India's EV Challenge: Supply, Localisation and Affordability

India's electric vehicle ambitions face a challenge that begins long before a vehicle reaches the showroom: securing the materials, components and technologies required to manufacture it competitively.

Rare-earth permanent magnets offer a clear example. These components are used in many electric motors, including those found in electric vehicles. Yet their supply chains are highly concentrated, leaving manufacturers exposed to export restrictions, geopolitical tensions and unpredictable procurement.

India is now trying to build domestic manufacturing capabilities in this strategically important area. But magnets are only one part of a much larger challenge involving battery cells, power electronics, semiconductors, production capacity and the cost of ownership.

Discussions at Autocar Professional's India EV Conclave on October 27, 2026, brought these issues into focus. Government representatives and automotive executives outlined different pieces of the same problem: India needs to move beyond expanding EV sales and develop the industrial capabilities required to sustain that growth.

The implications extend across the industry. Tata Motors and Mahindra are dealing with production constraints, Hyundai sees opportunities for India–South Korea cooperation, and the experiences of Ather Energy and Yamaha highlight why technology, manufacturing and consumer adoption must progress together.

**India's next EV milestone will depend not just on how many electric vehicles it sells, but on how competitively and reliably it can build them.**

Electric mobility depends on more than batteries. The electric motor, power electronics and the materials used to manufacture them are equally important to a vehicle's performance and cost.

Rare-earth permanent magnets are particularly significant because they enable high magnetic performance in compact motor designs. They are used in many traction motors, although alternative motor technologies can operate without rare-earth magnets.

The vulnerability lies in the supply chain. China has a dominant position in rare-earth processing and permanent-magnet manufacturing, making access to these materials a strategic concern for automotive manufacturers worldwide.

Supply disruptions can affect production schedules, procurement costs and the ability of manufacturers to meet localisation requirements.

India has already taken steps to address this exposure. The government's Scheme to Promote Manufacturing of Sintered Rare Earth Permanent Magnets carries a financial outlay of ₹7,280 crore and aims to establish 6,000 metric tonnes per annum of integrated domestic manufacturing capacity.

At the EV Conclave, the Ministry of Heavy Industries also discussed progress towards selecting manufacturers under the initiative, with commercial production expected to take time to establish.

The announcement is significant, but capacity targets should not be confused with operational production. India will still need to develop processing capabilities, manufacturing expertise, reliable raw-material access and commercially competitive products.

There is also an engineering dimension to the challenge. Manufacturers can reduce dependence on scarce materials through alternative motor designs, more efficient use of magnets and changes in motor architecture where commercially viable.

For India, therefore, the objective should be twofold: establish a reliable domestic magnet supply chain and encourage engineering solutions that reduce exposure to concentrated sources.

This matters beyond passenger cars. Electric buses, commercial vehicles, two-wheelers and other industrial applications can all be affected by constraints in relevant motor components.

The broader lesson is that localisation must begin with the components that can disrupt production, not merely those that are easiest to manufacture domestically.

The rare-earth challenge leads to a wider question: can India build an EV supply chain capable of competing with China's manufacturing ecosystem?

Hyundai Motor India MD and CEO Tarun Garg sees potential in combining India's cost competitiveness with South Korea's technological capabilities.

The logic is straightforward. India has a large automotive market, an established supplier base and manufacturing expertise. South Korea brings substantial capabilities in automotive engineering, electronics, batteries and industrial technology.

Cooperation between the two countries could help accelerate technology development, supplier localisation and manufacturing scale.

However, a partnership alone will not eliminate India's supply-chain vulnerabilities.

The real test is whether technology transfers, supplier investments and domestic manufacturing can translate into lower costs, consistent quality and dependable component availability.

Hyundai's own EV plans illustrate the complexity. The company has localised battery-pack assembly and is working to expand domestic sourcing of power electronics and integrated charging systems. However, battery-cell localisation has followed a different timeline, with imported Svolt cells intended for initial use in its upcoming compact electric SUV before a planned transition to locally produced Exide cells.

This distinction is important. A locally assembled battery pack does not necessarily mean the battery cells are manufactured domestically.

The same principle applies to semiconductors, electric motors and other advanced components.

India does not need to manufacture every input within its borders. Global sourcing can deliver scale, competitive pricing and access to technology. But excessive dependence on a single country or supplier for critical components creates risks that can outweigh short-term cost savings.

The more sustainable approach is to develop domestic capabilities where strategic importance and commercial viability justify them, while maintaining diversified international supply relationships.

India's opportunity is not simply to replace Chinese imports with Indian products. It is to build a supply chain that can compete on cost, quality, technology and resilience.

Batteries remain one of the most important determinants of EV cost and performance.

