India’s automotive industry is rapidly shifting toward electric vehicles (EVs), buoyed by supportive government policies and increasing environmental awareness. At the forefront of this revolution in India is Maruti Suzuki, the country’s largest automaker, which has placed strong bets on its maiden EV, the e-Vitara, to capture the growing Indian electric vehicle market. However, the e-Vitara’s production and launch schedule have recently been hit hard by global shortages of rare earth materials, underscoring a significant supply chain risk for India’s nascent EV sector.
This article explores how the rare earth supply crunch, worsened by China’s export restrictions, impacts Maruti Suzuki’s production targets and India’s overall EV ambitions, as well as the strategic steps the company and the government are taking to navigate this critical challenge.
The Role of Rare Earth Materials in EVs
Rare earth elements (REEs), including neodymium, dysprosium, and terbium, are indispensable for manufacturing high-performance permanent magnets used in electric motors. These magnets provide the torque and energy efficiency needed for electric propulsion.
Electric vehicles critically depend on these magnets, especially in Permanent Magnet Synchronous Motors (PMSMs)—the dominant motor type in modern EVs. Beyond motors, rare earths also feature in power steering, speakers, sensors, and other advanced automobile components, making them indispensable in EV production.
China’s Grip on Rare Earth Supply and Export Controls
China controls over 90% of the world’s rare earth processing capacity and has long used its dominance to shape global supply chains. In April 2025, China imposed tighter export controls on several key rare earth materials, requiring end-use certification and licensing. This move drastically reduced shipments to automakers outside China and tightened supply globally.
While companies in the U.S., Europe, and Japan have begun securing export licenses from Beijing, India’s automakers have been slower to obtain approvals, resulting in critical shortages of rare earth magnets and disrupted production planning for domestic EV projects.
Impact on Maruti Suzuki’s e-Vitara Production Plans
Maruti Suzuki, which unveiled the e-Vitara electric SUV with much fanfare at India’s major auto show in early 2025, is experiencing significant disruptions due to this supply crunch:
- Production cuts: The automaker has slashed near-term production targets for the e-Vitara by approximately two-thirds. Initially aiming to produce 26,512 units of the e-Vitara between April and September 2025, the target was revised downward to around 8,200 units for the same period—a sharp reduction illustrating supply constraints.
- Annual target adjustments: Despite this significant shortfall in the first half of the fiscal year, Maruti Suzuki intends to ramp up output in the second half, aiming to achieve its full-year production goal of approximately 67,000 electric vehicles by March 2026.
- Export goals: The e-Vitara, with its competitive pricing and features, was slated not only for the domestic market but also for export to Suzuki’s traditional markets in Europe and Japan. Production delays impact both domestic availability and export ambitions.
Read Also: affordable electric vehicles UK
Management and Official Responses
Maruti Suzuki’s Chairman, R.C. Bhargava, has sought to reassure the market and customers that, as of the latest reports, there has been “no material impact” on the e-Vitara’s launch schedule or operational continuity despite the ongoing rare earth shortages.
The company emphasizes it is actively monitoring the situation and exploring multiple supply chain strategies to minimize disruptions. Importantly, Maruti has highlighted that current manufacturing lines remain functional and that official communications will be made should the situation materially worsen.
Broader Implications for India’s EV Ecosystem
Maruti Suzuki’s predicament reflects a broader vulnerability within India’s electric vehicle supply chains:
- Dependency on Chinese Supply Chains: India’s heavy reliance on imports for critical EV components like rare earth magnets exposes the country to geopolitical risks and export policy shifts by China.
- Supply Chain Localization Urgency: The crisis underscores the urgent need for developing domestic rare earth mining, processing, and recycling infrastructure to reduce reliance on foreign suppliers and ensure supply chain resilience.
- Impact on Market Growth: Production slowdowns in marquee EVs like the e-Vitara may delay consumer adoption, affect used EV markets, and hinder India’s national ambitions to raise EV sales penetration to 30% of new vehicles by 2030 (up from around 2.5% presently).
- Increased Competition: The shortage also offers a competitive edge to other Indian automakers less reliant on Chinese imports or with alternative supply arrangements, such as Tata Motors and Mahindra & Mahindra, which lead electric vehicle sales in India.
Strategic Measures and the Government’s Role
The Indian government has been proactive in observing the rare earth crisis, dispatching delegations to China to expedite end-use certifications and seeking multiple supply partners globally.
Policy measures under consideration or implementation include:
- Encouraging domestic exploration and processing of rare earth resources.
- Promoting recycling of rare earth materials from used electronics and EV batteries.
- Facilitating import licenses and smoothing regulatory hurdles for acquiring critical materials.
- Supporting R&D for alternative magnet technologies that minimize rare earth usage.
These steps are essential to securing India’s EV ambitions and protecting local manufacturers against external supply shocks.
Economic and Market Reactions
News of rare earth material shortages and resulting production cuts at Maruti Suzuki triggered market jitters, briefly impacting the company’s share prices. Analysts view the rare earth bottleneck as a strategic wake-up call, highlighting the limits of current supply models and the critical nature of rare earths in the green economy transition.
Some caution that persistent shortages could slow India’s EV rollout timelines relative to competitors and stall investments unless offset by successful policy and industry responses.
The Road Ahead for Maruti Suzuki’s EV Plans
Despite current challenges, Maruti Suzuki remains committed to the Indian EV market, reinforcing its aggressive EV model lineup and production roadmap. The company has hinted that after an initial production shortfall, its mid- to long-term plans include scaling up e-Vitara production and accelerating other EVs to compete effectively.
Partnerships with global suppliers, investment in alternative magnet technologies, and a stronger focus on localization will be key to navigating the resource-constrained environment.
Read Also: European Union EV regulations
Conclusion
Rare earth material shortages—primarily due to China’s tightened export restrictions—have significantly impacted Maruti Suzuki’s production targets for its flagship e-Vitara electric SUV, delaying short-term supply and complicating India’s EV growth trajectory.
While the e-Vitara remains central to Maruti’s electric strategy and India’s ambitions of increasing EV penetration, this supply chain disruption highlights critical vulnerabilities in India’s EV ecosystem. The challenge of securing rare earth supplies necessitates aggressive domestic resource development, regulatory support, supplier diversification, and technological innovation to ensure long-term sustainability.
Maruti Suzuki’s response, balancing caution with commitment, illustrates the broader global auto industry’s struggle with rare earth shortages. Resolving these constraints will be a decisive factor for India’s position in the evolving global electric vehicle landscape, impacting not only consumer access but also economic growth and environmental commitments.
India’s journey toward electrified transportation depends heavily on overcoming these foundational material challenges to unlock the full potential of its burgeoning EV market.
Disclaimer: all details in written help with Ai-not own-refer original