What happens to India’s electric scooters when China holds back the magnets?

Why India’s scooter makers found workarounds first

Part 1 showed that China makes about 94% of the world’s strongest sintered magnets (IEA via Swarajya). This note asks what that means for the cars and scooters on Indian roads.

• What broke. China’s April 2025 licences cut supply of heavy rare earth magnets. Bajaj, Maruti, Ather and TVS all reported disruption within months.
• Why it matters. Most EV motors use rare earth magnets. Two of the scarcest elements, dysprosium and terbium, keep those magnets working when hot (Meridian Macro).
• The size clue. The two-wheeler motors in this note are 5 to 11 kW. Autocar Pro reports that below about 10 to 15 kW, the scarce heavy elements are not needed.
• The alternatives. Use less of the scarce elements, swap to a cheaper magnet, or use no magnet at all. BMW and Renault already sell cars with magnet-free motors.
• India’s builders. Ola, Sona Comstar, Chara, Greaves Cotton, Vimag, Sterling Tools, Conifer and Gati are all building motors that need less, or none, of what China controls.

The second of three notes on the magnet problem. Part 1 set out the global picture. Part 3 covers defence.

There are three ways to build an EV motor without China’s scarcest elements

Most EV motors today use permanent magnets made with rare earths. IDTechEx found that 87% of the world’s EV market used such motors in 2024, with roughly 1 to 3 kg of magnets in each (IDTechEx). The other designs all exist and work. The question is what each one gives up.

Six months that tested every Indian EV maker

China’s April 2025 rules did not ban magnet exports. They required a licence for seven medium and heavy rare earths, including dysprosium and terbium. As of early September 2025, Indian companies had yet to see a single import application approved (Reuters via Stockopedia). The effects showed up company by company.

Most of India’s EV market runs on small motors

India sold about 2.36 million EVs in 2025. Electric two-wheelers were 57% of them, about 1.35 million. Electric cars were about 197,000 (EVreporter).

Motor size is the link to magnets. Autocar Pro, reporting on Sona Comstar, says that below roughly 10 to 15 kW, motors can use light rare earth magnets without dysprosium or terbium. The two-wheeler motors in this story sit below that line. The car motors sit far above it.

Cars need much bigger motors, and some makers already sell them without magnets

Renault has used motors without rare earth magnets since its first electric Kangoo and Zoe in 2011 and 2012. Today they power the Megane, Scenic, Renault 5 and Renault 4. Its next motor, the E7A, is rated at 200 kW, is about 30% smaller than the previous generation, and will be built at Cléon from 2027 (Renault Group).

BMW’s new iX3 avoids rare earth magnets in both its motors and is rated at up to 805 km of range on the WLTP test (electrive). In March 2023, Tesla said its next drive unit would use a permanent magnet motor “which does not use any rare earth materials at all” (Market Index).

IDTechEx’s 87% figure shows these designs are still a small part of the market. Electrically excited motors add complexity and typically lose some efficiency on the standard test, and IDTechEx notes they look most attractive when rare earth prices are high (IDTechEx). IDTechEx forecasts that nearly 30% of the EV market will use rare-earth-free motors by 2036. That is its forecast, not ours.

Who in India is building motors that need less from China

The table sets out what each company has stated or shown in public, as of October 2026. Where a figure comes only from the company, we say so.

What we take from the evidence

1. India’s largest EV segment is also its easiest to protect. Two-wheelers are 57% of EV sales, and their motors are small. Sona and Ola have shown working motors that avoid the scarcest elements at that size.
2. Cars are the harder problem. Car motors are ten times larger or more. Magnet-free car motors exist, but the sources say they usually give up some efficiency, and few makers use them yet.
3. The scarce thing now is proof, not ideas. Chara’s founders say even certified motors face six to eight months of repeat testing by each customer. The companies to watch are the ones turning pilots into repeat orders.

Our reading, not a forecast. These points are our interpretation of the sources cited in this note. They are not predictions.

Which companies to follow, how far along each is, and how money gets in

The names in this note, placed by stage. For each we give the last round or listing we could verify, as of October 2026. Where a figure was not disclosed, we say so. This is a map, not a recommendation.

India: the names, and how a family could hold them

Rest of the world: the names, and how a family could hold them

How money comes in: five routes, and the entry level for each

These are the rules as written by RBI, SEBI and the Companies Act, as reported in the sources linked. They tell you who may use each route and at what level. They do not tell you whether a route suits your family.

If this theme belongs in your family’s portfolio, here is how to start

1. Choose a stage. Earlier stages offer less proof and fewer ways to sell. Listed names are the simplest to buy and to exit.
2. Check which routes you can use. Run the accredited investor tests above, and count the LRS limit for each family member separately.
3. Talk it through with us. Threewords works with families on private rounds in India and the US. Your Threewords relationship manager can go through whether, and how, any of these routes fit your family’s wider portfolio.

Write to Threewords at Enquiry.details@Threewordscapital.com. A conversation is not advice to buy any company named here.

The risks to weigh, and the questions to ask first

Five risks to keep in view

1. Efficiency costs range. Most alternatives give up some efficiency against rare earth motors (IDTechEx). In a car, that can mean less range per charge.
2. Supply has partly come back. China licensed four firms in India to import in October 2025. If magnets flow freely again, buyers may slow the switch.
3. Many claims are self-reported. Customer counts and capacity figures often come only from the company. Ask for independent proof.
4. Certification takes time. Each new customer may retest a motor for months, even after government certification (NITI Frontier Tech).
5. The rules can change quickly. China’s pause on its wider controls ends on 10 November 2026 (Technology.org), as set out in Part 1.

Questions for any motor founder

• Which vehicle makers buy from you today, and how many units did they order last quarter?
• How does your motor compare with a rare earth motor of the same power on efficiency and weight, and who measured it?
• Which certifications do you hold, and how long did customer testing take after that?
• What in your motor still comes from China: magnets, steel, copper, chips or tooling?
• If rare earth magnet prices fell sharply, why would your customers stay?

Four signals over the next two years

India’s scooters found a way around the magnet in months. The bigger test is what comes next.