When was the last time you used an EV? Even if you haven’t purchased an EV for yourself – great, one more thing to charge besides your phone, headphone, laptop and smartwatch – you might have used a public transportation EV in a major city, like Mumbai or Bengaluru.
There was a time when EVs were thought to be super cool, but ever since Elon got involved with DOGE and began chilling with #47, people turned on Tesla Cyber Trucks, even adding sticker disclaimers “I bought this before we knew Elon was crazy”. Plus, there were reports that, in the US, people were going after Tesla showrooms and lighting Cyber Trucks on fire. All of that might be slightly hurtful to Musk.
But, maybe EVs go beyond Elon Musk. To some extent, EVs in India might have a sour connotation to it, with the Gensol-BluSmart debacle afoot, but, maybe, things will smooth out. And besides all of this, do EVs in India have even more problems to deal with?
Have you heard of something called rare earth metals? Those are different from scorched earth, a brand Les Grossman is familiar with. There are a couple of rare earth metals that EVs are said to need for their electric motors. These rare earth metals have some pretty cool names, like neodymium, samarium, terbium and dysprosium. It’s the kind of thing that might make Francis Underwood and Raymond Tusk tussle a bit. These rare earth metals, in the form of magnets, are said to help electric motors spin better, which might make the EV go faster and be more powerful. It might even help with battery life.
But, unfortunately, India’s EVs might not have access to these magnets. The thing with these rare earth metals is that they’re almost exclusively supplied by China. And even if you’re not the biggest geopolitics buff, you might have heard that the US and China are cross with each other, one of the issues being tariffs. For any Hindi-speaking individual, a “tariff” might be a great thing to receive, but in the business world, when the tariff is higher, one party might not be too happy.
Sometimes, when mommy and daddy fight, the child ends up not getting his dinner. To some extent, that’s what’s happening with the rest of the world: it seems to be collateral damage. There’s a bit of a tech chokehold because of this bout. Beijing seems to have tightened its grip on magnet exports. Which means that Walter White, Jesse Pinkman and Michael Ehrmantraut might not get to delete all the evidence the DEA found in Gustavo Fring’s crib.
And like some other countries, India seems to be caught in the crosshairs. It seems to have become a logistical nightmare for EV manufacturers not just in India, but globally. Because India might be really getting the hang of EVs. In FY25, EV sales in India were said to cross about 2 million, marking close to a 20% annual growth and with electric two-wheelers leading the charge with close to 60% of all EV sales. Disregarding BluSmart, maybe, yay, a cleaner and greener India might be a possibility.
So, what’s the punitive measure is China taking against the US and, unfortunately, the rest of the world? How is it acting out? It’s said that China is imposing stricter export regulations and importers would have to provide detailed end-use certificates and product images to show how and why the magnets will be used.
Why is that a problem? If Indian companies have to abide by this, it might mean longer approval times and other unpredictable issues. Plus, there might be some confidential information companies would rather not give away. Interestingly, it might be a nefariously clever way for China to track exactly what the rest of the world is building and accordingly, throttle supply at will based on some geopolitical whims. You’ve got to admire the creativity. Seems like there’s no upside to this.
One may have thought this is just for the US, but nope, everyone faces the brunt of this. Plus, India seems to be benefitting from a couple of companies reducing their reliance on China for imports and looking at India more lovingly, so that might make China a bit more upset with India. Life is just a high school drama, but far more magnified, in posher accents and in suits.
So, the EV sector in India might be panicking just a tiny bit. Stakeholders are huddling together to come up with possible solutions to combat this.
Did no one flag China having a monopoly on rare earth elements as a potential industrial vulnerability? Because this really might create a slowdown in the EV space. Plus, all the sustainability ambitions might be impacted.
If China has a near-monopoly on rare earth elements, are there other smaller countries to engage with for magnets? India, excitedly, does have neodymium. Is it enough for the world? Is there enough to extract? Any environmental degradations if we start digging for this rare earth element?
Or maybe, it’s time to look inward? Could motors… just not have magnets altogether? That’s right, all those inspirational speeches might tell people to stop looking at something as a problem, but more of an opportunity. Is this applicable here?
There’s a Haryana-based company called Sterling Tools and in May 2025, it was said to have signed a tech licensing agreement with a UK firm called AEM (Advanced Electric Motors) to produce magnet-free traction motors for EVs. This would be at its Faridabad plant. Yay, India? Could that mean that the rest of the global EV companies might look at India for EV motors? Maybe, that could insulate the global EV realm from geopolitical tremors to some extent. Won’t play ball, China? Fine – as Thanos once said – we’ll do it ourselves.
So, will it be smooth sailing? Some speculate this could affect the performance of an EV, make it less efficient and more noisy for these motors might be larger and heavier. Maybe, in a public transportation EV, there could be somewhat of a compromise on size, but, in a two-wheeler, it might be a bit more noticeable.
Of course, the end-consumer might not really care whether their EV has a magnet or not or whether that magnet came from China or India or Wakanda or Wadiya. All they might be interested in knowing is the price, the range, the performance and the charging speed. Would going magnet-free mean a worse EV? In that case, Chinese EVs might rule and then, importing those would be even more expensive.
At a time like this, while India’s EV sector might be scrambling to figure it out, is it too ambitious to ask whether India might be able to own the whole EV stack? If India is “paralyzed” by China tightening the tap, is it some kind of wake-up call that we’re too dependent on someone else’s parts, pricing and geopolitics? Or is that just a harsh reality the rest of the world has to acclimate to: that China will continue to own, rule and leverage?
Can India own the core tech and other aspects or would it, like other countries, have to stick to being an importer? Does any of this bolster India to embrace HardTech – combining hardware and software for an industry? The VCs might not be entirely pleased with this. This might be too slow and uncertain. There might not be a beloved hockey stick growth here. Yet, if not owning the whole stack, are there other aspects of EVs India could gain a foothold in? It might take deep work.
Maybe, all of this might be some kind of harsh reality check. Like a GPT-wrapper, this might – to sound cynical – expose which entities in the EV realm have something to stand on and are antifragile and which ones might be engulfed by the supply chain stress. Or, maybe, no one ends up winning, they’re too battered and bloody to keep going. That’s worrisome. Is this the dot-com moment for EV companies in India? Or is that false equivalency?
Will India attract the rest of the world with or without magnet tech for EVs? Or would this end up being poles apart with what China can give the world?
