Maruti Suzuki pulls back on EV push amid rare earths crisis: How will it affect e-Vitara production?

Maruti Suzuki has decided to reduce near-term production of its first electric vehicle (EV), e-Vitara, by two-thirds because of rare earths shortages, Reuters reported, citing a document.

This development is the latest sign of disruption to the auto industry from China's curbs on some rare earth exports, which led to tensions across the global auto industry. While some companies in the United States, Europe and Japan are witnessing supplies easing as they secure licences from Beijing, India is still waiting for China's approval amid fears of production stoppages, said Reuters.

Rare earths crisis affects EV production

India's top carmaker said on Monday that it did not have any impact yet from the supply crisis, but plans to make about 8,200 e-Vitaras between April and September, versus an original goal of 26,500, according to a company document seen and reported by Reuters.

Reuters reported citing the document that "supply constraints" in rare earth materials are vital in making magnets and other components across a range of hi-tech industries.

Maruti still plans to meet its production target of 67,000 EVs for the year ending March 2026 by ramping up production in subsequent months. Between October and March 2026 - Maruti plans to produce 58,728 e-Vitaras, or about 440 per day, versus a previous target of 40,437 for those six months under its initial plan, Reuters said.

The carmaker faces a setback in achieving its EV dream

The e-Vitara was launched amid much fanfare at an automobile expo in January. The vehicle was deemed crucial to Maruti's EV push in the country, marking its entry in a fast-growing segment that India’s government wants to grow to 30 per cent of all car sales by 2030 from about 2.5% last year, as per Reuters data.

Reuters reported that the setback could also hurt parent Suzuki Motor, for which India is the biggest market for generating revenue and a global production hub for EVs. The bulk of the made-in-India e-Vitaras will be exported to Suzuki’s major markets like Europe and Japan around summer 2025.

Maruti’s reaction to rare earths shortage

Maruti told Reuters last week the rare earths issue had no "material impact" on the e-Vitara's launch timeline. Chairman RC Bhargava said there was "no impact at the moment" on production.

Maruti is yet to open bookings for the e-Vitara with some analysts warning it is already late to launch EVs in the country as Tesla is also expected to begin sales this year, reported Reuters.

Under its initial plan, Maruti planned to produce 26,512 e-Vitaras between April and September, which is the first half of the fiscal year 2025-26. Now under the revised plan, the company will manufacture 8,221 vehicles, which is around two-thirds cut in the production schedule.

Maruti Suzuki hits roadblock

The rare earths crisis comes at a time when Maruti is already struggling to recover market share lost to Tata Motors and Mahindra & Mahindra's feature-rich SUVs. These companies also lead India's EV sales. Maruti's share of India's passenger vehicle market is down to 41 per cent from a recent peak of about 51 per cent in March 2020.

Suzuki has reportedly reduced its sales target for India to 2.5 million vehicles by March 2031 from 3 million previously, and scaled back its lineup of EV launches to just four, instead of the six planned before, as competition intensifies.