By Piyush P. Yadav | September 2, 2026
Every electric vehicle sold in India today spins on a motor whose magnets came from China. India imports 100% of the sintered neodymium-iron-boron (NdFeB) magnets used in EV traction motors, and China controls more than 90% of global magnet manufacturing. Since Beijing imposed export controls on heavy rare earths such as dysprosium and terbium in April 2025, Indian two-wheeler makers have cut production, Maruti trimmed its early e Vitara plans, and the government has twice postponed a rule requiring domestic motor assembly. That rule finally took effect on September 1, 2026. This article explains the technology behind the problem, India's Rs 7,280 crore plan to build its own magnet industry, and the magnet-free motor designs that could make the crisis irrelevant.
Why EV Motors Need Rare Earths
Most EVs use permanent magnet synchronous motors (PMSMs). The rotor carries powerful NdFeB magnets that lock onto the rotating magnetic field produced by the stator windings. PMSMs are compact, efficient (typically 95-97%) and deliver high torque at low speed — exactly what scooters and city cars need.
The complication is heat. Plain NdFeB magnets begin losing magnetism above roughly 80°C, but a motor under load in a 45°C Indian summer can run far hotter. Manufacturers therefore dope the magnets with heavy rare earths — dysprosium (Dy) and terbium (Tb) — which raise the operating temperature to 150-200°C. Those two elements are the ones China restricted, and they are far scarcer than neodymium itself.
| Material | Role in the motor | India's import dependence | Global supply concentration |
|---|---|---|---|
| Neodymium (Nd), praseodymium (Pr) | Core of NdFeB magnet | Near-total for magnet-grade alloy | China dominates mining and separation |
| Dysprosium (Dy), terbium (Tb) | Heat resistance of the magnet | 100% (export-controlled since April 2025) | China controls the overwhelming majority of heavy rare earth output |
| Sintered NdFeB magnets (finished) | Rotor magnets | 100% imported | China makes over 90% of the world's magnets |
How the Shortage Has Played Out in India
- 2025: China's April 4, 2025 export controls forced Indian OEMs to apply for individual export licences for every magnet shipment. Approvals were slow and unpredictable. Business Standard reported that electric two-wheeler output fell in the July-September 2025 quarter as makers rationed motors, and Maruti Suzuki reduced near-term e Vitara production targets.
- September 30, 2025: The Ministry of Heavy Industries deferred the traction-motor localisation deadline for e-buses and e-trucks under PM E-DRIVE from September 1, 2025 to March 2026.
- March 13, 2026: A second deferral allowed continued import of complete traction motors containing rare-earth magnets until August 31, 2026.
- July 22, 2026: SIAM asked for a third extension, to April 1, 2027, citing continued disruption.
- September 1, 2026: The rule took effect with no announced extension. Traction motors for M2/M3 buses and N2/N3 trucks must now be assembled in India — magnet fitment included — to qualify for subsidies.
Note the nuance: the rule requires the motor to be assembled domestically. The magnets themselves can still be imported. That is because India has no magnet production to localise yet — which is what the next section addresses.
India's Rs 7,280 Crore Rare Earth Magnet Scheme
The Ministry of Heavy Industries' Rs 7,280 crore programme aims to build an integrated domestic sintered NdFeB magnet industry — covering metallisation, alloying and magnet manufacturing, not just final machining. The headline targets:
| Parameter | Target |
|---|---|
| Outlay | Rs 7,280 crore |
| Capacity | 6,000 tonnes per year of integrated sintered NdFeB magnets |
| Scope | Rare earth metal and alloy production through to finished magnets |
| Demand benchmark | India's rare earth permanent magnet demand projected at 8,220 tonnes per year by 2030 |
| Upstream feedstock | IREL (India) Ltd, the public-sector rare earth miner and processor |
Even at full capacity, 6,000 tonnes would cover about 73% of projected 2030 demand — and building the metallurgical expertise for magnet-grade alloys takes years. Analysts covering the sector argue that the seven-month extension SIAM requested would address short-term supply pain but cannot substitute for the decade-long effort needed to build a competitive domestic magnet industry from IREL's monazite feedstock to finished rotors. In the meantime, the scheme's main effect will be to attract joint ventures with non-Chinese magnet makers from Japan, Korea and Europe.
