Electric Vehicles in India faces Shock as Maruti Cuts Output

Electric vehicles in India: India’s largest car manufacturer, Maruti Suzuki has significantly reduced its short-term production goals for its first electric vehicle. The e-Vitara, due to a global scarcity of rare earth elements. This will certainly impact the EV manufacturing sector. It increases uncertainty about India’s readiness for EVs. While supply chains around the world remain in unpredictable conditions.

Production Target Reduction for Electric Vehicle Manufacturing

Maruti has decreased targets for e-Vitara manufacturing dramatically from 26,500 units to only 8,200 units. Almost a two-thirds reduction in production for the April through September 2025 production window. Due to supply constraint regarding the rare earth elements required for the components of the EV’s motors. The motors have magnets that require rare earth elements.

Despite the changes, the company is working towards its overall target of 67,000 EVs for the fiscal year ending March 2026. Maruti is working to ramp up manufacturing later in the year to cover the deficit produced by the shortage at the outset.

Impact of China’s Ban on Rare Earth Exports

China’s recent ban on exports of rare earth elements has sent shockwaves through the global automotive and technology sectors. While firms in the U.S., Europe, and Japan have begun to receive special exemptions from China to lessen the toll, India came later to approving such exemptions. This delay has created uncertainty for domestic vehicle manufacturers, like Maruti Suzuki, because of the potential for larger pauses in manufacturing, and makes long lead-time acquisition decisions difficult to handle, predict and comply with.

Market analysts and industry watchers have been glued to the situation given the more latest news on business and global supply chains, as he rare earth elements are necessary to manufacturing the latest technologies and, consequently, a global issue.

e-Vitara’s Importance to Maruti’s EV Ambitions

The e-Vitara, which was first revealed at India’s Auto Expo in January 2025, represents a significant step for Maruti in its move towards EV vehicle production.

With government targets that aim for 30% of car sales to be electric vehicles by 2030 (almost 12 times, higher than the 2.5% that were EVs in sales for 2024), the e-Vitara is key to the growth aspirations of Maruti and Suzuki Motor Group in both India and the rest of the world.

However, cuts and pauses in production will threaten Maruti’s ability to compete, especially given rivals Tata Motors and Mahindra & Mahindra are now entrenched in the first position in India’s EV market with their products offering a broad range of features for consumers to access.

Shareholder Reactions and Market Reactions

Following the announcement of the production cut, Maruti Suzuki’s stock price fell 1.4% on the Indian stock exchange. The company stated that the rare earth shortage has not caused no “material impact” to the e-Vitara’s schedule as of yet, but analysts maintain a cautious stance. Maruti also has not yet begun accepting bookings for the vehicle, which some speculate might extend the launch schedule.

Suzuki Motor, Maruti’s parent company, has adjusted its long-term forecast from six EV models launched to four EV models launched by 2031, in addition to revising its sales target in India from 3 million units down to 2.5 million units.

Despite the uncertainty, Maruti is planning to produce e-Vitaras between October 2025 and March 2026, to total 58,728 units – nearly 440 units/day at the peak capacity – which at least demonstrates that it is committed to rebuild its momentum. However, the supply issue with the rare earth materials has not changed and it is likely this situation will continue to affect the production schedule.

While the world is shifting, the situation contributes to recent changes to business – especially in the automotive and energy sectors – that has found that modelling needs stronger and more diverse supply chains in electric mobility.

Conclusion

Maruti Suzuki’s re-calibration of its EV strategy illustrates the precarious position of the global supply chain setup today. The e-Vitara delay may be a wake-up call for India’s EV ambitions, underscoring the need for better local capabilities in rare earth procurement and manufacture. The next few months will be key as the industry watches how India and Maruti address these obstacles to their electrification objectives.