Ola Electric, Tata Motors, Bajaj Auto Stock Jump Up to 6% as China Pledges to Tackle Rare-Earth Magnet Shortages

Indian auto stocks opened strong on Tuesday, as companies such as Ola Electric Mobilitys share price rose over 9%, Tata Motors stock price rose by 3.5%, and Bajaj Auto rose by as much as 2.56%. This surge followed reassurances from China that it will address concerns over rare-earth magnet shortages—a crucial input for electric vehicle (EV) production. The Nifty Auto index also advanced 1.35%, building on Monday’s nearly 5% gain, partly driven by speculation of a potential Goods and Services Tax (GST) cut to boost vehicle demand. 

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China’s Dominance and Supply Strain

China currently controls approximately 90% of the global supply of rare-earth magnets. The recent disruption in exports had already begun to strain production. Bajaj Auto, for instance, slashed EV output by up to 50% in July and warned that the shortage could persist into August and September. 

Automakers’ Response to the Shortage

Hero MotoCorp noted during its Q1 FY26 earnings call that the industry-wide shortage poses a serious challenge. However, the company has managed to secure sufficient magnet supplies to cover its internal combustion engine as well as EV models through the second quarter of FY26. Hero added that components reliant on these magnets—such as EV motors and various sensors—are currently covered, while it continues exploring long-term alternatives. 

Similarly, Tata Motors—the country's largest EV manufacturer—has not yet seen an impact on production, but is proactively seeking alternative supply sources to mitigate future disruptions. 

If China's commitments translate into action, automakers may gain breathing room. The potential relief coincides with growing optimism over domestic demand, partly fuelled by talk of a GST cut on vehicles.

Conclusion

In summary, Indian auto shares rallied strongly as China pledged corrective measures to handle rare-earth magnet shortages. The move helped alleviate investor concern over production risks and lent fresh momentum to the Nifty Auto index. While challenges remain, the assurance from Beijing, if fulfilled, offers a welcome reprieve for automakers already under pressure.