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Inventories of rare earth magnets may taper off by mid-July for certain automotive applications: ICRA
Jun-13-2025

Rating agency ICRA in its latest report has said that 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. It said 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.

ICRA Senior Vice President and Group Head-Corporate Ratings Jitin Makkar said 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. He said 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 said 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. 

He further said in FY2025, 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. He added that the supply uncertainty has cast a shadow on production planning, and the dependence on China for these specialised materials could upend the automobile sector, particularly the fast-growing electric vehicle segment, if the concern remains unresolved. 


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