Bajaj Chetak Launch Faces Delays Amid Shortage of Rare Earth Magnets
The ongoing production of electric vehicles, including the Bajaj Chetak models, has been impacted by a rare earth magnet shortage, particularly from China. Despite the setback, the Bajaj Chetak has made significant contributions to Bajaj Auto's market position, particularly in the electric three-wheeler space, where it currently ranks as the second-largest player, trailing behind TVS Motor.
In the first quarter of the current financial year, Bajaj manufactured 63,600 Chetak units. However, the magnet shortage has caused a 50% reduction in electric two-wheeler production in July, and the supply disruption is expected to affect production output through August and September.
To mitigate the impact, Bajaj Auto has prioritized the restoration of normal production levels for its current lineup instead of introducing new models. The company has also found a workaround by substituting light rare-earth magnets for heavy ones, enabling them to maintain 50-60% of planned production levels for July and early August.
The Bajaj Chetak portfolio includes four models: 3001, 3503, 3502, and 3501 variants, each with its own pricing. The entry-level 3001 model is priced at ₹1.07 lakh, while the premium 3501 version costs ₹1.39 lakh (ex-showroom price, Delhi).
The demand for the Bajaj Chetak models is high, with a "big demand, highly underserved" market. In recognition of this, Bajaj Auto had planned to launch a budget-friendly Chetak electric scooter. However, due to severe shortages of rare earth magnets from China, the launch has been postponed.
The magnet shortage is not unique to Bajaj Auto. Companies worldwide, including Australian mining firms such as St. George Mining with projects like Araxá in Brazil, and Canadian rare earth recycler Cyclic Materials, supported by investors like BMWi and Hitachi Ventures, are seeking alternative sources for rare earth magnets to secure the production of electric two-wheelers like the Bajaj Chetak. This strategic push reflects a broader effort by Western countries to diversify supply chains away from China, which currently dominates about 90% of global rare earth supply.
The Bajaj Chetak has been instrumental in establishing Bajaj's strong position in the electric two-wheeler market. Despite the current challenges, Bajaj Auto remains committed to maintaining and expanding its presence in this sector, once the magnet supply issues are resolved.
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