the vehicles," the lobby of automakers wrote to the heavy industries ministry on 27 June. Mint has seen a copy of the letter.
Electric vehicles are powered by traction motors connected to a battery, while sensors, telemetry and other electronic functions of all vehicles use rare earth magnets. India's automakers have so far failed to meet Chinese officials to quicken the approval process, highlighting the external dependence for these critical items, as well as the vulnerability of global supply chains.
Local woes
Siam also requested easier localization norms in production-linked incentive schemes and PM E-Drive, which will allow them to use imported material in vehicles without being disqualified for incentives. 'Applicants under both the PM-E Drive Scheme and Auto PLI Scheme should be granted temporary exemption/relaxation from the compliance requirements under PMP (phased manufacturing programme) timelines and DVA (domestic value addition) thresholds, specifically for components/aggregates affected by the REM supply crisis," the industry body wrote, urging the heavy industries ministry to request the finance ministry for a maximum of 7.5% BCD on motors.
Siam counts nearly all major automakers such as Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Tata Motors Ltd, Bajaj Auto Ltd, Mahindra and Mahindra Ltd, and TVS Motor Co. as its members. Queries emailed to the industry body remained unanswered.
"If China relaxes its restrictions, then we will return to normal; but if it doesn't, there are no quick solutions," S.B. Mohanty, acting chairman and managing director of IREL Ltd, the state-owned rare earths company, told Mint in a recent interview.
Subsidy scheme
New Delhi will decide on a scheme to subsidize domestic production of rare earth magnets, heavy industries minister H.D. Kumaraswamy said on 24 June, adding stakeholder consultations are underway.
Experts fear that any increase in cost in the current situation may be passed on to consumers as margins in the automobile industry are thin.
As per Harshvardhan Sharma, group head for auto tech and innovation at Nomura Research Institute Consulting & Solutions India, the difference in duties, combined with logistics and markup by motor makers, can increase the landed cost of motors by 18-25%. 'Any increase in motor prices — due to full motor imports — cascades directly into final vehicle pricing unless offset by subsidies or economies of scale," Sharma notes.
The most critical component using the rare earth magnet is the traction motors, the heart of an electric vehicle. In multiple consultations with the government over the last few months, manufacturers have conveyed that production lines will be threatened if the situation is not resolved soon. Bajaj Auto leadership warned during its post results earnings call on 29 May that production output will come under threat starting from July.
Chinese grip
Srihari Mulgund, partner at EY Parthenon, a consultancy, said that relying on imports for motors will give China a control on the market dynamics.
'China has capacity to meet India's demand and for its low-voltage motors used in two-wheelers and three-wheelers, India can emerge as a key player. As this industry already works on wafer thin margins, any cost increase is likely to be passed through, which will have a bearing on the demand environment," he said.
In 2025, Maruti Suzuki, Mahindra, Tata Motors and Hyundai have already raised prices by 1-4%. At a time when country's carmakers are reporting a weak market, experts fear the impact any price hike can have particularly when the festive season is set to start from the next month.
'Along with the cost increase, automakers will have to deal with compliance cost increase as well due to the fact new motors will have to be homologated with the authorities," Mulgund added.
Slow crawl
According to industry estimates, India's car market will see a 1-2% growth in FY26. In 2025, the market grew by 2% to 4.3 million units.
As per two people in the know, Chinese vendors told companies looking to import rare earth magnets to buy the motors directly instead of buying the raw material required to make them locally.
'If motors begin to be imported from China, it will put our localization efforts under threat and make firms more dependent on China," one of the persons mentioned above said. Increasing dependence on China, especially in the manufacturing of clean fuel vehicles, will also pose a hurdle to the Make in India initiative.
Nomura Research Institute's estimates suggest that in electric two-wheelers, the traction motor forms 13-18% of bill of materials cost. In passenger EVs, the motor contributes 8-10%, with batteries making up 35-40%.
With Chinese manufacturers looking to target higher-value components, experts warn that the latest crisis has given its companies an opportunity.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Xi Jinping losing his grip? Signs emerge of chaos in China's military and political circles
Xi Jinping losing his grip? Signs emerge of chaos in China's military and political circles

Economic Times

timean hour ago

  • Economic Times

Xi Jinping losing his grip? Signs emerge of chaos in China's military and political circles

