Maruti trims H1 e-Vitara production plan from 26,500 to 8,200 units amid China’s rare earth export curbs

Maruti Suzuki, India's leading automaker, is significantly reducing its near-term production targets for its first electric vehicle, the e-Vitara. The cutbacks, amounting to two-thirds of its original plan, are a direct result of shortages in rare earth materials caused by China's export restrictions.

These materials are crucial for manufacturing components such as magnets essential to electric vehicles and other high-tech industries, news agency Reuters reported on Tuesday. This decision reflects the broader impact of China's curbs on the global automotive sector, with India facing particularly acute challenges as it awaits approval for continued imports.

The e-Vitara, which was launched earlier this year with much anticipation, is pivotal to Maruti's electric vehicle strategy in India—a market projected to see EVs make up 30% of total car sales by 2030. Despite the rare earth supply issues, Maruti reported that these challenges have had no "material impact" on the vehicle's launch timeline. However, the company's production plans have substantially shifted from an initial target of 26,500 units to just 8,200 units between April and September.

Despite the current production setbacks, Maruti Suzuki aims to meet its annual target of producing 67,000 electric vehicles by March 2026 by ramping up production in the latter half of the fiscal year. The company plans to accelerate production to 58,728 units between October and March 2026, a significant increase from the earlier forecast of 40,437 units for the same period. This strategic adjustment aims to mitigate the effects of the halted supply chain and maintain its competitive edge in the market.

India's reliance on China for rare earth imports has become increasingly problematic amid these supply disruptions. Commerce and Industry Minister Piyush Goyal noted that the situation serves as a “wake-up call” for India and the world. He emphasised the ongoing efforts to develop domestic capabilities and reduce dependence on Chinese imports, recognising the necessity for more resilient supply chains. These efforts include increasing research and development, promoting private sector involvement, and exploring international partnerships.

The rare earths crisis has highlighted India's vulnerabilities in the automotive supply chain, as Maruti Suzuki struggles to regain market share against competitors like Tata Motors and Mahindra & Mahindra, who lead in India's EV sales. The company's market share has decreased to 41% from a high of 51% in March 2020. Additionally, Suzuki has reduced its sales target in India to 2.5 million vehicles by March 2031 from a previous goal of 3 million, scaling back EV model rollouts due to intensifying competition.

As the situation develops, India is actively engaging with industry stakeholders to strengthen its domestic production capacities and create alternative supply chains. In Bern, Goyal explained the dual approach of sourcing from other countries and boosting local production, underlining the urgency of India's plan to achieve a sustainable and self-reliant rare earth ecosystem.