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Mint
a day ago
- Automotive
- Mint
India's rare earth magnets crisis: What lies ahead for the EV sector?
As China's curbs on rare earth magnets send ripples across global automotive, defence and consumer electronics supply chains, India's fledgling EV ecosystem must finally reckon with its overreliance on China. At present, with no immediate resolution in sight, the EV industry faces major setbacks in the form of production delays, as Beijing turns down not one but two applications for India-bound shipments. China holds complete dominance over rare earth elements, mining 61 per cent and refining 91 per cent of the global supply. While India has the third-largest reserves of rare earth minerals, it has seen little to no investment from private companies and is yet to develop a self-reliant supply chain. Rare earth magnets are crucial for a variety of electronics. In the automotive scheme of things, they're needed for ICE vehicles as well, featuring in the motors found in power steering, windscreen wipers, etc. However, for EVs, they are indispensable as they're part of the Permanent Magnet Synchronous Motors, which deliver high torque, are energy efficient, and are compact in size. According to Ravi Bhatia, President and Director of JATO Dynamics India, an automotive market intelligence and analysis firm, the outlook isn't good, particularly for EVs and electric two-wheelers. Bhatia predicts manufacturing delays that could range between two and six months and a 5-8 per cent price hike. This means that an electric scooter costing ₹ 1.6 lakh could be dearer by ₹ 8-13,000. The issue is that even ICE cars need rare earth magnets for motors, driving power steering, windscreen wipers, etc. 'It takes about 4-5 years to scale up the technology and qualify with auto OEMs. Thereafter, it takes about 2 years to build the plant. It takes a lot of capital during this time to scale up technology. Unfortunately, all the processing is done in China in order to reach the levels of purification needed,' says Vikram Handa, MD at Epsilon Carbon Pvt Ltd, an India-based firm specialising in cathode and anode production. 'Having an independent supply chain needs policy support, risk capital and time,' Bhatia says. Up till now, private firms have been risk-averse and rightly so, as manufacturers have always sought to look toward China thanks to their competitive pricing. According to Bhatia, setting up a mine costs anywhere between ₹ 4000 and ₹ 8000 crore and comes with a decade-long gestation period. 'The kind of policy support offered by China 20 years ago was just not available either in India or the US or Europe, so singling out Indian enterprises will not be fair. And while we have large reserves, the process from reserve to actual production takes 10 years,' says Nitin Gupta, CEO and Co-Founder of Attero Recycling. Gupta also states that a policy framework supporting and incentivising the mining and refining of critical and rare earth minerals has only just been put in place in the form of the National Critical Minerals Mission (which has allocated a budget of ₹ 16,300 over a period of seven years). The Critical Minerals Act is also likely to be amended in the monsoon session, according to an article in the Business Standard. 'We need policy and capital to build locally so we are resilient to shocks in the future.' 'You can go to Australia or Canada, where large companies are established. You just have to pay more,' says Handa. Handa also uses the example of production-ready graphite manufactured by Epsilon, which remains unutilised by Indian OEMs who prefer to purchase directly from China, which manufactures it at a much larger scale, and sells it for the lowest cost, thanks to the industry being heavily subsidised. 'We make natural and synthetic graphite, but unfortunately, we are catering more to international customers because the Indian customer continues to buy from China.' Bhatia claims that the government is talking to companies in Australia and Japan and highlights once again that China's processing of over 90 per cent of rare earth magnets makes us extremely vulnerable. 'It's a big threat that can slow down the wheels of the economy.' While setting up a local supply chain is non-negotiable, its effects are only going to be felt in a decade. Gupta points to a more elegant short-term solution: Recycling. 'Will setting up a domestic supply chain take 10 years? The answer is no. Setting up mines and refineries will take 10 years, but India's domestic supply chain can be fastened very well through recycling. If you look at battery grade minerals, cobalt, lithium carbonate and nickel graphite, we are extracting more than 97 per cent pure battery grade cobalt, lithium, nickel and graphite and putting it back in the circular economy. Globally, extraction efficiency is less than 75 per cent, including China. Gupta claims that Attero is also extracting rare earth materials like neodymium from magnets, which are up for recycling. 'Theoretically speaking, we can meet 80-90 per cent of the demand via recycling if 90 per cent of end-of-life products are put back into recycling. We can make India the recycling hub of the world. We don't need to restrict ourselves to end-of-life products produced in India,' says Gupta. 'Focus on domestic recycling, build-up capacity to become the global recycling hub and in parallel, continue to develop mining activities so that in the long-term, we are only self-reliant but we can supply to the world.' 'The government needs to reassess incentives for hybrids,' says Bhatia. 'I've been advocating the use of hybrids for the next decade as they need fewer resources as compared to EVs. We are a price-sensitive market,' he adds. However, there's no circumventing the need for rare earth magnets since their application is so widespread. Given that hybrids feature electric motors, they rely on rare earth magnets as well. Although the government has suggested using alternative forms of technologies like ferrite magnets or magnet-free designs, this isn't feasible according to Gupta. 'There are major cost and performance trade-offs. Take your cell phone. Your cell phone has a speaker. That speaker has a magnet in it. Try changing that to a ferrite magnet, your phone will have to be 4 times its current size.' Gupta says that hybrids are feasible in the short term, but do not offer long-term solutions. 'Considering hybrids as an alternative to EVs is a good idea because you're not betting on one tech. But globally, EVs will be the predominant technology.'
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
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
Disruption of rare earth magnet supplies beyond 30 days can impact vehicle production in India: Report
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. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 무릎이 붓고 아프신 분들만 읽으세요. 큰딸민지 더 알아보기 Undo 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. Live Events "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.
