From rare earths to trade tariffs: Tata Motors maps strategy to mitigate geopolitical headwinds

Time of India

4 days ago

New Delhi: Following China's restrictions on
rare earth
magnet exports, auto major
Tata Motors
said it is working with the government and is also taking steps to procure magnets from alternate sources. These elements are critical to the production of ICE as well as electric vehicle (EV) components.
Speaking to the media on Tuesday, Group CFO
PB Balaji
said there is no immediate concern. 'No panic buttons are being pressed at this stage,' he said.
Commenting on the broader
geopolitical risks
, including the Israel-Iran conflict, he noted that the semiconductor crisis of 2022–23 served as a critical stress test for the automotive ecosystem, which led companies to internalise key lessons and significantly strengthen their supply chain resilience.
The automaker stated that it will 'not change any of the product launch plans' at this stage. However, it added that if the situation worsens significantly, a reassessment may be necessary.
The company recently launched the Harrier EV, with dispatches scheduled to begin next month, and confirmed that the Sierra EV rollout remains on track.
Shailesh Chandra, MD at Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, added that the company is 'comfortable from a stock perspective for the next few months.' However, he acknowledged the strategic need to diversify sourcing in the medium to long term.
'We have identified seven high-impact rare earth elements out of 17 that are most critical to our components. We are closely tracking how to reduce the constitution or mix of these into the components in which it gets into,' Chandra said.
He added that while short-term dependency will continue, there are clear pathways to significantly reduce and eventually eliminate this dependence over the long term.
Union Steel and Heavy Industries Minister HD Kumaraswamy on Tuesday said the government is likely to decide on a subsidy scheme for domestic production of
rare earth magnets
within 15–20 days. While actual production is expected to take about two years, interim sourcing alternatives including Japan and Vietnam are being explored.
Tariff impact on JLR
Tata Motors anticipates a tariff-related impact on its British subsidiary
Jaguar Land Rover
(JLR), with EBITDA expected to decline to the 5–7 per cent range, down from its earlier 10 per cent EBIT trajectory.
Further, he acknowledged that exports from the company's Slovakia plant to the US remain subject to tariffs, resulting in a cost impact. To mitigate this, the company is rolling out a "cost-out programme over the next 12–18 months."
Meanwhile, Balaji confirmed that JLR will commence completely knocked down (CKD) operations at its Ranipet, Tamil Nadu plant in India by early 2026, gradually transitioning from its current Pune base. JLR plans to invest ₹9,000 crore in Ranipet plant over five years, as part of a broader strategy to expand its presence and manufacturing capabilities in the country.
He noted that the proposed UK-India trade agreement could ease market entry for future models without requiring CKD scale initially.
Hybrids on the cards?
When asked about plans to introduce hybrid models by 2030, Chandra said that while the company currently categorises hybrids under the petrol segment, it remains open to the technology.
'If competitiveness requires us to introduce hybrids in certain segments, we will do so– not just for emission compliance, but also for performance-driven reasons,' he noted.
However, reiterating its stance on incentivising hybrid vehicles, Tata Motors stated that the company does not view them as a long-term solution deserving of government incentives.
'We are absolutely fine supplying hybrids if that's what the customer wants. But our concern lies with incentivising hybrids. These are not destination technologies, they are transitional, meant to be used for managing CAFE norms by others,' Balaji said.
According to him, hybrids are essentially enhanced ICE powertrains, and if they are to be incentivised, then CNG should logically receive similar support.
Tata Motors' internal powertrain forecast in the near-term projects 30 per cent of volumes from EVs, 27 per cent from CNG, and around 6–10 per cent from diesel, with the remaining share comprising petrol including hybrids.
It may be noted that the automaker's Avinya brand for EVs, which was initially aimed to launch within two and a half years from mid-2022, has been deferred to late 2026 due to 'feasibility challenges in certain subsystems', which required architectural revisions and prolonged engineering cycles.
Demerger completion targeted by year-end
Tata Motors' proposed demerger process is progressing smoothly, with July 1 this year set as the 'appointed date' for accounting purposes and October 1 as the 'effective date' when the commercial vehicle (CV) and passenger vehicle (PV) businesses begin operating as separate entities.
Balaji noted that while the shareholder approval has already been secured, the company is now filing with the NCLT, after which it expects to receive inputs from the ROC and other regulators before final approval. Once the NCLT ruling is received, the company will proceed to operationalise the demerger.
Post the demerger, the existing listed entity will become the PV business. The spun-out CV entity, which is set to be renamed Tata Motors, will be listed separately within 45–60 days of the effective date. Tata Motors anticipates the full process, including listing of both entities, to be completed by November–December 2025 period.