President Xi Jinping's absence from the BRICS summit sparks speculation of internal turmoil in China, despite official claims of a scheduling conflict. Experts suggest Xi may be facing challenges to his leadership and control, while widening rifts within BRICS, fueled by trade disputes and China-India tensions, further complicate the situation. Premier Li Qiang is attending instead. Tired of too many ads? Remove Ads Xi Jinping Skips BRICS Summit for First Time Experts See Signs of Turmoil at Home Tired of too many ads? Remove Ads Premier Li Qiang Steps In Widening Rifts Within BRICS China-India Tensions Add Pressure FAQs Tired of too many ads? Remove Ads For the first time since it was started, Chinese President Xi Jinping is not attending the BRICS summit , a move that's raising speculations that something must be going terribly wrong within China, as per a official explanation from Beijing is simple, a 'scheduling conflict,' and that Xi had already met with Brazilian President Luiz Inácio Lula da Silva earlier this year, but experts are convinced, as per Fox sudden absence from this week's gathering of major emerging economies in Brazil for BRICS is prompting questions about the stability of his leadership at home, according to the Fox News expert on US-China relations, Gordon Chang said, "That doesn't make sense," adding, "There are many other countries at the BRICS summit, not just Brazil. To me, it's extremely significant that Xi Jinping is not going. It suggests turbulence at home — there are signs he's lost control of the military and that civilian rivals are reasserting power. This is a symptom of that," as quoted in the READ: Keir Starmer on the way out? This surprise contender could be the UK's next Prime Minister According to a Fox News report, Premier Li Qiang is attending the summit in Brazil instead of Xi, continuing a recent trend of Xi scaling back his appearances on the global Burack of the Heritage Foundation also pointed out that Xi's absence might indicate deeper issues, saying, "It's another indication that BRICS is not going to be China's vassalization of the Global South," as quoted in the explained that countries like Brazil and Indonesia have recently imposed tariffs on China over industrial overcapacity and dumping, which reflect widening rifts within the group. Burack pointed out that, "China is actively harming all those countries for the most part, maybe with some exceptions, through its malign trade policies and dumping and overcapacity," as quoted by Fox READ: Nvidia just dropped a game-changer — CEO Jensen Huang calls it a miracle for AI supercomputing While a few analysts have also cited rising China-India friction as a possible reason for Xi's decision to not attend the summit, according to the pointed out that, "China has been at war with India for decades, essentially," adding, "These are fundamentally opposing interests. It's difficult to see China changing its behavior in the near term, and that will keep tensions high," as quoted by Fox to the report, Indian prime minister Narendra Modi is expected to take a leading role at the summit, which could have been another deterrent for Xi's attendance. The author of The Red Emperor, a biography of Xi, Michael Sheridan said, Xi, as the Red Emperor, does not want to be overshadowed,' as quoted in the due to a scheduling conflict and because he already met Brazil's president this year. But many experts suspect political turmoil at unclear, but experts suggest he may be facing internal challenges or strategic shifts.

TikTok new app coming for U.S users, claim reports. Check launch date, how to download
TikTok new app coming for U.S users, claim reports. Check launch date, how to download

Time of India

time2 hours ago

  • Time of India

TikTok new app coming for U.S users, claim reports. Check launch date, how to download

TikTok is reportedly developing a new version of its app or users in the US as the deadline for China-based ByteDance to divest the U.S. assets nears. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads FAQs Americans are reportedly set to get a new version of TikTok as the China-based ByteDance video sharing platform is building a new version of its app for users in the United States, Reuters reported quoting The Information report. This comes ahead of a planned sale of the app to a group of investors. US President Donald Trump has said that he will start talking to China on Monday or Tuesday about a possible TikTok deal. He said the United States "pretty much" has a deal on the sale of the TikTok short-video has developed a plan to launch the new app to U.S. app stores on September 5, the report said. Last month, Trump extended to September 17 a deadline for China-based ByteDance to divest the U.S. assets of report added that TikTok users will eventually have to download the new app to be able to continue using the service, although the existing app will work until March of next year, though the timeline could change.A deal had been in the works earlier this year to spin off TikTok's U.S. operations into a new U.S.-based firm, majority-owned and operated by U.S. investors. That was put on hold after China indicated it would not approve it following Trump's announcements of steep tariffs on Chinese said the United States will probably have to get a deal approved by did not say who the potential buyer was. The president said earlier in the week that he had found a buyer for the U.S. branch of TikTok, the popular Chinese-owned video app that faces a ban adopted by Congress over national security concerns. A 2024 law required that the app effectively be banned in the United States unless its parent company, ByteDance, sold it to a non-Chinese company. Congress was concerned that sensitive user data could end up in the hands of the Chinese was not clear if the deal would comply with some of the requirements Congress adopted for a sale of TikTok, particularly if ByteDance chose not to share the app's algorithm with the U.S. buyers. Private equity firms have been hesitant to invest in a deal without some form of indemnification.A1. Parent company of TikTok is Byte Dance.A2. Donald Trump did not say who the potential buyer was.

China defends Brics against Trump's tariff threats: A call for cooperation
China defends Brics against Trump's tariff threats: A call for cooperation

Time of India

time2 hours ago

  • Time of India

China defends Brics against Trump's tariff threats: A call for cooperation

China on Monday said Brics is not a bloc for confrontation and does not target any third country, as it reacted guardedly to US President Donald Trump's additional 10% tariffs on the group and supporting nations. Brics is an important platform for cooperation among emerging markets and developing countries, Chinese Foreign Ministry spokesperson Mao Ning told a media briefing here. "It advocates openness, inclusiveness and win-win cooperation. It is not a bloc for confrontation. Nor does it target any country," Mao said. Mao was responding to a question on Trump's threat to impose additional 10% tariffs on countries aligning themselves with the Brics countries. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Play War Thunder now for free War Thunder Play Now Undo Referring to Trump's tariff hike threats, she said: "Trade war and tariff war have no winners," she said. Ning also said that it opposes tariffs being used as a tool to coerce others. The use of tariffs serves no one, she said. Not Working to Undermine Other Nations: Kremlin Live Events Meanwhile, the Kremlin said on Monday that the Brics group of nations had never been working to undermine other countries. "We have seen such statements by Trump, but it is important to note here that the uniqueness of Brics is that it is a group of countries that share common approaches and a common world view on cooperation based on their own interests,: said Peskov. "And this cooperation has never been and will never be directed against any third countries."

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store