China’s Rare Earth Magnet Ban: A Threat to India’s Automobile Industry? How analysts view EV space now
China’s Rare Earth Magnet Ban: As a leading decision by neighboring countries to ban the export of rare earth magnets in various countries, including India and the United States, the action poses a threat to the Indian automotive industry, especially the electric vehicle (EV) industry. More than 80% of the country’s supply of rare earth magnets comes from China, and this move is expected to cause immediate production and cost increase. Know what analysts say.
“Indian electric vehicle manufacturers, especially in the two-wheeler sector, are facing serious short-term challenges. Inventories may run out in a few weeks, while alternative resources are limited, companies may be forced to raise prices or lower production,” according to Ajit Mishra of the religious broker.
Simranjeet Singh Bhatia Almondz Global has attracted much attention, such as Exide Industries’ large investment in electric vehicle battery manufacturing will be affected by supply chain disruptions.
Bhatia said the ban would affect major auto companies such as Bajaj Auto, Tata Motors, TVS Motors and Ola Electric after the ban, adding that the damage has not been reflected in the financials of electric vehicle companies.
Batia also said high-debt auto companies like Ora Electric may see further pressure on their profit margins.
Here is a summary of the May 2025 car sales:
- TV motor leading EV dual-wheel sales: 24,550 units
- Bajaj Auto: 21,770 units
- Ola Electric: 18,550 units
Meanwhile, HDFC Securities’ Atul Karwa linked the ban to wider global trade tensions and said China is taking advantage of its rare earths, accounting for 70% and producing 90% of magnets in the world, using it as leverage.
Kalva said that Indian OEMs expect current stocks to last until this month, and rare earth production is capital and energy-intensive and difficult to replace quickly.
“Diplomatic efforts may be needed to speed up China’s approval,” Kava said.
What silver lining is there in the field in the long term or short term?
According to Bhatia, this will provide a silver lining for auto companies in the long run, and industry representatives say it is necessary to find alternative sources of rare earth magnets.
Why does China do this?
In response to high tariffs from U.S. President Donald Trump, China sees the action as pointed out by Karwa of HDFC Securities.
Everything you need to know about the importance of rare earth magnets, in the EV and automotive industries
This magnet is made of a group of 17 special metals called rare earth elements. Rare earth magnets are crucial for EV motors, and each vehicle uses up to 1-2 kilograms of these materials. The most common types are made of New Mountain, iron and boron, which are essential for electric vehicle motors because they make the motor lighter and enhance the power of the vehicle. It also helps electric cars run faster and keeps the battery going longer, and also lasts longer at speeds, as well as important parts like gears and drive trains.
What is a drive train?
The drive train system transmits power from the engine or electric motor to the wheels so that the vehicle can move. In electric vehicles, there is a fuel engine instead, and there is a battery-powered electric motor.
Rare earth magnets are also used in smartphones, laptops, wind turbines, aircraft and even missiles.
However, this magnet is also used in many automotive parts such as motors, brakes, wipers, audio systems, power windows, sensors, speedometers, water pumps and automatic transmissions.
Why are these magnets so important?
Due to its small characteristics and light weight, it even works well in high temperatures.
On the other hand, magnets such as magnets or ferro nitrate magnets produced in India are heavier and have less functions. They also produce less torque.