The Technology Escape Hatch: Motors Without Heavy Rare Earths
The faster route around the bottleneck is engineering. Three approaches are in play:
1. Heavy-rare-earth-free (HRE-free) permanent magnet motors
These retain neodymium magnets but eliminate dysprosium and terbium through grain-boundary diffusion, finer grain control and better thermal management (oil or liquid cooling of the rotor). Simple Energy claims to be the first Indian OEM to commercially manufacture HRE-free motors, and its Wave scooter launching today uses in-house motor technology. Several global suppliers have production-ready HRE-free designs for two-wheelers and small cars. The magnets are still imported, but they escape the export-controlled category.
2. Ferrite-magnet PMSMs
Ferrite magnets use no rare earths at all. They are roughly one-third as strong as NdFeB, so the motor must be larger and heavier for the same output — acceptable in a three-wheeler or a low-speed scooter, harder in a performance car. Improved rotor designs have narrowed the gap, and ferrite is a natural fit for the L3/L5 electric three-wheeler segment, where India already has 60% EV penetration.
3. Magnet-free motors: induction, wound-rotor and switched reluctance
Induction motors (Tesla's original choice), externally excited synchronous motors (used by BMW and Renault) and switched reluctance motors need no magnets. Their drawbacks — lower efficiency at partial load, more complex control electronics, rotor heating — are being addressed with silicon-carbide inverters. For long-range EVs with big batteries, a 2-3% efficiency loss is tolerable if it removes a single-point supply dependency.
| Motor type | Rare earth use | Efficiency | Size/weight | Best fit in India |
|---|---|---|---|---|
| Conventional NdFeB PMSM (with Dy/Tb) | High; export-controlled elements | 95-97% | Smallest | Current cars and scooters |
| HRE-free NdFeB PMSM | Nd/Pr only | 95-97% | Small; needs better cooling | Scooters, cars (near-term) |
| Ferrite PMSM | None | 90-94% | 30-50% larger | Three-wheelers, low-speed 2Ws, buses |
| Induction / wound-rotor / SRM | None | 90-95% | Larger; complex electronics | Trucks, buses, long-range cars |
What This Means for the Battery Story
India's cell-manufacturing push — the Reliance, Exide, Amara Raja and Ola gigafactories we covered in our gigafactory report — addresses the battery half of the import bill. Locally produced NMC cells reached roughly $95/kWh in 2026, competitive with imports once logistics and GST are counted. The motor half of the problem is smaller in rupee terms but harder: a magnet shortage stops a production line outright, whereas a cell shortage can be bridged with imports. The same logic that makes sodium-ion batteries attractive — escaping a concentrated supply chain — applies to magnet-free motors.
For fleet operators, the localisation rule is the most immediate consequence; our commercial EV guide covers the e-bus and e-truck landscape. For consumers, the rare earth issue is largely invisible today — but it explains why some scooter delivery times stretched in 2025, and why the next generation of Indian EV motors will look different under the skin.
Frequently Asked Questions
Why do electric vehicles need rare earth magnets?
Most EVs use permanent magnet motors whose rotors contain neodymium-iron-boron magnets. Small amounts of dysprosium and terbium are added so the magnets keep working at motor operating temperatures of 150°C or more. India imports 100% of these sintered magnets, mostly from China.
What is India's Rs 7,280 crore rare earth magnet scheme?
It is a Ministry of Heavy Industries programme to build 6,000 tonnes per year of integrated sintered NdFeB magnet capacity in India, covering alloy production through finished magnets, with IREL (India) Ltd as a potential upstream supplier. India's demand is projected at 8,220 tonnes per year by 2030.
What changed on September 1, 2026 for EV motors?
Under PM E-DRIVE's Phased Manufacturing Programme, traction motors for electric buses (M2/M3) and trucks (N2/N3) must now be assembled in India — including magnet, rotor, stator, shaft, bearing, enclosure, connector and cable fitment — to remain eligible for subsidies. SIAM's request for an extension to April 1, 2027 had not been approved as of the deadline.
Are there EV motors that do not use rare earths?
Yes. Ferrite-magnet motors, induction motors, externally excited synchronous motors and switched reluctance motors use no rare earths. Heavy-rare-earth-free NdFeB motors, which Simple Energy says it already manufactures commercially, keep neodymium but drop the export-controlled dysprosium and terbium.