Bajaj flags EV production cuts on China magnet supply delays

Bajaj Auto Ltd has raised concerns about a possible pause in electric scooter production from July because of supply disruptions of rare earth magnets from China.

The company talked about the issue during its fourth-quarter earnings call for FY25, citing unresolved regulatory problems and depleting inventories.

The restrictions have been recently introduced by China and require Indian importers to undergo a new certification process to prove the materials will not be used for military purposes.

The process includes self-declarations by vendors, followed by multi-layered approvals from Indian ministries, the Chinese embassy in India, and local Chinese authorities.

“The rare earth situation is a very difficult one,” Rakesh Sharma, executive director at Bajaj Auto, said.

He called the approval process “very onerous” and noted that “around 30 such applications have cleared all stages in India and have been sent to Chinese authorities.” However, he added, “the loop has not closed,” raising doubts about the system’s effectiveness.

“There’s a dark cloud on the horizon,” the company said, adding that without timely approvals, shipments may not arrive, hampering production starting July.

Sharma, however, noted that there is no short-term alternative, as refining rare earth elements requires significant investment and expertise.

China currently accounts for 80% of the global supply of these magnets, which are essential for electric motors.

Bajaj Auto reported a 6% year-on-year rise in net profit to Rs2,049 crore for the quarter ended 31 March, surpassing analyst estimates.

Revenue from operations also grew 6% to Rs12,148 crore, owing to a favourable product mix and stable margins.

Total sales during the quarter reached more 1.1 million units, and motorcyles and three-wheelers performed well in the quarter.

EBITDA margins also remained steady because of premium product lines such as Pulsar and KTM.