Bajaj to halt August production of EVs due to shortage of rare earths

Bajaj Auto may halt production of its electric scooter, Chetak, and electric three-wheeler, GoGo, as domestic manufacturing faces a shortage of rare earth magnets due to China’s export restrictions, Managing Director Rajiv Bajaj said, according to The Economic Times. 

The update makes Bajaj the first company to observe a “Zero month” in August.

The Economic Times reported that Bajaj Auto, the second-largest producer of electric scooters in India by volume, had to cut EV production in half in July due to a shortage caused by China’s action. However, the company told the publication that it managed to maintain full production in June by utilising its existing inventory.

China continues to be the world's top provider of rare earth magnets, which are necessary for internal combustion engine (ICE) models, consumer electronics, defence systems, renewable energy infrastructure, and aerospace applications, as well as electric vehicles.

According to ET, Bajaj has asked for greater clarity from the government on the situation of evolving supply conditions and what to expect in the near term. 

Earlier, India resumed tourist visas for Chinese nationals, raising the possibility of PM Narendera Modi’s visit to China for the Shanghai Cooperation Organisation’s meet. The meeting will be closely monitored by the EV industry stakeholders for relaxation in China’s RE export policy. However, it is still early to conclude that PM Modi will be visiting the SCO.

According to Economic Times, Bajaj stated that there has been no definitive information from the relevant ministry or regulatory bodies regarding the success of the industry's attempts to seek a relaxation of domestic value addition (DVA) criteria under the production-linked incentive (PLI) scheme.