Maruti Suzuki has made the decision to reduce the production of its first electric vehicle (EV), the e-Vitara, by two-thirds due to rare earth shortages, as reported by Reuters. This move highlights the impact of China's export restrictions on rare earths on the global auto industry. While companies in the US, Europe, and Japan are seeing some relief as they secure licenses from China, India is still waiting for approval, raising concerns about potential production disruptions.

The rare earths crisis has prompted Maruti Suzuki to revise its production targets. The company plans to manufacture about 8,200 e-Vitaras between April and September, a significant decrease from the initial goal of 26,500 units. The scarcity of rare earth materials, crucial for making magnets and other components in various high-tech industries, is cited as a key factor affecting production.

Despite the setback, Maruti Suzuki remains committed to meeting its overall production target of 67,000 EVs by the end of March 2026. The company aims to ramp up production in the following months, with plans to produce 58,728 e-Vitaras between October 2025 and March 2026, compared to the previous target of 40,437 units for that period.

The launch of the e-Vitara was a significant milestone for Maruti Suzuki's EV strategy in India. The vehicle was introduced at an auto expo in January and was seen as a key player in the growing EV segment, which the Indian government aims to expand to 30% of all car sales by 2030. The setback in production could impact parent company Suzuki Motor, as India serves as a major revenue-generating market and a global production hub for EVs.

Maruti Suzuki has assured that the rare earths shortage has not affected the launch timeline of the e-Vitara. Despite the challenges, the company has yet to open bookings for the EV, with some analysts cautioning that the delay in launching EVs in India could pose a challenge, especially with Tesla expected to enter the market this year.

The rare earths crisis adds to Maruti Suzuki's existing challenges in regaining market share lost to competitors like Tata Motors and Mahindra & Mahindra in the SUV segment. These companies are leading the EV sales in India, contributing to Maruti's decline in market share from 51% in March 2020 to 41% currently.