Rare-earth shortages threaten EV momentum even as TVS Motor rides a tax-cut boost, stronger demand and rising sales to a sharp profit jump this quarter.
TVS Motor Co. has warned that the limited availability of rare-earth magnets remains a major constraint for its electric vehicle (EV) business. According to a recent Mint report, the company highlighted the issue in its financial performance report for the September quarter. Executives said the shortage could continue in the short to medium term, affecting industry-wide growth.
Despite the supply challenge, TVS expects the recent reduction in goods and services tax (GST) rates to fuel demand in the second half of this financial year. The benefit, it said, has already been fully passed on to buyers. This is expected to encourage purchases during the December and March quarters.
EV sales showed positive momentum in the second quarter. TVS delivered 80,000 electric two- and three-wheelers, up 15% from the previous quarter and slightly higher than the 75,000 units reported a year earlier. Management noted that customer interest remains strong, and the EV business generated revenue of ₹12.69 billion with positive contribution margins.
K.N. Radhakrishnan, director and chief executive, said growth could have been far more substantial if rare-earth magnets were more readily available. He added that the GST cuts should support sales across both rural and urban regions. Entry-level two-wheelers, including scooters and motorcycles, now offer savings of roughly ₹7000, which the company believes will help restore rural buying power.
Overall vehicle sales, including exports, rose 18% sequentially to 1.5 million units. Annual growth reached 23%. Revenue increased 15% from the previous quarter to ₹140.51 billion, supported by higher demand across categories. TVS also kept a tight hold on costs, lifting net profit to ₹8.33 billion; up 30% sequentially and 42% from the same period last year.
However, TVS shares slipped 2.31% to ₹3555 on Tuesday, while the benchmark Sensex also closed lower.
