Manufacturing startups look to tap rare-earth-free motors as China tightens grip on supply

Since China announced curbs, the vulnerabilities of India’s rapidly growing EV ecosystem have been laid bare.

India’s manufacturing and mobility startups are moving fast to reduce their dependence on rare earth magnets, a critical component in electric vehicle (EV) motors and industrial robots, as global supply chains face fresh risks from China’s export curbs.

Rare earths such as neodymium, dysprosium including 15 silvery-white metals called lanthanides, or lanthanoids, plus scandium and yttrium are essential for high-performance permanent magnet motors, but they are expensive to extract and overwhelmingly controlled by China, which holds nearly 90 percent of global supply.

China introduced restrictions on its rare earth exports on April 4, two days after US President Donald Trump announced reciprocal tariffs on April 2. Since then, the vulnerabilities of India’s rapidly growing EV ecosystem have been laid bare.

“Today the only way to build an efficient motor is through permanent magnet synchronous motors, which need rare earths. The problems are well known, they are costly, difficult to mine, and China has near total control. It is prudent for us to look at alternatives,” Bhaktha Keshavachar, founder and CEO of Bengaluru-based Chara Technologies, told Moneycontrol.

Chara has developed synchronous reluctance motors that do away with rare earth magnets entirely.

“Our dependency on rare earths is already minimal, and we are constantly exploring ways to reduce it further. With more companies now emerging in this space, viable alternatives are steadily becoming available,” Said Gunjan Gunjan Kapadia, co-founder and CEO of Sthyr Energy, a Chennai-based deeptech startup co-founded with IIT Madras researchers to develop long-duration, safe, and cost-effective zinc-air batteries.

Chara's motors, once considered too complex to deploy at scale, are now being revived thanks to advances in electronics and control algorithms.

“We recognised five years ago that India must move away from China dependency. Our motors match the efficiency and torque of magnet-based motors, and in some conditions deliver 10 per cent better mileage,” Keshavachar said.

The company, which has set up a factory in Peenya, Bengaluru, has begun shipping motors this year and expects revenues to climb from Rs 3 crore last year to Rs 30 crore in FY26.

“Reluctant customers are now far more open, thanks to the geopolitical tensions now,” he added.

Other startups are also shifting gears. Ati Motors, which makes autonomous industrial robots, is moving towards ferrite motors.

“This is not cost-efficient as of now, but it will become so,” said co-founder and CEO Saurabh Chandra.

“Induction motors have been made in India for decades. They don’t use rare earth magnets, and with battery prices falling, the small efficiency trade-off is no longer a dealbreaker,” Chandra added.

Bengaluru-based electric scooter maker Ather Energy is redesigning its motors to reduce dependence on heavy rare earths, while Ola Electric is working on ferrite-based solutions.

“The long-term strategy must be to leapfrog rare earth into rare-earth-free technology,” founder Bhavish Aggarwal said.

Simple Energy, meanwhile, has become the first OEM in India to commercially manufacture heavy rare-earth-free motors at its Hosur facility, leveraging in-house R&D.

“Global supply chain disruptions and material dependencies have made one thing clear: the future of electric mobility must be built on self-reliance. Deep localisation and a ‘Make in India’ approach are no longer aspirations, they’re imperatives,” said Suhas Rajkumar, CEO and Co-founder, Simple Energy

Globally, companies in the US, UK, Israel and Canada are working on rare-earth-free designs. Research is also advancing on new materials, such as tetrataenite, manganese-bismuth, and iron-nitride alloys, although commercial deployment is still a decade away.

The Indian government has taken note of the challenge.

In the beginning of September, Industry players engaged with Commerce Minister Piyush Goyal and the Ministry of Heavy Industries, seeking incentives to support rare-earth-free technologies alongside mining.

“We told them to support both mining and alternatives. Both achieve the same purpose of supply chain independence, The government has taken note of our concerns as well” said a founder aware of the developments.

The shift is not without compromises.

Rare-earth-free motors tend to be bulkier, Chara’s three-wheeler motor weighs 18 kg, compared to 15 kg for a magnet-based one. But in a 750 kg autorickshaw, the difference is negligible. Costs, too, are expected to come down as manufacturing scales up.

For now, startups see opportunity in the disruption.

With global supply volatile and India importing nearly 700 tonnes of rare-earth magnets this year, the race to develop alternatives has become both a strategic necessity and a commercial opening.