India's auto sector least impacted by rare earth curbs as over 95% vehicles have IC engine; EVs, hybrids hit hardest: Report

New Delhi [India], June 17 (ANI): India's auto sector is least impacted by the recent curb of rare earth magnets by China as over 95 per cent of vehicles in India's are internal combustion engine (IC) vehicles noted a report by Nuvama.

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Electric vehicles (EVs), along with hybrid passenger vehicles and electric two-wheelers, are likely to face the most impact from restrictions on rare earth materials (REMs).

The report explained that while REMs are used in a wide range of industries, the biggest effect of the restrictions will be felt in the EV sector, particularly in EV motors.

It stated "The greatest impact of the above restriction in descending order will be electric PVs, hybrid PVs, and electric 2W. Conventional ICE vehicles will be least impacted".

In India, EV adoption is still at an early stage, with penetration at just 7 per cent for two-wheelers and 3 per cent for passenger vehicles.

Although EV sales have grown at a strong compound annual growth rate (CAGR) of 25 per cent between FY23 and FY25, the growth is on a low base. Therefore, even if sales decline, the overall effect on the Indian auto sector is expected to be limited.

Most electric vehicles use Permanent Magnet Synchronous Motors (PMSMs), which rely on REMs to maintain a stable magnetic field, especially at high temperatures. The use of PMSMs is far higher in EVs compared to hybrid or ICE vehicles.

As per the report, the average REM usage per vehicle is around 0.8 kg for electric vehicles, 0.5 kg for hybrid vehicles, and just 0.1 kg for ICE vehicles.

Hence, the impact of the restrictions will be the highest on electric passenger vehicles, followed by hybrid passenger vehicles, and then electric two-wheelers. Conventional ICE vehicles will see minimal impact.

In April, China imposed restrictions on the export of seven key rare earth elements: samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.

These elements are essential in producing magnets like neodymium iron boron (NdFeB) and samarium-cobalt (SmCo), which are used in various applications including EVs. China currently controls over 90 per cent of global processing of rare earth elements, giving it significant control over the global REM supply chain.

Though the restrictions are mainly aimed at the defence sector, the ripple effects will be seen across the auto, industrial, and aerospace industries.

Auto manufacturers will now need to get end-user certification from the Chinese government to continue sourcing these materials. The process is expected to take around 45 days. (ANI)

(The story has come from a syndicated feed and has not been edited by the Tribune Staff.)