Inventories of rare earth magnet for certain automotive applications may taper off by mid-July, says report

New Delhi: Inventories of rare earth magnets may taper off by mid-July for certain automotive applications, following the export restrictions from China and ensuing shipment delays, rating agency Icra said on Thursday.

While the automobile industry is exploring a range of contingency options, each of these appears ridden with logistical, regulatory, and engineering complexities, exacerbating the prevailing uncertainty, it stated.

The industry, having recovered from the semiconductor supply crunch of 2021-22 that shaved off nearly 100,000 units, or about 4 per cent, from passenger vehicle production, now faces a fresh disruption, Icra Senior Vice President and Group Head-Corporate Ratings Jitin Makkar said in a statement.

“With China tightening export controls and delaying shipment clearances, rare earth magnet inventories are projected to last only until mid-July 2025 for several, if not all, passenger vehicle and two-wheeler applications,” he added.

The magnets in question — neodymium-iron-boron (NdFeB) — are known for their strength and efficiency, used for high-performance automotive applications such as traction motors in electric vehicles (two-wheelers and passenger vehicles) and power steering motors (in passenger vehicles) in both electric vehicles and internal combustion engine vehicles. The more conventional ferrite magnets are used for less performance-sensitive applications such as wiper motors, window regulators, and starter motors.

“In FY25, India imported around $200 million worth of these magnets for both automotive and non-automotive applications, with approximately 85 per cent of this sourced from China,” Makkar said.