**Tata Motors and JLR Highlight Electric Vehicle Risks Amid Supply Chain Concerns**
Tata Motors Ltd and its subsidiary Jaguar Land Rover (JLR) have for the first time identified significant risks to their electric vehicle (EV) operations, citing potential production delays and shortages linked to China’s dominance over the EV supply chain. In their annual reports for 2024-25, both companies introduced a new risk category titled “electrification transition,” emphasizing the financial threats posed by mismanagement during the shift to clean technology. They noted, “Unmanaged supply chain issues can lead to production delays and shortages,” although they did not specify any particular triggers.
This acknowledgment is notable as no other domestic automaker has categorized the electric transition as a distinct business risk in their reports. The concerns arise as global automakers face challenges due to China’s export restrictions on rare earth magnets, essential components for electric motors and other EV parts. The Indian auto sector has warned the Union government that production cuts could commence as soon as this month if China does not resume exports of these critical materials. While China has restarted exports to foreign companies, applications from Indian automakers remain unresolved.
Estimates suggest that China controls approximately 80% of the global lithium-ion battery market and around 90% of the supply chain for rare earth magnets. Shailesh Chandra, managing director at Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, highlighted the necessity of these magnets for both electric and internal combustion engine vehicles, noting that different original equipment manufacturers (OEMs) are at varying levels of stock.
In response to these challenges, Tata Motors and JLR are investing in expanding their capacity to produce key components. JLR’s annual report mentioned that Tata Group’s Agratas is set to build the UK’s largest battery cell facility in Somerset, aimed at supplying high-performance battery cells for new electric models. The company is also making substantial investments to enhance its core facilities and supply chain for electrification. Agratas Energy Storage Solutions Pvt. Ltd serves as the Tata Group’s battery business, with Tata Motors and JLR as primary customers.
Previously, Tata Motors had expressed concerns regarding its electric vehicle business in international markets, primarily due to a slowdown in demand in Europe and the US. The uncertainty surrounding the pace of EV adoption in key markets may necessitate strategic adjustments for the company moving forward.
**FAQ**
**What risks are Tata Motors and JLR facing in their electric vehicle business?**
Tata Motors and JLR have highlighted risks such as potential production delays and shortages due to supply chain issues, particularly related to China’s control over rare earth magnets and lithium-ion batteries.
