Maruti Suzuki India (MSIL) said on Thursday its operations are unaffected by the global rare earth magnet shortage, but added that the situation is “uncertain and evolving”.
Image used for representation purpose only. Photograph: ANI Photo
The firm said it is exploring multiple solutions to maintain continuity in operations and will notify stakeholders in case of material impact.
The clarification comes amid a Reuters report earlier this week stating that the country’s largest carmaker has slashed production estimates for its upcoming electric SUV, the e-Vitara, by nearly two-thirds due to rare earth supply constraints.
According to the report, MSIL has revised its production target for the e-Vitara from 26,000 units to just 8,200 units for the first half of FY26.
The report, citing internal documents, attributed the change to “supply constraints” of critical rare earth elements, particularly magnets used in electric powertrains.
Despite the scale back, MSIL reportedly aims to meet its full-year target of 67,000 units by ramping up production in the second half of FY26.
“There is a lot of uncertainty and the situation is continuously evolving. We are monitoring the situation and pursuing multiple solutions to ensure continuity in our operations.
"If and when there is any material impact to our business, we will inform all stakeholders,” a spokesperson said. latory requirements,” the spokesperson added.
Rare earth magnets are a crucial component in electric vehicle (EV) motors and are also used in power steering systems, speakers, and other car components.
Their shortage stems from China’s decision in April to tighten export controls on key rare earth elements, including neodymium, dysprosium and terbium.
These elements are essential in the production of permanent magnets used in EVs.
According to the Federation of Automobile Dealers Associations (FADA), electric car sales in India reached 107,645 units in fiscal year 2024–25, up from 91,506 units in FY24, marking a 17.7 per cent year-over-year increase.
China controls more than 90 per cent of the global rare earth magnet supply chain.
China’s new export rules require companies to obtain end-use certifications and licences, which has slowed shipments and created uncertainty for automakers worldwide.
The disruption has raised alarm in India’s automotive industry, especially among EV manufacturers who depend heavily on Chinese supplies.
The Indian government is monitoring the situation.
A delegation may soon travel to China to expedite clearances for shipments stuck due to regulatory bottlenecks.
Additionally, the government is evaluating measures such as incentivising domestic rare earth magnet production and expanding recycling initiatives.
The rare earth crunch comes at a time when Indian automakers are stepping up EV production to meet future emission targets and global demand.
Auto firms make 2-pronged plans for rare earth crunch
Automotive (auto) original equipment manufacturers — which have not received any supply of rare earth magnets from China since April 4, nor any response to requests from 35 companies for import licences — have put together a two-pronged strategy to avert production shutdowns by the end of this month.
Many companies are exploring the option of importing motors or sending motor sub-assemblies to China, where they can be fitted with rare earth magnets and then shipped back to India.
The workaround could offer temporary relief, as China’s restrictions apply to magnets, not finished products. However, both alternatives would drive up motor costs.
Separately, a delegation comprising representatives from Tata Motors, TVS Motor Company, Mahindra & Mahindra, Ather Energy, Hero MotoCorp, Maruti Suzuki India (MSIL), the Society of Indian Automobile Manufacturers, the Automotive Component Manufacturers Association of India, and a few component suppliers has sought a meeting with China’s commerce ministry, which is handling the matter.
The Indian embassy in China has been tasked with scheduling the appointment; however, no time has been allotted or confirmed yet.
Some delegation members are still waiting for visas.
The magnet shortage has hit electric vehicles harder, particularly two-wheelers.
Says a senior executive at MSIL: “The requirement for rare earth magnets is much lower in internal combustion engine vehicles than in electric ones. We’re not in a crisis just yet.”
“We are currently analysing the situation and monitoring all key developments. We continue to be optimistic that with the combined efforts from both the industry and government the situation will get resolved soon,” says Anurag Mehrotra, managing director, JSW MG Motor India.
Industry estimates put the annual requirement for rare earth magnets at 500 tonnes for two-wheelers and 300 tonnes for cars.
The total spend is around Rs 306 crore.
The issue is also being taken up at senior levels within the government, under the Ministry of Heavy Industries.
“The matter requires direct intervention at the top.
"As one gets to the negotiating table with China, there has to be some give and take.
"For instance, China has its own concerns, such as visa clearances for its executives,” says a senior executive at an auto company.
While importing motors remains an option, it isn’t simple — they must be customised for specific vehicles.
Even if a suitable motor is available, it must undergo testing and validation, which could take months.
In the case of sub-assemblies, the logistics of shipping them to China and back would delay timelines and add costs.
The problem isn’t limited to India. MSIL, for example, has halted production of the Swift due to rare earth supply curbs, becoming the first Japanese company affected by China’s restrictions.
Globally, some automakers are now considering relocating certain parts of the supply chain to China to sidestep the growing problem.
China controls more than 90 per cent of the global supply of rare earth metals, which allow magnets to operate at high temperatures.
It was earlier expected to ease export restrictions to the US after both countries agreed to reduce tariffs for 90 days, but that has yet to happen.
By: Surajeet Das Gupta
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