With the scarcity of rare earth magnets threatening to impact electric vehicle production in the country, Original Equipment Manufacturers (OEMs) are looking for alternatives.
They are considering substituting rare earth magnets with alternative engineering materials, importing fully assembled motors from China, introducing rare earth magnet-free motors, switching to motors that rely on electromagnets, and shipping the rotors to China and then re-importing the assembled rotors. However, the alternatives will require additional time and logistics.
“As Indian manufacturers push towards securing a stable supply chain, the challenge with critical components like rare earth magnets is their concentrated sourcing destination. The current crisis, while disruptive, may also serve as a catalyst for innovation and strategic diversification, both in sourcing and in science,” stated market rating agency ICRA.
Faridabad (Haryana) - based Sterling Tools Ltd , a manufacturer of high automotive fasteners and solutions catering to passenger cars, two-wheelers and commercial vehicles, has signed a technology licensing agreement with Advanced Electric Machines (AEM) to manufacture rare earth magnet-free motors for electric vehicles. The motors will be manufactured at its plant in Faridabad.
“We have a technology licensing partnership to manufacture AEM’s range of magnet-free motors in India. The induction motors are magnet-free, but the trick is to get the performance permanent magnets give without utilising permanent magnets. We have been in touch with them for five years and have been essentially talking to them on the relevance of the technology in the Indian market, sharing details on the Indian market and to understand how we can develop the supply chain in India so that we can localise,” Jaideep Wadhwa, Director, Sterling Tools Ltd told businessline.
The company is in talks with Indian OEMs and international companies to manufacture the rare earth magnet free motors. It is anticipating to begin production of rare earth magnet free motors by FY27.
“The current crisis has really given a very sharp focus to this, and therefore, our customers are evincing a lot of interest to try and develop vehicles with our motors. Even on war footing, it could easily take a year or upto 18 months to complete the validation, and certify the motor for a vehicle and then put it into production. We require customer validation and will be able to go into production in about a year,” added Wadhwa.
R&D and Infrastructure capability
“The reliance on elements like neodymium, dysprosium, and praseodymium—critical for high-performance electric motors—poses a significant challenge due to rising costs, supply chain constraints, and geopolitical risks. While some of these elements are available in India, the limited refining and processing infrastructure restricts their scalability. To address this, alternatives such as iron nitride, manganese-based compounds, and ferrite magnets are under development,” Pratik Kamdar, CEO and Co-Founder, Neuron Energy, told businessline.
These materials, which are free of rare earth elements, are especially promising for two- and three-wheeler EVs, where cost sensitivity is a major consideration. While these solutions are not yet mass-market ready, they hold significant potential with continued innovation. We anticipate that with focused R&D, government support, and robust investment in local manufacturing ecosystems, the industry could begin to meaningfully reduce its reliance on rare earth magnets by 2028–2030,” added Kamdar.