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Hans India
a day ago
- Automotive
- Hans India
RARE EARTH MAGNETS SUPPLY RISK TO INDIA
New Delhi: A disruption in rare earth magnet supplies lasting beyond a month can impact production of passenger vehicles, including electric models, weighing on the domestic automobile industry's growth momentum, a report on Tuesday said. Rare earth magnets, low in cost but critical in function, could emerge as a key supply-side risk for India's automotive sector if China's export restrictions and delays in shipment clearances persist, Crisil Ratings said in a statement. 'The supply squeeze comes just as the auto sector is preparing for aggressive EV rollouts. Over a dozen new electric models are planned for launch, most built on PMSM platforms,' Crisil Ratings Senior Director Anuj Sethi said. While most automakers currently have 4-6 weeks of inventory, prolonged delays could start affecting vehicle production, with EV models facing deferrals or rescheduling from July 2025, he added. A broader impact on two-wheelers and ICE PVs may follow if the supply bottlenecks persist for an extended period, Sethi said. 'The shortage of rare earth magnets is forcing automakers to reassess supply-chain strategies. Despite contributing less than 5 per cent of a vehicle's cost, these magnets are indispensable for EV motors and electric steering systems,' said Crisil Ratings Director Poonam Upadhyay. Automakers are actively engaging with alternative suppliers in countries such as Vietnam, Indonesia, Japan, Australia, and the US, while also optimising existing inventories, she noted. Rare earth magnets are integral to Permanent Magnet Synchronous Motors (PMSMs) used in EVs for their high torque, energy efficiency and compact size. Hybrids also depend on them for efficient propulsion. In internal combustion engine (ICE) vehicles, the use of rare earth magnets is largely limited to electric power steering and other motorised systems. In April this year, China, the world's dominant exporter of rare earth magnets, imposed export restrictions on seven rare earth elements and finished magnets, mandating export licences. The revised framework demands detailed end-use disclosures and client declarations, including confirmation that the products will not be used in defence or re-exported to the US. With the clearance process taking at least 45 days, this added scrutiny has significantly delayed approvals.
Economic Times
2 days ago
- Automotive
- Economic Times
Disruption of rare earth magnet supplies beyond 30 days can impact vehicle production in India: Report
Agencies Representative image. A disruption in rare earth magnet supplies lasting beyond a month can impact production of passenger vehicles, including electric models, weighing on the domestic automobile industry's growth momentum, a report on Tuesday said. Rare earth magnets, low in cost but critical in function, could emerge as a key supply-side risk for India's automotive sector if China's export restrictions and delays in shipment clearances persist, Crisil Ratings said in a statement. "The supply squeeze comes just as the auto sector is preparing for aggressive EV rollouts. Over a dozen new electric models are planned for launch, most built on PMSM platforms," Crisil Ratings Senior Director Anuj Sethi said. While most automakers currently have 4-6 weeks of inventory, prolonged delays could start affecting vehicle production, with EV models facing deferrals or rescheduling from July 2025, he added. A broader impact on two-wheelers and ICE PVs may follow if the supply bottlenecks persist for an extended period, Sethi said. "The shortage of rare earth magnets is forcing automakers to reassess supply-chain strategies. Despite contributing less than 5 per cent of a vehicle's cost, these magnets are indispensable for EV motors and electric steering systems," said Crisil Ratings Director Poonam Upadhyay. Automakers are actively engaging with alternative suppliers in countries such as Vietnam, Indonesia, Japan, Australia, and the US, while also optimising existing inventories, she noted. "With applications across EVs and ICE vehicles, a prolonged supply squeeze could disrupt production of PVs and 2Ws, making this low-cost component a potential high-impact bottleneck for the sector," she said. Rare earth magnets are integral to Permanent Magnet Synchronous Motors (PMSMs) used in EVs for their high torque, energy efficiency and compact size. Hybrids also depend on them for efficient propulsion. In internal combustion engine (ICE) vehicles, the use of rare earth magnets is largely limited to electric power steering and other motorised systems. In April this year, China, the world's dominant exporter of rare earth magnets, imposed export restrictions on seven rare earth elements and finished magnets, mandating export licences. The revised framework demands detailed end-use disclosures and client declarations, including confirmation that the products will not be used in defence or re-exported to the US. With the clearance process taking at least 45 days, this added scrutiny has significantly delayed approvals. And the growing backlog has further slowed clearances, tightening global supply chains. India, which sourced over 80 per cent of its 540 tonnes magnet imports from China last fiscal, has started to feel the impact. By end-May 2025, nearly 30 import requests from Indian companies were endorsed by the Indian government, but none have yet been approved by the Chinese authorities, and no shipments have arrived. During the pandemic, rare earth magnet supplies remained stable, unlike semiconductors, reinforcing reliance on just-in-time inventory without building strategic buffers. However, while semiconductors have a globally diversified supply base, over 90 per cent of rare earth magnet processing is concentrated in China, with limited short-term alternatives. Recognising the risk, the government and automakers are taking action on two fronts, Crisil said. In the short term, the focus is on building strategic inventories, tapping alternative suppliers and accelerating domestic assembly under Production Linked Incentive schemes. For the long term, reducing import dependency will hinge on fast-tracking rare earth exploration, building local production capacity and investing in recycling infrastructure, Crisil stated.
