Bajaj Auto's Electric Dream Hits a Speed Bump

China’s restrictions on rare earth magnet exports are sending shockwaves through India's auto industry, with Bajaj Auto at the forefront of the crisis. The company's managing director, Rajiv Bajaj, has warned of a potential 'zero month' in August, as production of electric scooters and three-wheelers may come to a complete standstill.

'Hit Quite Hard', Bajaj admits, as the company struggles with the unavailability of heavy rare earth magnets, crucial for their leading electric models, Chetak and GoGo. This shortage has forced a 50% reduction in EV production this month, despite June's full capacity achievements.

Searching for Alternatives

With no immediate substitutes available, Bajaj Auto is exploring medium-term solutions, including finding alternative materials or sourcing beyond China. The global dominance of China in rare earth magnet supply poses a significant challenge not just for EVs but across multiple industries.

The Broader Impact

The crisis highlights the vulnerability of global supply chains and the urgent need for diversification. As the festive season approaches, the impact on Bajaj Auto's revenue and profitability could be substantial, underscoring the critical nature of this supply chain disruption.