Rare-earth squeeze puts electric two-wheeler firms, suppliers at odds

OEMs seek temporary exemption to keep subsidy and avoid shutdowns

Electric two-wheeler (e2W) companies are upset with some of their suppliers of heavy rare-earth magnet–powered electric motors, who have objected to their proposal — under consideration by the government — that would allow e2W original equipment manufacturers (OEMs) an exemption from localisation norms on electric motors, thereby enabling them to continue receiving the ₹5,000-per-vehicle subsidy. 

A senior executive at an e2W manufacturer said, “We are being deprived of the subsidy because of opposition from automotive (auto) component players. All we’re doing is sending sub-assemblies to China, where they are fitted with rare earth magnets and 

then shipped back until rare earth imports from China resume. The entire process is handled by suppliers, not by us directly.” 

 

Auto component makers, however, see it differently. 

A senior industry executive argued, “We have invested heavily in building capacity to manufacture electric motors, based on commitments from OEMs. That capacity could remain idle if OEMs continue importing motors. If subsidies are extended despite OEMs not meeting localisation norms, we stand to incur huge losses.”