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Business Standard
2 days ago
- Automotive
- Business Standard
Auto sector faces slowdown due to rare earth magnet shortage: Crisil
India's automotive industry is staring at potential slowdown due to shortage of rare earth magnets, a critical component for electric vehicles (EVs) and hybrids, ratings agency CRISIL has said. China's recently imposed export restrictions and prolonged shipment delays are disrupting the supply chain, which could impact production and the sector's growth trajectory. Rare earth magnets are integral to the permanent magnet synchronous motors (PMSMs) utilised in EVs, valued for their high torque, energy efficiency, and compact design. Hybrids also rely on these magnets for efficient propulsion. In internal combustion engine (ICE) vehicles, their use is primarily confined to electric power steering and other motorised systems. Anuj Sethi, Senior Director at CRISIL Ratings, said, 'The supply squeeze coincides with the auto sector's preparations for aggressive EV rollouts. Over a dozen new electric models are scheduled for launch, primarily on PMSM platforms.' He added, 'While most automakers currently possess 4-6 weeks of inventory, sustained delays could begin to affect vehicle production, with EV models potentially facing deferrals or rescheduling from July 2025. A broader impact on two-wheelers and ICE passenger vehicles may occur if supply bottlenecks persist for an extended period.' The Chinese wall In April 2025, China, the primary global exporter of rare earth magnets, implemented new export restrictions on seven rare earth elements and finished magnets. This revised framework necessitates export licenses, demanding detailed end-use disclosures and client declarations, including assurances that the products will not be used for defence or re-exported to the US. The clearance process now takes a minimum of 45 days, causing significant approval delays and exacerbating global supply chain tightness. India, which imported over 80 per cent of its approximately 540 tonnes of magnets from China in the last financial year, is experiencing the effects. By the end of May 2025, while the Indian government endorsed nearly 30 import requests from domestic companies, Chinese authorities had not approved any, resulting in no shipments reaching India. Poonam Upadhyay, director at CRISIL Ratings, said, 'The shortage of rare earth magnets is compelling automakers to re-evaluate supply-chain strategies. Despite contributing less than 5 per cent of a vehicle's cost, these magnets are essential for EV motors and electric steering systems.' She noted that automakers are engaging with alternative suppliers in countries such as Vietnam, Indonesia, Japan, Australia, and the US, while also optimising existing inventories. 'With applications across EVs and ICE vehicles, a prolonged supply squeeze could disrupt production of PVs and 2Ws, making this low-cost component a potential high-impact bottleneck for the sector. In a constrained supply scenario, magnets may also be diverted to ICE models, which require fewer units, potentially impacting EV growth,' Upadhyay explained. During the pandemic, rare earth magnet supplies remained stable, unlike semiconductors. This led to a reliance on just-in-time inventory without the establishment of strategic buffers. Unlike semiconductors, which have a globally diversified supply base, over 90 per cent of rare earth magnet processing is concentrated in China, offering limited short-term alternatives. The Indian remedy In response to this risk, the Indian government and automakers are taking action on two fronts. Short-term efforts focus on building strategic inventories, securing alternative suppliers, and accelerating domestic assembly under Production Linked Incentive schemes. Long-term objectives involve fast-tracking rare earth exploration, establishing local production capacity, and investing in recycling infrastructure to reduce import dependency. Diversification of supply sources is an ongoing effort, aligning with policy initiatives. The pace of China's export approvals for these magnets remains an immediate concern for automotive players. Domestic passenger vehicle volumes are projected to increase by 2-4 per cent in the financial year 2026, with electric PVs potentially rising by 35-40 per cent from a low base. Electric two-wheelers could see approximately 27 per cent growth, exceeding the overall 2W segment's 8-10 per cent growth. However, continued supply tightness could temper this momentum, particularly in the EV segment.
