Maruti Suzuki Slashes EV Production Amid Rare-Earth Magnet Crisis

une 12, 2025 | New Delhi

Maruti Suzuki India, the country’s largest automaker, has cut its near-term production target for the new e-Vitara electric SUV by nearly two-thirds, shrinking it from 26,500 units to 8,200 units for the period April–September 2025—primarily due to a shortage of rare-earth magnets.

What’s Driving the Crisis?

• In April 2025, China imposed strict export curbs on seven rare-earth elements and finished magnets, introducing enhanced licensing requirements—delaying most outbound shipments

• These magnets are critical for high‑efficiency electric motors (PMSMs) in EVs and hybrid vehicles, as well as applications in steering systems and audio components

• China accounts for over 90% of global rare-earth magnet processing, making India heavily dependent on its supply chain

Production Impact & Recovery Plan

• The revised production outlook aims to sustain full-year targets. Maruti plans to ramp up production of e-Vitara in the second half of FY26, with an anticipated 58,728 units to compensate for the earlier shortfall

• Short-Term (H1 FY26): 8,200 units (▼ 69%)

• Long-Term (H2 FY26): 58,728 units for the full-year goal of 67,000 units

Maruti’s Statement

Maruti Suzuki has stressed it has had “no material disruption” to EV production thus far and is actively exploring alternatives, maintaining strategic inventories and gearing diplomatic efforts to secure magnet imports

“As of now there is no disruption in our operation … we are pursuing multiple solutions to ensure continuity … any material impact will be communicated,” a company spokesperson stated

Broader Industry Repercussions

• CRISIL Ratings warns that EV and hybrid output could face delays by July 2025 if the crisis continues beyond a month, possibly spreading to ICE vehicle lines m.economictimes.com+2business-standard.com+2fortuneindia.com+2.

• Major Indian auto players like Bajaj Auto and Bosch have voiced concerns; the former warned of production halts without sufficient magnet imports reuters.com.

• The crisis has spurred calls for PLI policy relaxations, import streamlining, and domestic rare-earth mineral development

Strategic Outlook & Next Steps

Short-Term Solutions:

• Establish government-to-government channels for export approvals from China

• Build strategic inventory reserves and seek alternative suppliers

• Fast-track PLI and PMP schemes to incentivize domestic processing capacity

Long-Term Measures:

• Invest in rare-earth mining and processing in India and allied countries

• Boost recycling initiatives to recover magnets from end-of-life products

• Diversify sourcing to nations like Vietnam, Australia, and Japan

Summary Table

Conclusion:
Maruti Suzuki’s production adjustment highlights the fragility of India’s EV supply chain amid global geopolitics—particularly China’s rare-earth dominance. The company’s proactive mitigation efforts—ranging from diplomatic engagement to local sourcing—will be crucial in maintaining its EV roadmap and ensuring India’s sustainable automotive growth.