India has introduced incentives to encourage advanced battery-cell manufacturing, including a 50 GWh Production-Linked Incentive programme for Advanced Chemistry Cells. However, the Ministry of Heavy Industries acknowledged at the Conclave that implementation has taken longer than initially anticipated because of challenges involving technology transfer and testing.

This highlights a recurring problem in industrial policy: announcing manufacturing capacity is considerably easier than bringing it into reliable commercial production.

Battery-cell manufacturing requires significant capital, technical expertise, process control and dependable supplies of raw materials. It also requires production yields and product quality that can compete with established global manufacturers.

The same challenge applies to power electronics and traction motors.

Localising a component can reduce import exposure, but it does not automatically make the final vehicle cheaper. Domestic production must achieve sufficient scale, productivity and quality to compete with global alternatives.

There is also a question of where localisation creates the greatest strategic benefit. Components that are expensive, difficult to source or vulnerable to disruption may deserve greater attention than parts that can be imported reliably at competitive prices.

For policymakers, the relevant measures should include actual production, domestic value addition, supplier competitiveness and the effect on finished-vehicle costs.

For automakers, the priority should be to ensure that localisation plans are aligned with product launches and realistic supplier capabilities.

Without this coordination, a vehicle programme can be delayed even when the final assembly line is ready.

The importance of a stronger supply chain becomes clearer when examining the production challenges described by Tata Motors and Mahindra at the Conclave.

Tata Motors Passenger Vehicles MD and CEO Shailesh Chandra expects the company's EV supply to catch up with demand within two to three months.

Mahindra Electric Automobile MD R Velusamy described a different capacity constraint. According to the figures reported by Autocar Professional, the company faces monthly demand of approximately 10,000–11,000 vehicles against structural capacity of around 8,000 vehicles. Mahindra aims to increase capacity to 12,000 vehicles per month by the end of FY2027.

These are management estimates and expectations, not independently verified counts of customers who could not obtain a vehicle.

Nevertheless, the statements indicate that manufacturing execution is becoming an increasingly important part of the competitive equation.

Automotive production depends on a coordinated network of suppliers. Expanding assembly capacity is of limited value if battery cells, semiconductors, power electronics or other essential components remain constrained.

Tata's management has highlighted the time required to increase supplier output and concerns about semiconductor availability. Mahindra has also pointed to constraints involving industrial materials such as aluminium, steel and copper.

The implications go beyond delivery waiting periods.

When supply is insufficient, manufacturers may lose sales to competitors or struggle to convert bookings into deliveries. Dealers may find it difficult to maintain inventory, while customers may reconsider whether an EV suits their immediate needs.

The commercial opportunity is clear: a manufacturer that can reliably supply the right vehicles has a chance to capture demand that competitors cannot fulfil.

But the longer-term challenge is more complicated. If multiple manufacturers expand production simultaneously, they will compete for the same suppliers, materials, technical expertise and manufacturing resources.

India's EV growth will therefore require capacity planning across the entire supply chain, not just investment in vehicle assembly plants.

For the Indian market, the ultimate test of supply-chain development is whether it helps make electric vehicles more affordable and dependable.

Domestic manufacturing can reduce exposure to import costs and supply disruptions. Higher volumes can improve economies of scale. Better engineering can improve energy efficiency and reduce material requirements.

However, these benefits are not guaranteed.

New factories may initially operate below efficient capacity. Domestic components may cost more than established imported alternatives. Raw-material prices can rise, and research and development require sustained investment.

Hyundai's Garg has raised concerns about rising input costs and the implications of changes to production-linked incentives for EV pricing.

This exposes a policy dilemma. Support for domestic manufacturing can help build long-term capabilities, but the industry must eventually develop a competitive cost structure that does not depend indefinitely on incentives.

Affordability also extends beyond the ex-showroom price.

Customers consider financing, insurance, charging access, service availability, battery warranties and resale value. A lower purchase price may not be sufficient if buyers remain uncertain about long-term ownership costs.

Manufacturers must therefore improve the overall ownership proposition rather than focus exclusively on battery capacity or headline driving range.

The objective should be to make EVs attractive to mainstream customers on both purchase price and lifetime cost.

Supply-chain competitiveness is only one side of the EV transition. Manufacturers must also understand why adoption differs across vehicle categories.

Ather Energy Chief Business Officer Ravneet Phokela has observed that electric scooters are moving towards mainstream acceptance while electric motorcycles face a more difficult path.

The difference reflects the variety of jobs that two-wheelers perform.

Many scooter users have predictable urban commuting patterns, making charging and daily energy requirements relatively straightforward. Motorcycle buyers may place greater importance on highway performance, long-distance travel, durability and the flexibility to undertake journeys without extensive charging planning.

