Bajaj Auto Warns of EV Hit in Q2 as Rare Earth Shortage Bites

PUNE: 8th August 2025 Bajaj Auto Ltd is slamming the brakes on electric vehicle production after a global shortage of rare earth magnets squeezed supplies. Executives said Tuesday that the company cut production of its Chetak scooters in half in July, a trend that is expected to continue into the current quarter. Management predicted a 25%-30% decline in electric three-wheeler sales. Despite these constraints, Bajaj Auto’s electric business performed well in the June quarter, accounting for more than 20% of the company’s domestic revenue, up from the low teens a year ago. China, which controls more than half of global rare earth production and nearly all refining, recently halted magnet exports, causing a ripple effect that has rattled EV manufacturers around the world. “Production has been compromised since June,” said Executive Director Rakesh Sharma, adding that electric three-wheeler volumes may decrease by up to 30% this quarter. Nonetheless, Bajaj Auto’s quarterly results soared past expectations. In the June quarter, net profit increased by 14% to ₹2,210 crore ($265 million), while revenue grew by 10% to ₹13,133 crore. Exports increased 16% to a record 476,000 units, with double-digit growth in both two- and three-wheelers. The company’s premium motorcycle segment also reached new heights, with KTM and Triumph models up 20% on refreshed lineups. However, the rare earth shortage jeopardises Bajaj’s electric advance. While EVs made up more than a fifth of domestic revenue, July registrations fell 15% month over month, highlighting the headwinds. Management is scrambling for solutions, including rapid‑fire motor redesigns to cut dependence on heavy rare earths and diversify suppliers. Executives anticipate “significant improvements” in the supply situation by fiscal 2026. The Bottom Line: For Bajaj Auto, the rare earth squeeze is a curveball testing both its supply‑chain agility and electric ambiti