India’s top-selling e-scooter stalls as rare-earth crunch bites

India’s best-selling electric scooter, Bajaj Auto’s Chetak, ran into trouble in July. A shortage of rare-earth metals forced the company to slash production nearly in half.

Bajaj rolled out just 10,824 units of the Chetak, compared with 20,384 in the same month last year.

To cope, the company quickly redesigned some motors to run on light rare-earth magnets and began reworking supply chains. Sharma said those changes helped claw back “close to half” of its planned July output, and expects production to reach 60 percent of normal in August and September.

The crunch is not unique to Bajaj. China stopped rare-earth shipments to India on April 4, two days after President Donald Trump announced reciprocal tariffs. Since then, no supplies have arrived, hitting EV makers and electronics companies hard.

Industry groups are worried. Vigneshwar Chittur Selvakumar, president of the Federation of Automobile Dealers Association, said he is “deeply concerned” about the disruption, warning it could “have a drastic impact on the automobile sector.”

Rare earths — 17 elements including dysprosium, terbium and samarium — are key to making high-strength magnets for EVs, smartphones, defence gear and medical equipment. China dominates both mining and processing, holding about 90 percent of global refining capacity.

The disruption comes just as India’s EV market is booming. Sales hit 2 million in 2024, up 24 percent from the year before, with two-wheelers leading the surge. More than 100,000 electric cars were sold in the year ending March 2025, and Tesla launched its Model Y in July.

But companies are hesitant to admit how badly shortages are biting.

The impact extends beyond EVs. TV makers, which rely on rare-earth magnets for speakers, are also feeling the strain. Arjun Bajaj of Videotex said the company has enough stock for now but is exploring alternatives like ferrite magnets: “Though matching the performance of rare-earth magnets will require continued research and technological upgrades.”

There was some relief in mid-August when China agreed to ease export restrictions on rare earths to India, after talks between foreign minister S Jaishankar and Chinese officials in Beijing. Still, experts warned against reading too much into it.

India does have reserves — the fifth-largest globally, at 8.5 million tonnes — but contributes less than 1 percent of global output. Environmental rules, lack of infrastructure and regulatory hurdles have slowed development.

The Geological Survey of India has launched exploration in Assam and West Bengal as part of a long-term strategy to secure domestic supplies. “The exploration is part of India’s long-term strategic vision to achieve self-reliance in key sectors,” GSI chief Asit Saha told Al Jazeera.

But Mahindra University’s Banik struck a cautious note: “It might take over a decade to completely set up the processing units of rare metals, but the technology of using rare earth in vehicles might become outdated by then.”