China’s Rare Earth Magnet Ban Hits India’s EV Giant: Ather Energy Delays ₹262.5 Cr Subsidy Claims!

Bengaluru-based Ather Energy, one of India’s leading electric two-wheeler manufacturers, has temporarily deferred demand incentive claims worth ₹262.50 crore under the PM E-DRIVE scheme.

The move comes as a direct fallout of China’s export restrictions on heavy rare earth magnets, a critical component in electric vehicle traction motors. The supply chain shock has forced Ather to make temporary deviations in its motor manufacturing process, impacting compliance for up to 52,500 vehicles.

What Triggered the Disruption?

In late 2023, China imposed mandatory export licenses for certain rare earth materials, including dysprosium and terbium—both vital for EV traction motors. Since China controls the majority of the world’s rare earth supply, the policy shift immediately disrupted global EV manufacturing.

For Ather, this meant motor suppliers could no longer meet domestic sourcing requirements under the government’s Phased Manufacturing Program (PMP). As a result, the company faced deviations in domestic fitment of magnets—a key compliance parameter for receiving EV subsidies.

Ather’s Response: Seeking Exemption and Innovating

Rather than rushing claims, Ather Energy is engaging with the Ministry of Heavy Industries to seek a temporary exemption from the PMP guidelines.

At the same time, the company has developed a groundbreaking Heavy Rare Earth Free (HREF) motor, which has already received type approval from ARAI (Automotive Research Association of India). Importantly, PM E-DRIVE eligibility certificates have started arriving for different Ather models equipped with this motor—signaling compliance recovery in progress.

Why This Matters for India’s EV Sector

This disruption highlights a deeper vulnerability in the EV supply chain: overdependence on China’s rare earth dominance. With supply concentrated in one country, EV makers worldwide face exposure to geopolitical risks and policy shifts.

For India, where the government is aggressively pushing Make in India and EV adoption targets, the situation raises urgent questions:

• How can manufacturers diversify sourcing?

• Will India accelerate domestic rare earth mining and refining?

• Can innovations like HREF motors reduce strategic dependence?

Ather Energy’s Stand

Despite the setback, Ather reiterated its commitment to the PM E-DRIVE scheme and Phased Manufacturing Program. The company emphasized its dedication to localization and self-reliance, while acknowledging that temporary supply chain shocks are beyond its control.

By delaying claims instead of risking non-compliance, Ather is signaling long-term credibility and policy alignment—a move likely to strengthen trust among regulators and customers alike.

Key Takeaways

• ₹262.5 crore subsidy claims deferred due to supply chain issues.

• Up to 52,500 Ather scooters affected under PM E-DRIVE.

• China’s rare earth export ban disrupts global EV magnet supply.

• Ather’s HREF motor offers a long-term solution.

• Highlights India’s urgent need to diversify EV supply chains.