Ola Electric doubles down on rare earth-free motors to sidestep China curbs
rare earth-free motors
will power its vehicles by next quarter amid pressure on supply chains for the critical input due to trade tensions between the US and China.
Rare earths are a group of 17 minerals pivotal to manufacturing automobiles, consumer electronics and defence equipment.
In a letter to shareholders after its June quarter results, the
electric two-wheeler
maker said it had started working on motors without rare earth magnets a couple of years ago. The project was fast-tracked in April after
Beijing
restricted exports in response to tariffs imposed by the US.
These motors will come to Ola Electric vehicles by next quarter, and ensure business continuity, similar performance, and lower costs as rare earth magnets are costly, the company said.
Ola Electric said it has a "reasonable inventory" of rare earth magnets, which it has been sourcing from two countries to keep options open. The company said that since it is not reliant on intermediary motor suppliers, it has been able to switch and ramp up other sources of rare earth magnets quickly.
Traffic back on rare earths supply routes
Meanwhile, rare earth exports from China increased 32per cent sequentially in June following a deal between Washington and Beijing, Reuters reported, citing customs data.
China, the world's largest producer of rare earths, exported 7,742.2 metric tonnes in June, up from 5,864.6 metric tonnes in May, data from the
General Administration of Customs
showed.
This data does not segregate different kinds of rare earths and related products, some of which are not covered by the controls. A detailed breakdown will be released on July 20.
The two largest economies in the world reached a series of agreements in June to resume the export of rare earths after some car factories in the US had to shut down due to a lack of raw materials.
China recently said that Europe's usual rare earths demand could be met. Some carmakers confirmed in late June that the elements were starting to flow again, although not freely.
Ola Electric Q1 results
Ola Electric started fiscal year 2026 on shaky footing, with operating revenue declining nearly 50per cent year-on-year to Rs 828 crore in the June quarter, and its net loss widening 23per cent to Rs 428 crore in annual terms. However, sequentially, the electric two-wheeler manufacturer managed to narrow its losses by 50per cent, from Rs 870 crore in the March quarter.
Vehicle deliveries
plunged to 68,192 units during the quarter, down from 1,25,198 in the corresponding period last year. However, the company's gross margin for its
automotive business
improved to 25.6per cent, from 18.4per cent a year ago.
Ola Electric pared its total expenses by 42.4per cent to Rs 1,065 crore, primarily on an Rs 870 crore reduction in the cost of materials consumed. Employee benefit expenses also dropped to Rs 89 crore, from Rs 123 crore a year earlier.
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