Highlights

• Bajaj Auto paused and then restarted deliveries of its Chetak electric scooter due to rare earth magnet shortages.
• The incident highlights the strategic vulnerability of relying on limited global rare earth suppliers, primarily China.
• The event underscores the importance of supply chain diversification for electric vehicle manufacturers.

---

Rare Earth Exchanges (REEx) highlights a development with significant supply chain implications: Bajaj Auto (opens in a new tab), an Indian multinational automotive manufacturing concern based in Pune, has resumed deliveries of its flagship electric scooter, Chetak, after a pause caused by shortages of rare earth magnets.

The news, first reported by Business Standard (Aug. 23, 2025, “Bajaj Auto resumes supplies of its e-scooter ‘Chetak’”) underscores how rare earth supply chain fragility directly impacts consumer markets. Bajaj stated that deliveries slowed in recent weeks due to “international component availability” but have now restarted ahead of schedule, with shipments recommencing August 20. The company claims it has secured sufficient magnet supply to meet demand during India’s upcoming festive season.

Bajaj Auto

Why This Matters

Permanent magnets made with rare earth elements such as neodymium, praseodymium, dysprosium, and terbium are indispensable to electric vehicle motors. Bajaj’s temporary production pause shows that even market leaders are at the mercy of global rare earth supply volatility.

Chetak is not a niche product—its market share has doubled since April 2024, making it the No.1 electric scooter brand in India by FY25. The magnet shortage not only disrupted sales but highlighted the strategic weakness of relying on limited global suppliers, primarily China, which refines nearly 90% of the world’s rare earths.

Questions Left Hanging

The article leaves several important questions unanswered:

• Source Diversification: From whom did Bajaj secure its new magnet supply, and is it sustainable long-term?
• Domestic Policy Angle: Will India accelerate plans for domestic rare earth mining and magnet manufacturing to reduce reliance on imports?
• Investor Exposure: With two-wheel EV demand booming, are other Indian OEMs facing similar risks—and are suppliers like MP Materials, Lynas, or African projects poised to step in?
• Festive Season Cushion: Bajaj says it has “sufficient supply,” but how deep are those inventories? What happens if Chinese export restrictions tighten later this year?

Investor Takeaway

For investors, Bajaj’s magnet hiccup is both a warning signal and an opportunity. Companies positioned outside China’s orbit—whether in Africa, Australia, or the U.S.—stand to benefit as OEMs like Bajaj scramble to lock in reliable long-term supply. The real race isn’t between scooter brands; it’s between nations and miners—and refineries-- to control the magnets that make them move.

Source: Ralph Jennings, Business Standard (opens in a new tab), Aug. 23, 2025

©!-- /wp:paragraph -->