Production Cut Due to Rare Earth Shortage
Maruti Suzuki, India’s largest carmaker, has sharply reduced its near-term production target for its debut electric vehicle, the e-Vitara, because of a critical shortage of rare earth materials following China’s export restrictions. The company now plans to produce just 8,221 e-Vitaras between April and September 2025, down from its original target of 26,512 units—a reduction of nearly two-thirds.
Global Supply Chain Disruption
The shortage of rare earths, which are essential for EV motors and other high-tech components, is part of a broader global supply chain crisis. While automakers in the US, Europe, and Japan have started to secure export licenses from Beijing, Indian manufacturers are still awaiting approvals, raising concerns about further delays and possible production stoppages.
Maruti’s Output Strategy and Market Impact
Despite the setback, Maruti Suzuki aims to meet its annual production target of 67,000 e-Vitaras for the year ending March 2026 by ramping up output to nearly 59,000 units in the second half of the fiscal year. The e-Vitara is a cornerstone of Maruti’s EV strategy and is crucial for both domestic sales and exports to Europe and Japan.
Intensifying Competition and Market Share Pressures
This production cut comes as Maruti faces growing competition from Tata Motors and Mahindra & Mahindra, both leaders in India’s electric vehicle market. Maruti’s share of the passenger vehicle segment has declined to 41%, down from 51% in March 2020, and the company has trimmed its long-term sales and EV launch targets in response to these challenges.
Urgent Need for Supply Chain Diversification
While Maruti’s management maintains there is “no material impact” on the e-Vitara’s launch timeline, industry insiders warn that ongoing rare earth supply constraints could force further changes to production plans. The situation underscores India’s heavy reliance on Chinese rare earths and highlights the urgent need for domestic supply chain development and diversification.
