India's automobile industry is actively developing strategies to circumvent China's recent ban on the export of rare earth elements (REEs) and rare earth magnets (REMs), which had threatened to halt electric vehicle (EV) production. Indian companies are now focusing on manufacturing electric cars that do not rely on these crucial components, with the first rare earth magnet (REM)-free motor EVs expected to hit the market by the financial year 2026-27.

China's dominance in the rare earth sector has long been a point of vulnerability for global industries. The country has a history of leveraging its control over REMs as a geopolitical tool. For instance, in 2014, a geopolitical crisis between China and Japan led to a three-fold increase in REM prices, underscoring the instability of relying solely on this supply chain.

According to Jaideep Wadhwa, director of component maker Sterling Tools, Indian companies have been anticipating such challenges and working on alternative technologies for several years. "We have been working with many vehicle manufacturers on the application of rare earth magnet-free motors for the last 4 to 5 years," Wadhwa stated, indicating that these efforts span across commercial vehicles, two-wheelers, and even traditional petrol-diesel vehicles.

Mahesh Babu, CEO of Ashok Leyland's EV arm Switch Mobility, emphasized the long-term necessity of exploring REM alternatives. "As a long-term plan, all companies will have to consider REM options," he said, acknowledging that while some solutions might be ready by FY 2026-27, others could take longer to develop and implement.

The urgency for indigenous solutions is highlighted by recent import data. In the financial year 2024-25, India's import of rare earth magnets surged by 87% year-on-year, reaching 53,700 tonnes. A staggering 93% of these imports originated from China. This marks a significant increase from FY 2023-24, which saw imports of 28,700 tonnes, and a substantial jump from 12,400 tonnes in FY 2020-21.

By focusing on REM-free motor technology, the Indian automobile industry aims to build resilience against potential supply chain disruptions and reduce its dependence on China for critical EV components, thereby accelerating its journey towards self-reliance in the electric mobility sector.