Indian electric vehicle manufacturer faces shortages of rare earth metals amid China's export restrictions

The restrictions on the export of rare earth materials and magnets by China in the wake of the tariff war with the USA have started to impact the electric vehicle industry worldwide, including India, the Indian Express reported on Sunday. 

The Indian EV makers may face a possible scarcity of the critical components, which might lead to price increases and manufacturing hold-ups in a young, cost-sensitive market.

According to reports, the Indian auto sector has started a dialogue with the government to make it easy for manufacturers to acquire the rare earth magnets from Beijing. Although the export of rare earth magnets, an essential component in the production of electric vehicles, has not been completely prohibited by the Chinese government, the procedure has been made extremely challenging, leading to lengthy delays and raising concerns about scarcity.

To provide an intense magnetic field required for effective and potent electric motors, such as the traction motors, rare earth magnets like neodymium-iron-boron (NdFeB) magnets are considered essential. Moreover, these magnets also have a significant impact on other EV parts, such as the braking, wiper, and power steering systems. These rare earth magnets are almost exclusively produced in China.

According to The Indian Express report,  under the new export laws of China, importers are obligated to provide their Chinese suppliers with an undertaking stating that the rare earth magnets they purchase from them would only be utilised in automobiles and not for military or defence purposes.

Citing an official, The Indian Express reported,  “What’s making the process more cumbersome is that the Chinese side is also insisting that local governments issue an endorsement for their importers. In our case, that would be the Director General of Foreign Trade (DGFT), which will have to endorse each importer separately. A separate authorisation must also be sought from the Chinese Embassy. We are talking to the government about how the process can be made better, because it is clear that the industry would need their help.”

Meanwhile, Mint has reported that the Automotive Component Manufacturers Association of India (ACMA) and the Society of Indian Automobile Manufacturers (SIAM) are scheduled to meet the Commerce Ministry on Monday to discuss the concerns of disruption in the supply of rare earth magnets from China.

The report says that the concern has already been registered with the Prime Minister’s Office, pressing for government intervention.