India's electric vehicle industry is bracing for fresh supply chain turbulence, with TVS Motor Company too raising a red flag over China’s curb on export of rare earth magnets - a critical EV motor component - just days after Bajaj Auto expressed production concerns.
"The impact of the ban will begin to reflect in production by June or July," Sudarshan Venu, MD, TVS Motor said during an interaction with CNBC-TV18 on June 2, warning that the electric two-wheeler segment could be especially exposed. Rare earth magnets, largely sourced from China, are vital to EV motor’s performance, and any supply disruption could derail production schedules.
Also Read: Bajaj Auto's EV production at risk from July as China tightens rare earth magnet supply
In the near to medium term, this could lead to output halts and even potential price hikes, said Venu, as companies race to secure alternative sources. "We’re actively exploring ways to de-risk the situation, but there could be cost increases down the line," the managing director of TVS Motor said.
The company has again underscored the urgent need for India to localise its EV supply chain. "The auto industry must build a robust domestic ecosystem for such critical materials. Developing a self-reliant supply chain is a necessity," Venu said.
According to the protocol, Indian importers - in this case, TVS Motor vendors - must self-declare the end use of the magnets, which are then cleared through a multi-step certification process involving Indian authorities and the Chinese Embassy. So far, about 30 such applications have cleared the Indian stages and await final clearance from China.
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With China controlling nearly 90 percent of global rare earth magnet supplies, finding immediate alternatives remains a challenge. Substitutes would require time-consuming investment in testing, validation, and integration, making them viable only in the medium term.
Last week, Bajaj Auto had referred to the situation as a ‘dark cloud on the horizon’ during its Q4FY25 earnings call, flagging serious production risks from as early as next month if the matter remains unresolved. While a formal process is now in place to certify that the materials won’t be diverted for military use, the fate of shipments from China still hangs in the balance.
At about 11 am, shares of the company were trading at Rs 2,748, lower by 1 percent from the last close on the NSE. The TVS Motor Company share price has 16 percent since the start of the year.
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