Bajaj Auto of India indicates a reduction in its expected EV production due to a shortage of rare earth magnets.

Bajaj Auto is facing issues to fulfill the projected electric vehicle delivery target set for their second quarter, as the in-house manufacturer is running through a shortage of rare earth magnets. 

As per company, they are estimating to deliver about 50-60% of their electric two-wheelers specifically planned for this quarter. This is a big crisis as the entire EV industry is going through a shortage of rare earth magnets. 

The CFO of Bajaj Auto, Dinesh Thapar addressed the issue and said that many OEM companies are looking for a variety of alternatives to increase the production flow, which encompasses the creation of motors that utilize lighter rare earth materials instead of the heavier counterparts. He further clarified that, “Currently, we are able to fulfill 50-60% of our electric two-wheeler targets set for this quarter and about 70-80% of the electric three-wheeler plan.” 

He further mentioned that Bajaj is now in a position to mitigate risks associated with China's rare earth magnet export ban that was implemented in March of this year.

Currently, China controls more than 90% of the global production of rare earth magnets, and had banned the export of crucial materials in April 2025 and hence put a direct pressure on various manufacturers like Bajaj Auto and TVS company to look for different options after banning the supplies. 

Impact of Restricted Supply on Festive Season 

The EV output shortage for India's second biggest electric two-wheeler manufacturer is coming at a point when manufacturers expand their productions especially during these festive seasons commencing from August last week. 

Clarifying this issue, Thapar said even Bajaj recovers and ramps up its scales after this, still there will be a huge impact especially in festive seasons, as the production would not be as significant as the company had predicted.

Going by current market dynamics, Bajaj Auto has registered a significant profit and beat their estimated quarterly profits on Wednesday, which could be due to the boost in exports after the commencement of overseas shipments of its luxury KTM motorcycles. The company also gave a remarkable achievement of higher profit margins to its popular e-scooter Chetak’s sales and its revolutionary three-wheeler Gogo. 

Bajaj Auto has reported a profit of 20.96 billion rupees (approximately $239 million) for the April-June period, surpassing the estimates of some auto analysts who predicted a profit of 20.42 billion rupees, according to LSEG.