Tata Motors races to secure rare earth magnet supply amid global risks

Tata Motors' stock price is down nearly 15 percent since the beginning of the year.

Tata Motors is taking no chances with its electric vehicle supply chain, as rare earth magnets—vital for EV motors—emerge as a potential global choke point. While production remains unaffected for now, the company is already working on alternatives to secure future supplies.

Group CFO P.B. Balaji, speaking on the Q1 FY26 earnings call, said the company is evaluating all options: "Redesigning, including lighter ones, including different sources, including different substitutes being put in place."

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The push comes amid rising global concern over China’s dominance in rare earth supplies, which could spark shortages or price spikes in the event of geopolitical tension. Tata Motors, along with its UK-based unit Jaguar Land Rover, is preparing to respond with a multi-pronged strategy—ranging from supplier diversification to component redesign. Domestically, the company said it is covered for the next 2-3 months, and it is looking at alternatives outside of China.

Balaji pointed out that past experiences have shaped this proactive stance. "The learnings coming from the semiconductor crisis have meant that we have been off the blocks quite fast. And that has helped us cope with this quite well, both here (at Tata Motors) and in JLR. And that is what we are executing.”

For now, there is no change to Tata Motors’ production or launch plans, but the company isn’t waiting for disruptions to materialise.

Apart from this, Jaguar Land Rover is staring at a roadblock in China after the government cut the luxury tax threshold from 1.3 million RMB (Chinese yuan) to 900,000 RMB, pulling almost all Range Rover sales into the tax net and adding an extra 10 percent levy in a market where retail finance remains tight.

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The company is also grappling with higher US import tariffs. Recent trade agreements have eased the blow from an initially proposed 1,000 percent hike, but duties will still rise sharply — about 300 percent for vehicles built in the UK and 500 percent for those from Europe. These tariffs directly raise the landed cost of JLR’s cars in the US, potentially squeezing margins and limiting pricing flexibility. A planned 15 percent reduction in these rates is yet to take effect, meaning elevated costs will persist in one of its most important overseas markets.

Tata Motors on August 8 reported a net profit of Rs 3,924 crore for the April-June quarter of the financial year 2026. This marks a 30 percent on-year drop from the Rs 5,643 crore net profit from continuing operations reported in the same period last year. The drop in net profit was in line with the Moneycontrol poll of six brokerage firms.

The firm's revenue from operations meanwhile dropped 2.5 percent on-year to Rs 1.04 lakh crore in Q1 FY26, from Rs 1.07 lakh crore in Q1 FY25. Revenue however beat estimate, as brokerages polled by Moneycontrol had expected the firm's revenue to drop 8.7 percent.

Shares of the company closed at Rs 634, lower by 2 percent from the last close on the NSE. Tata Motors' stock price is down nearly 15 percent since the beginning of the year.

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