Suzuki Halts Swift Production Amid China's Rare Earth Curbs India's EV Makers On Alert

Suzuki Motor Corporation has temporarily suspended production of most variants of its popular Swift compact car at its Japanese facilities, excluding the Swift Sport model. The move, effective from May 26 to June 6, marks the first time a Japanese automaker has been directly impacted by China's rare earth export restrictions, reports said.

This development comes as China tightens its grip on critical mineral exports, triggering alarm across global supply chains dependent on rare earth elements (REEs) for automotive, defense, and semiconductor manufacturing.

China's rare earth export ban

Beijing's decision to restrict the export of rare earth alloys, magnets, and mixtures was widely viewed as retaliation against the United States' increased tariffs on Chinese products. Rare earths are vital components in advanced electronics, electric motors, weapons systems, and semiconductors. With China producing nearly 90% of the world's REEs, the supply chain disruption is now threatening manufacturing continuity across multiple sectors.

The Chinese government has also mandated that importers declare the end use of rare earth magnets - a bureaucratic process requiring clearance from the Chinese Embassy - further slowing down shipments.

India's EV ambitions face critical supply challenge

India's aggressive push toward electrification has hit a stumbling block. The shortage of rare earth magnets - critical for EV motor functions - is already affecting production pipelines. According to reports, Indian automakers might be forced to increase prices by up to 8% to offset the cost of scarce imports.

Major players like TVS Motor Company and Bajaj Auto have raised red flags, warning of potential EV production halts if the bottleneck persists. Other manufacturers such as Mahindra, Hyundai, Kia, and Hero MotoCorp are also at risk, especially in the highly cost-sensitive two-wheeler segment.

Impact on EV growth projections

The disruption threatens to derail India's EV growth trajectory. As per BloombergNEF's EV Outlook 2024, India is expected to witness a 199% surge in EV sales by 2027, with projections of 5.9 million units sold annually by 2040. However, China's export policy may force a recalibration of these ambitious goals unless alternative sourcing strategies are found.

Global automakers sound the alarm

The implications of China's curbs extend far beyond India. Global automakers and aerospace companies are bracing for further disruptions, and some are already considering temporary shutdowns.

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