‘Been hit quite hard…': Bajaj Auto reels from China's rare earth magnet curbs; Rajiv Bajaj says ‘looking at a zero month'
China's rare earth magnet curbs are set to hit India's auto sector, with Bajaj Auto being possibly the first to halt production of its electric scooters in August. According to Bajaj Auto managing director Rajiv Bajaj, August may be a 'zero month' for the company.
Bajaj Auto may have to bring its production to a complete halt in August for its Chetak electric scooter and GoGo electric three-wheeler due to a shortage of rare earth magnets, Rajiv Bajaj told ET.
India's second-largest electric scooter manufacturer by volume has been compelled to reduce its EV production by 50% this month, despite achieving full production capacity in June by utilising existing component stocks, according to Bajaj.
'Hit Quite Hard', says Bajaj
'Bajaj Auto had in recent months achieved pole position in both the electric scooter segment with its Chetak and the electric three-wheeler segment with its GoGo. Hence, since our volume requirements are quite high, particularly with the festive season approaching, we have been hit quite hard by the unavailability of heavy rare earth magnets as opposed to some of the smaller low-volume manufacturers,' Rajiv Bajaj was quoted as saying by ET.
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Talking about the possibility of a 'zero month' in August, Bajaj said, 'Should that happen, it would be not just a significant impact on our leading share and revenue, but also on our Ebitda (earnings before interest, tax, depreciation and amortisation) as our EV portfolio is now reasonably profitable.'
According to Bajaj, for immediate needs, there are no substitutes. Looking ahead to the medium term, two clear options emerge: seeking a replacement for the high rare earth magnet, or identifying sources beyond China.
'In the short-term, there are no alternatives. In the medium-term, the two obvious alternatives are to look for an alternative to the high rare earth magnet and/or to look for an alternative to the source i.e. China,' he said.
China is the global leader in rare earth magnet supply, which is essential not only for electric vehicles but also for conventional internal combustion engine (ICE) vehicles, renewable energy systems, consumer electronics, defence equipment, aerospace applications, and various other industrial uses.
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