These are tendencies, not universal distinctions. The needs of a city commuter and a touring motorcycle buyer can differ substantially even within the same category.

The implication is that manufacturers cannot assume one successful EV product strategy will translate directly into another segment.

Electric motorcycles need products that satisfy motorcycle customers' expectations for performance, range, convenience and reliability. Competitive pricing alone will not resolve these requirements.

The broader lesson is that electrification must follow customer use cases. The technology must fit the journey, not simply the other way around.

Yamaha's position adds another dimension to the discussion: how established manufacturers should manage the transition from petrol-powered products to electric mobility.

Yamaha Motor India Group Chairperson Jim Aota's comments, as reported by Autocar Professional, framed the company's EV entry as a business-risk calculation rather than a concern about vehicle reliability.

The distinction matters.

An established manufacturer must weigh the cost of developing new products, building supplier relationships and expanding distribution against the uncertainty of future demand and profitability.

Entering too aggressively can expose a company to underutilised capacity and weak returns if demand develops more slowly than expected. Moving too cautiously can leave competitors with stronger products, customer relationships and market positions.

A gradual entry may allow a manufacturer to learn from early customers and limit initial investment. However, a cautious approach needs a credible plan for products, pricing and expansion if the market develops favourably.

Yamaha's situation illustrates why the EV transition is not just a technology decision. It is also a question of capital allocation, timing and competitive positioning.

The right pace will differ across manufacturers, depending on their existing businesses, technical capabilities and appetite for risk.

The government's policy priorities reflect the same shift taking place within the industry.

Direct purchase incentives can help reduce the initial price difference between electric and conventional vehicles. But they cannot independently create a globally competitive supply chain.

At the Conclave, the Ministry of Heavy Industries outlined a broader direction involving domestic component manufacturing, battery technology, cybersecurity, charging infrastructure, financing and international manufacturing.

Three areas are particularly important.

Critical materials and domestic capabilities: Rare-earth magnets and advanced battery cells illustrate the need to secure strategically important inputs while developing competitive manufacturing expertise.

Cybersecurity and software: Connected vehicles depend on software, electronic control systems and data. Protecting these systems is becoming part of vehicle safety, privacy and customer trust. India will need stronger capabilities in automotive software development, testing and cybersecurity.

Global manufacturing and exports: Establishing manufacturing or assembly operations in overseas markets can help Indian companies serve local customers and meet market-specific requirements. However, international expansion must be supported by competitive products, appropriate investment returns and dependable local supply chains.

Policy success should be judged by results rather than announcements alone. That means tracking commercial production, supplier development, domestic value addition, vehicle costs and the competitiveness of Indian manufacturers in global markets.

The objective is not to eliminate international trade. It is to ensure that Indian manufacturers can participate in global supply chains without becoming excessively vulnerable to concentrated dependencies.

The developments discussed at the EV Conclave point towards five priorities for India's electric mobility industry.

1. Turn localisation plans into commercial production. Battery cells, permanent magnets, power electronics and other strategic components must be manufactured at competitive cost and quality.

2. Diversify critical supply chains. Domestic capabilities should be complemented by multiple reliable international sources rather than dependence on a single supplier or geography.

3. Expand production in line with supplier readiness. Vehicle assembly, component availability and supplier investment must progress together to prevent bottlenecks.

4. Make ownership economics more compelling. Lower vehicle costs, accessible charging, reliable after-sales service and confidence in battery durability will be necessary to attract mainstream customers.

5. Measure policy outcomes, not just investment commitments. Actual output, domestic value addition, affordability and global competitiveness are stronger indicators of progress than announced capacity alone.

These priorities are interconnected. A domestic magnet industry will not solve every supply-chain challenge. Battery-cell localisation will not automatically make every EV affordable. Additional assembly capacity will not deliver more vehicles if suppliers cannot keep pace.

Progress requires a coordinated effort across manufacturers, component suppliers, technology developers and policymakers.

India has the opportunity to become a more important force in global electric mobility. Its domestic market, manufacturing base and engineering talent provide a foundation on which to build.

But ambition alone cannot guarantee competitiveness.

The rare-earth magnet initiative shows why supply-chain resilience matters. Hyundai's India–South Korea proposition highlights the value of technology and global partnerships. Tata Motors and Mahindra demonstrate the importance of matching production with demand, while Ather and Yamaha underline the need to align products and investment decisions with customer behaviour and commercial realities.

The government's next policy phase will have to connect these objectives: stronger domestic capabilities, reliable access to critical materials, competitive manufacturing costs and sustained consumer adoption.

India does not need to produce every component domestically. It needs to know which dependencies threaten its competitiveness, where local manufacturing can deliver value and how to build alternatives without making vehicles prohibitively expensive.