Ather sees impact of ongoing rare earth magnet crisis in Q2, expects temporary cost impact

Ather Energy joined a growing list of automotive companies sounding the alarm bells on the ongoing rare earth magnet crisis, triggered by import restrictions placed by China.

According to Tarun Mehta, CEO and co-founder of Ather Energy, the company sees the impact of the ongoing crisis restricted to the second quarter, leading to possible delays of up to one week in supplying vehicles to its dealers during this period.

Mehta, during the company’s post-earnings call, added that the company is working towards minimising this gap. ”This was a larger gap a few months ago, but a lot of strong R&D (research and development) work has minimised this,” he said.

Despite the attempts, the company will see a “small impact” on its retail. The statement comes as automotive companies gear up for the festive season—a period marked with high sales and demand due to attractive discounts.

The ongoing crisis has also triggered a “small cost impact,” Mehta added. “We’ve obviously had to scramble our supply chains, but we expect it to be a small number at this point and also temporary.”

While Ather Energy did not disclose details about the technology or alternatives it is looking to to implement in its vehicles amidst the rare earth magnet crunch, Mehta added that he’s more optimistic about “moving to rare earth magnets out from heavy rare earth magnets, because rare earth magnets don’t have an export ban and have a little bit of more supply available globally, with China not being the only one (supplier).”

Both rare earth magnets and heavy rare earth magnets utilise rare earth elements; the difference lies in the specific elements used. While rare earth magnets are made from alloys like neodymium-iron-boron or samarium-cobalt, known for their high strength, heavy rare earth magnets incorporate heavier rare earth elements like dysprosium and terbium into the alloy. 

Ather’s rival and legacy player Bajaj Auto’s Managing Director Rajiv Bajaj said the company could see a “zero month” of EV output in August, interrupting production of its Chetak scooters, according to an Economic Times report.