The shortage of rare earth magnets resulting from China’s recent export restrictions is taking a drastic toll on an Indian e-scooter manufacturer.
Bajaj Auto Ltd (NSE: BAJAJ-AUTO) says it will only be capable of fulfilling about 55 per cent of its previously planned deliveries during this year’s second fiscal quarter. The Indian financial year runs between April and March.
Bajaj’s Chief Financial Officer, Dinesh Thapar, revealed the alarming figure during a conference call about its Chetak scooter brand’s Q1 results.
He says the company will be hit particularly hard during the Indian festive season when scooter sales tend to rise significantly. This period is associated with multiple Hindu, Sikh and other cultural events and peaks between September and January.
“Given the buoyancy that was building up for Chetak, we had a very big plan for the festive season,” Thapar stated. “We will likely meet only 50 per cent of that plan.”
The Chinese, a dominant force in the rare earths sector, have cut off their crucial supply to India since April. Many other countries are also grappling with the impact of the immense shortage in multiple industries. Defence and aerospace, automotive, healthcare, consumer electronics and clean energy tech are worthy of note.
Read more: Ramaco gets key permit for 1st new U.S. rare earths mine in decades
Bajaj wants to shift away from rare earth magnets
In the long term, Bajaj plans to re-risk its electric scooter business by procuring motors that don’t require rare earth magnet materials. This will be a considerable task.
“So, in the short term, the focus is on securing alternative grades and sources of rare earth magnets,” Thapar said. “The long-term strategy is to transition to non-rare-earth magnet motors, such as those using ferrite technology, by the end of this fiscal.”
He thinks Bajaj should be able significantly de-risk its scooter production process by the end of the Indian financial calendar year on Mar. 31.
In addition to the scooter line and its flagship 35 series, Bajaj also manufactures electric 3-wheel vehicles and motorcycles.
Thapar pointed out that the transportation product supplier should only be capable of meeting about 75 per cent of its planned three-wheeler shipments during the quarter ending Sept. 30.
Read more: Ramaco gets key permit for 1st new U.S. rare earths mine in decades
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