Bajaj Auto Cuts EV Production by 50% Amid Rare Earth Crunch, Seeks New Suppliers

Bajaj Auto, India’s 2nd-largest electric 2-wheeler manufacturer, has significantly reduced production of its EVs as a result of a global supply crunch in heavy rare earth (HRE) magnets, as per news reports. 

The shortage, triggered by China’s suspension of magnet exports since April, has disrupted deliveries and affected production volumes, with the company confirming a 50% drop in July output. Bajaj now anticipates similar constraints to persist through August and September, even as it pursues alternate supply options and technological solutions.

China Export Halt Hits EV Supply Chain

Heavy rare earth magnets are vital to electric vehicles, powering high-performance motors in tight spaces and supporting critical electronic functions. The supply crisis stems from China’s dominant control over the rare earth market, where it accounts for 60% of global production and 90% of refining. Since China halted magnet exports in April, the ripple effects have been felt across the global auto industry, with Bajaj Auto among the hardest hit.

Rakesh Sharma, Executive Director and Chief Technology Officer, highlighted the ongoing impact: “Non-availabilities have begun to compromise production in June itself, resulting in some shortfalls in deliveries to dealers in June. July has seen a 50% shortfall. While we expect production in August to be better than July, we may still see a shortfall of similar levels of 50% in this quarter in Chetak and about 25% to 30% or so in E autos.

Strategic Response and Sales Impact 

In response to the crisis, Bajaj Auto has launched a dual-track strategy. First, it explores the replacement of heavy rare-earth magnets with lighter, more accessible variants. 2nd, it is accelerating R&D efforts to develop next-generation technologies that can completely bypass rare earths. Despite these efforts, July registrations dropped by 15% month-on-month to 19,650 units, reflecting the supply limitations.

Bajaj Auto Q1 FY26 Earnings Results 

Despite the challenges, Bajaj Auto reported a strong set of financials for the first quarter of FY26. The company posted a 14% year-on-year rise in consolidated net profit to ₹2,210.44 crore, while revenue from operations climbed 10% to ₹13,133.35 crore, as per its stock exchange filing. Total sales during Q1 stood at 11.11 lakh units, marginally higher than 11.02 lakh units in the same period last year.

2-wheeler sales remained flat at 9.49 lakh units, while commercial vehicle (CV) volumes rose by 7% year-on-year to 1.62 lakh units. However, domestic sales fell 8% to 6.35 lakh units, dragged by a 9% drop in domestic 2-wheeler volumes and a 2% dip in CV sales. On the other hand, exports surged 16% to 4.76 lakh units, driven by a 14% rise in 2-wheeler exports and a 32% spike in CV exports.

Also Read: July 2025 Auto Sales: TVS Leads Two-Wheeler Segment, Hero and Bajaj Trail Behind!

Bajaj Auto Share Price Performance 

As of August 7, 2025, at 11:32 AM, Bajaj Auto share price is trading at ₹8,046 per share, reflecting a decline of 1.62%. Over the past month, the stock has declined by 4.93%.

Conclusion

As rare earth shortages challenge the electric mobility landscape, Bajaj Auto’s proactive response, through supply-side interventions and technology shifts, signals resilience and long-term strategic thinking. 

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