“Rare-Earth Supply Easing to Boost India’s Electric Two-Wheeler Growth to 16-18% Next Fiscal, Says Crisil Ratings”

The anticipated easing of rare-earth supply is projected to significantly stimulate the growth of electric two-wheeler (E2W) volumes in India, with estimates indicating an increase of 16-18 percent in the upcoming fiscal year. This marks a notable rebound from the current fiscal year’s growth rate, which has moderated to 12-13 percent due to ongoing supply chain constraints, according to a recent report by Crisil Ratings. The slowdown in E2W growth during this fiscal year is primarily attributed to temporary disruptions in the availability of rare-earth magnets, crucial components for electric vehicle manufacturing, as well as the rationalization of the goods and services tax (GST) on internal combustion engine (ICE) models. In the previous fiscal year, the electric two-wheeler sector witnessed an impressive volume growth of 22 percent, underscoring the potential for recovery as market conditions improve. Crisil Ratings Senior Director Anuj Sethi highlighted that the supply disruption caused by the rare-earth magnets shortage had a significant impact on E2W volumes, particularly around mid-year. However, as supply began to stabilize and coincide with revisions in GST that affected ICE models, original equipment manufacturers (OEMs) responded by offering discounts and introducing competitively priced electric models. This strategic maneuver aimed to bridge the price gap between ICE and electric vehicles, thereby supporting a recovery in volumes. The report indicates that manufacturers are adjusting their strategies to capitalize on the evolving market dynamics and consumer preferences, which are increasingly leaning towards sustainable and eco-friendly transportation options. As the Indian government continues to promote electric mobility through incentives and infrastructure development, the electric two-wheeler segment is poised for accelerated growth. The combination of easing supply constraints, favorable policy adjustments, and consumer demand for greener alternatives positions the E2W market for a robust recovery in the next fiscal year. With the increasing adoption of electric vehicles in India, stakeholders in the automotive industry are closely monitoring these trends to align their production and marketing strategies accordingly. The shift towards electric mobility is not only a response to environmental concerns but also a strategic move to tap into the burgeoning market potential of electric two-wheelers in India. As the country aims to reduce its carbon footprint and achieve sustainable transportation goals, the electric two-wheeler sector is set to play a critical role in shaping the future of mobility in India. The forecasted growth of 16-18 percent in electric two-wheeler volumes reflects the resilience of the industry and its ability to adapt to changing market conditions. As manufacturers ramp up production and innovation in electric vehicle technology, the upcoming fiscal year presents a promising outlook for the electric two-wheeler market in India, reinforcing the need for continuous investment and development in this vital sector.