Depleting Inventory of Imported Rare-Earth Magnets a Concern For EV Industry
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New Delhi: Stakeholders in the electric vehicle (EV) industry are concerned about the fact that inventories of rare-earth magnets used in EV traction motors and power steering systems could run dry by mid-July this year.
Rating agency Icra has said that in wake of the depleting inventory, there is a need for urgent contingency planning.
'The rare-earth magnet supply shock is a serious concern, particularly for EVs and premium passenger vehicles. Rare-earth magnets, especially neodymium-iron-boron (NdFeB), are indispensable for high-efficiency traction motors and other advanced automotive systems. With inventories expected to deplete by mid-July, contingency planning has become urgent,' said Jitin Makkar, senior vice president and group head, corporate ratings, Icra, reported Business Standard.
The delay in the shipments of rare-earth magnets began in April, when authorities in China introduced new licensing rules and intensified inspections, which led to custom clearances slowing down. It resulted in unpredictable shipping timelines and uncertainty about future availability.
According to the estimates of Crisil, another rating agency, the present challenge could affect up to 6-7 per cent of quarterly EV production if the issue remains unresolved within the next two months.
In FY 25, India imported around $200 million worth of rare-earth magnets. A majority of these imports were used in automotive and industrial applications.
In electric two-wheelers, motors cost between Rs. 8,000 and Rs. 15,000, with rare earth magnets accounting for around 30 per cent of the motor cost.
The rare-earth magnets are important because of their high magnetic strength, energy efficiency, and thermal stability. These properties are difficult to replicate with conventional alternatives like ferrite magnets.
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