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

The easing of rare-earth supply is poised to catalyze substantial growth in the electric two-wheeler (E2W) market in India, projecting an increase of 16-18% in the next fiscal year, following a moderation to 12-13% growth in the current fiscal year due to persistent supply chain challenges, according to recent insights from Crisil Ratings. This fiscal year has seen a slowdown in E2W growth primarily attributed to temporary disruptions in the availability of rare-earth magnets, compounded by the rationalization of the Goods and Services Tax (GST) on internal combustion engine (ICE) models. In the previous fiscal year, the E2W segment experienced a robust growth rate of 22%, highlighting the volatility and potential of this market. “The supply disruption caused by the shortage of rare-earth magnets had weighed on E2W volumes around mid-year. As availability began to ease, coinciding with the GST-led price revision in ICE models, original equipment manufacturers (OEMs) relied on discounting and introduced lower-priced electric models to narrow the ICE-EV price gap,” stated Anuj Sethi, Senior Director at Crisil Ratings. This strategic shift has facilitated a recovery in volumes, reflecting the resilience of the E2W sector amidst fluctuating supply dynamics. As the Indian market continues to transition towards electric mobility, the easing of rare-earth supply is expected to play a critical role in enhancing availability and affordability of electric two-wheelers, thus driving consumer adoption and market penetration. The focus on sustainability and government incentives further underscores the long-term potential of the E2W market in India. With the rise in consumer awareness about environmental impacts and the benefits of electric vehicles, the E2W segment is well-positioned for growth. The anticipated increase in production and sales not only aligns with India’s broader goals for reducing carbon emissions but also supports the country’s aim to become a global leader in electric mobility. Overall, the electric two-wheeler market in India is on the cusp of significant transformation, and as supply chain constraints ease, stakeholders are likely to witness a renewed momentum in growth, ultimately benefiting consumers and contributing to a greener future.