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Business Standard
2 days ago
- Automotive
- Business Standard
Rare earth magnet disruption of over 30 days may hit vehicle output: Rpt
A disruption in rare earth magnet supplies lasting beyond a month can impact production of passenger vehicles, including electric models, weighing on the domestic automobile industry's growth momentum, a report on Tuesday said. Rare earth magnets, low in cost but critical in function, could emerge as a key supply-side risk for India's automotive sector if China's export restrictions and delays in shipment clearances persist, Crisil Ratings said in a statement. "The supply squeeze comes just as the auto sector is preparing for aggressive EV rollouts. Over a dozen new electric models are planned for launch, most built on PMSM platforms," Crisil Ratings Senior Director Anuj Sethi said. While most automakers currently have 4-6 weeks of inventory, prolonged delays could start affecting vehicle production, with EV models facing deferrals or rescheduling from July 2025, he added. A broader impact on two-wheelers and ICE PVs may follow if the supply bottlenecks persist for an extended period, Sethi said. "The shortage of rare earth magnets is forcing automakers to reassess supply-chain strategies. Despite contributing less than 5 per cent of a vehicle's cost, these magnets are indispensable for EV motors and electric steering systems," said Crisil Ratings Director Poonam Upadhyay. Automakers are actively engaging with alternative suppliers in countries such as Vietnam, Indonesia, Japan, Australia, and the US, while also optimising existing inventories, she noted. "With applications across EVs and ICE vehicles, a prolonged supply squeeze could disrupt production of PVs and 2Ws, making this low-cost component a potential high-impact bottleneck for the sector," she said. Rare earth magnets are integral to Permanent Magnet Synchronous Motors (PMSMs) used in EVs for their high torque, energy efficiency and compact size. Hybrids also depend on them for efficient propulsion. In internal combustion engine (ICE) vehicles, the use of rare earth magnets is largely limited to electric power steering and other motorised systems. In April this year, China, the world's dominant exporter of rare earth magnets, imposed export restrictions on seven rare earth elements and finished magnets, mandating export licences. The revised framework demands detailed end-use disclosures and client declarations, including confirmation that the products will not be used in defence or re-exported to the US. With the clearance process taking at least 45 days, this added scrutiny has significantly delayed approvals. And the growing backlog has further slowed clearances, tightening global supply chains. India, which sourced over 80 per cent of its 540 tonnes magnet imports from China last fiscal, has started to feel the impact. By end-May 2025, nearly 30 import requests from Indian companies were endorsed by the Indian government, but none have yet been approved by the Chinese authorities, and no shipments have arrived. During the pandemic, rare earth magnet supplies remained stable, unlike semiconductors, reinforcing reliance on just-in-time inventory without building strategic buffers. However, while semiconductors have a globally diversified supply base, over 90 per cent of rare earth magnet processing is concentrated in China, with limited short-term alternatives. Recognising the risk, the government and automakers are taking action on two fronts, Crisil said. In the short term, the focus is on building strategic inventories, tapping alternative suppliers and accelerating domestic assembly under Production Linked Incentive schemes. For the long term, reducing import dependency will hinge on fast-tracking rare earth exploration, building local production capacity and investing in recycling infrastructure, Crisil stated.
Time of India
2 days ago
- Automotive
- Time of India
EV launches may stall as China chokes magnet supply: Crisil sounds alarm for auto sector
New Delhi: India's auto industry could face disruptions in electric vehicle (EV) production if the current delays in rare earth magnet shipments from China persist, Crisil Ratings has said. According to the rating agency, nearly 30 import requests from Indian companies had been endorsed by the Indian government by the end of May 2025, but none have yet been approved by Chinese authorities, with no shipments arriving so far. Rare earth magnets, although accounting for less than 5 per cent of a vehicle's cost, are essential for permanent magnet synchronous motors (PMSMs) widely used in EVs and hybrids, as well as in components like electric power steering in internal combustion engine (ICE) vehicles. In April 2025, China imposed export restrictions on seven rare earth elements and finished magnets, requiring detailed end-use declarations and client confirmations, including that the materials would not be used for defence purposes or re-exported to the US. The revised rules have led to approval delays of at least 45 days, creating a backlog and tightening global supply chains. India sourced over 80 per cent of its ~540 tonne rare earth magnet imports from China in the last fiscal. Crisil Ratings flagged that a disruption lasting more than a month could impact EV launches and stall production schedules. 'The supply squeeze comes just as the auto sector is preparing for aggressive EV rollouts. Over a dozen new electric models are planned for launch, most built on PMSM platforms,' said Anuj Sethi, Senior Director, Crisil Ratings. According to Crisil, most automakers currently have 4-6 weeks of inventory. If the situation is not resolved, EV model launches could be deferred or rescheduled starting July 2025. While the immediate risk is to the EV segment, ICE passenger vehicles and two-wheelers could also be affected if the supply crunch extends. In FY26, domestic passenger vehicle volumes are expected to grow 2-4%, while electric PVs could rise 35-40 per cent on a low base. Electric two-wheelers may see ~27 per cent growth, compared with overall 2W growth of 8-10%. But sustained supply tightness may slow this momentum, particularly for EVs. 'Despite contributing less than 5 per cent of a vehicle's cost, these magnets are indispensable for EV motors and electric steering systems,' said Poonam Upadhyay, Director, Crisil Ratings. 'Automakers are actively engaging with alternative suppliers in Vietnam, Indonesia, Japan, Australia, and the US, while also optimising existing inventories.' The report added that during the pandemic, rare earth magnet supplies remained stable, unlike semiconductors, reinforcing reliance on just-in-time inventories. However, unlike semiconductors which have a diversified supply base, over 90 per cent of rare earth magnet processing is concentrated in China, with limited short-term alternatives. Crisil Ratings said that automakers and the government are addressing the risk through two approaches: building strategic inventories and sourcing from alternate suppliers in the short term; and reducing import dependence via exploration, domestic production, and recycling in the long term. The pace of China's export approvals remains the immediate monitorable, Crisil said, as the sector braces for possible disruption ahead of a key EV launch cycle.
