A global rare earth shortage forces Maruti Suzuki to rethink EV production plans, revealing how supply chains, not demand, are emerging as India’s biggest electric mobility challenge.
India’s largest carmaker, Maruti Suzuki India Limited, has scaled back production of its first electric vehicle following disruptions in the global supply of rare earth magnets a critical component used in electric motors.
The company had planned an initial production run of nearly 26,000 units of its upcoming electric SUV, the e-Vitara. However, due to material shortages, early output has been cut to around 8,000 vehicles. The revised strategy is expected to prioritise export markets before a wider domestic rollout, pushing India launch timelines further.
The supply disruption is largely linked to tightening export controls and approval processes in China, which dominates close to 90% of global rare earth processing capacity. India currently relies heavily on imports of these specialised materials, making automakers vulnerable to geopolitical and logistics challenges.
The delay comes at a crucial moment for India’s electric mobility transition. Electric passenger vehicles account for roughly 2% of total car sales today but are projected to grow rapidly as policy incentives and consumer adoption increase. With more than 40% share of India’s passenger vehicle market, Maruti Suzuki’s EV entry was expected to accelerate mass adoption in the affordable segment.
Industry observers say the production cut may temporarily benefit rivals already selling electric models, allowing them to consolidate early market leadership. At the same time, the episode reinforces a broader industry reality EV competitiveness increasingly depends on secure access to critical minerals and components rather than vehicle technology alone.
The situation is likely to push policymakers and automakers toward faster localisation of EV supply chains, including electric motors, components and rare earth processing, as India works to reduce dependence on global material bottlenecks.
