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The Collection Wed, 18 Jun 25 |
Multiple stories, multiple perspectives, one theme worth your time—every week. |
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“A dark cloud on the horizon.”
That’s how Rakesh Sharma, the executive director of Bajaj Auto, described China’s fresh restrictions on rare earth metal exports late last month. The new controls threaten a critical part of the supply chain for automobile manufacturers, especially electric vehicle (EV) makers. This might lead to a crippling shortage that heavily disrupts production in a matter of weeks, according to reports.
This particular set of dominoes started falling on 4 April, when—in response to the sweeping tariffs declared by the Trump administration in the United States—China announced that anyone shipping any of the 17 listed rare earth metals from the country would have to secure a licence and fulfill a set of new conditions. The US has now managed to close a bilateral export deal with China for non-military use, but the same is not true for India and its manufacturers.
The result? Around 30 Indian companies are awaiting permits from the Chinese government for rare earth imports, with over 50 automobile manufacturers dependent on Chinese supply for critical components such as magnets. India’s largest carmaker, Maruti Suzuki, for instance, has been forced to cut production targets for its soon-to-be-launched maiden EV—the e-Vitara—by nearly 70%.
On Monday, Nitin Gadkari, India’s transport minister, exhorted Indian researchers and institutes to find an alternative to Chinese rare earths. “This problem exists because of our dependence on China,” he said. For context, China controls over 60% of global rare earth production and over 90% of rare earth processing; India accounts for under 1% of global production.
The stories in this week’s edition of The Collection explore the challenges facing India’s EV sector, how we got here, and what the automobile industry is doing to stave off the crisis.
Stakeholders are exploring some solutions. Bengaluru-based Chara Technologies has developed EV motors that are free of rare earths, as have BMW and other component makers such as Mahle, Omega Seiki, and Valeo—which supplies motors to Mahindra and Mahindra.
Other companies like Midwest Group and Star Trace are stepping in to build domestic processing capabilities, with the former announcing an investment of Rs 1,000 crore to process rare earths and make magnets locally. Last week, my colleague Suprita Anupam dived deep into the different strategies Indian auto companies are employing.
TVS waits, Tata localises, Mahindra hedges—how Indian automakers are dodging a magnet meltdown
Unless China clears shipments soon, Indian EV production could stall by mid-July
Mahindra Electric’s three-wheelers, for instance, use induction motors which do not require any rare earth minerals, leaving them in better shape than many peers. That should be a relief, considering the delayed deliveries of its four-wheelers earlier this year due to tech glitches. The issue has since been solved.
Mahindra’s new EVs promise the future, but the software is … still loading
XEV 9e and BE 6 promised the future. Software made sure it never arrived for many. The automaker’s much-hyped tech is now the bottleneck—buggy deliveries, missing updates, and a launch stuck buffering
Of course, China’s dominance in rare earths was decades in the making.
Back in the early ’90s, its pre-eminent statesman, Deng Xiaoping famously said: “The Middle East has oil, China has rare earths.” In a recent Daybreak episode, we explored how that set China on the path to rare-earths supremacy, and the paradox at the heart of the entire process—a whole lot of pollution to serve clean energy needs.
Daybreak • 505 |
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India, for its part, has struggled to get extraction and production of another critical EV material up and running: lithium—a key requirement for high-power EV batteries.
Auctions for the mining of lithium reserves in Jammu and Kashmir have failed twice, in 2023 and 2024. And projects to extract reserves in Chhattisgarh haven’t taken off either.
Why? What does lithium mining look like? What are its social and environmental costs? We explored in the story below.
Inside the lithium rush: can bidders strike gold in the race to mine?
The precious battery material has made miners rich globally, but a closer look at Chhattisgarh’s block ahead of auction paints a grim picture. Jammu and Kashmir may be no different
Not all of India’s EV challenges come from raw material shortages or unfavourable geopolitics. Take its Rs 18,000 crore PLI scheme for electric batteries.
Suprita, again, decoded the reasons behind why the scheme overpromised and underdelivered in this February story.
India’s Rs 18,000 crore battery plan is stuck at Rs 24 crore
Reliance, Rajesh Exports, and Ola have little to show in terms of production. And India may not have all that it needs for an advanced battery industry
None of this makes for a very healthy EV components industry, which appears to be one of the deterrents slowing the entry of Elon Musk’s Tesla into India.
Of course, there’s also the question of whether enough SUV-loving Indians will even want to buy Tesla’s very expensive sedans.
Tesla is almost in India, but who cares for its cars?
India doesn’t have what it takes to build a Tesla car. Tesla may not have what Indians want, either
That’s a wrap for this week. Write to [email protected] with your thoughts and suggestions, or leave a comment on our web or app.
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Rahul leads the promotion and distribution efforts for the journalism produced by The Ken. He works at the intersection of the publication's editorial and business operations.
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