Maruti Suzuki, India’s largest carmaker, has sharply cut its production target for its maiden electric vehicle, the e-Vitara, for the first half of the fiscal year due to a shortage of rare earth materials. These materials are critical components in the manufacture of magnets and various other high-tech parts, and their global supply has been heavily disrupted by China’s export restrictions.

As per internal documents reviewed by Reuters, Maruti Suzuki now plans to produce only 8,221 e-Vitara units between April and September 2025, a drastic drop from its initial goal of 26,512 units — a reduction of nearly two-thirds.

Rare Earth Crisis Hits EV Ambitions

The rare earth crunch has emerged as a significant hurdle for global automakers, including Suzuki Motor, the parent company of Maruti. While companies in the United States, Japan, and Europe have reportedly started receiving rare earth shipments under licences from Beijing, India is yet to secure such approvals, leading to uncertainties for domestic manufacturers.

Despite this, Maruti remains optimistic. According to the document, the company still targets an annual output of 67,000 EVs by March 2026, hoping to ramp up production in the second half of the year. Between October 2025 and March 2026, Maruti plans to produce 58,728 e-Vitaras, compared to the earlier target of 40,437, signalling an ambitious recovery in output.

Impact on Suzuki’s Global Strategy

This setback is particularly critical because India is Suzuki Motor’s largest market by revenue and a key global manufacturing base for its electric vehicles. A large proportion of these e-Vitaras were intended for export to major overseas markets like Europe and Japan, especially during the summer of 2025.

The e-Vitara, which was unveiled with great fanfare at the India Auto Show in January 2025, is central to Maruti’s EV strategy and to Prime Minister Narendra Modi’s EV policy goals. The government aims to increase EV sales to 30 percent of all cars sold in India by 2030, up from just 2.5 percent last year.

Public Statements vs Internal Reality

Just last week, Maruti’s chairman RC Bhargava told reporters that the rare earth issue had no material impact on the e-Vitara’s production or launch timeline. However, the internal document clearly outlines a scaled-back plan. Moreover, both Maruti and Suzuki declined to comment when contacted on Tuesday.

Following the news, Maruti Suzuki’s shares fell as much as 1.4 percent on the Indian stock exchange, reflecting investor concerns over supply chain disruptions and potential delays.

Competitive Pressure from Domestic Rivals

The rare earth supply issue is not the only concern for Maruti. The company is also losing market share to aggressive domestic rivals like Tata Motors and Mahindra and Mahindra, both of which offer feature-rich SUVs and lead India’s electric vehicle segment.

Maruti’s share in the passenger vehicle market has declined to 41 percent from a peak of 51 percent in March 2020. The slowdown in EV rollout is likely to give further advantage to competitors, especially with Tesla planning to enter the Indian market soon.

Strategy Adjustment Amid Supply Constraints

Maruti has also trimmed its long-term forecasts. Suzuki has revised its vehicle sales target in India to 2.5 million units by March 2031, down from its earlier projection of 3 million. Additionally, it has reduced its EV lineup from six planned models to four, citing intense competition and operational bottlenecks.

Maruti’s previous production plan, known as Plan A, projected a first-half output of 26,512 units and a second-half target of 40,437 units. The revised Plan B now targets 8,221 units in the first half and a sharp uptick to 58,728 units in the second half — an average of around 440 units per day at peak production.

Market Response and Analyst Views

Analysts believe Maruti’s late entry into the electric vehicle market is increasingly risky. With supply chain vulnerabilities and intensifying competition, the e-Vitara's delayed rollout could mean missed opportunities in a rapidly growing segment.

Furthermore, India’s strategic dependence on Chinese rare earths is a broader industry issue. The lack of diversification in sourcing these critical materials exposes manufacturers to geopolitical risks. While alternative sourcing efforts are underway globally, the approval delays from China continue to cause uncertainty.

Conclusion

Maruti Suzuki’s decision to cut near-term e-Vitara production highlights the fragility of global EV supply chains, especially for emerging markets like India. While the company plans to make up for the shortfall in the second half of the year, the dependence on rare earth imports and rising domestic competition present formidable challenges.

The next few months will be crucial for Maruti Suzuki’s EV journey. Its ability to secure materials, ramp up production, and regain lost market share will determine whether it can stay competitive in India’s fast-transforming auto industry.

Disclaimer

This article is for educational and informational purposes only and does not constitute financial advice. Investment decisions should be based on individual risk tolerance and consultation with SEBI-registered advisors. Market conditions are volatile and subject to change. Neither the author nor the platform is responsible for losses arising from use of this information.

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