Ola Electric has announced that its electric vehicles will be powered by rare earth-free motors starting next quarter. This move comes in response to global supply chain pressures triggered by ongoing trade tensions between the United States and China. Rare earth minerals, a group of 17 critical elements, are essential for manufacturing electric motors, electronics, and defense equipment.
In a recent letter to shareholders following its June quarter results, Ola Electric shared that it began developing motors without rare earth magnets a couple of years ago. Ola Electric rare earth-free motors’s project was accelerated in April after China, the largest producer of rare earths, restricted exports in response to U.S. tariffs. According to the company, the new motors will deliver similar performance, ensure business continuity, and reduce costs as rare earth magnets are expensive.
Ola Electric stated it currently holds a “reasonable inventory” of rare earth magnets sourced from two different countries, giving the company flexibility. It added that since it does not depend on intermediary motor suppliers, it was able to quickly adjust and scale alternative supply sources.
Meanwhile, recent customs data showed that China’s rare earth exports rose by 32% in June after agreements were reached between Beijing and Washington to resume trade. China exported 7,742.2 metric tonnes in June, up from 5,864.6 metric tonnes in May. However, the data does not yet provide a detailed breakdown of rare earth types or categories under export controls. A more detailed report is expected on July 20.
Ola Electric’s Q1 financials for fiscal year 2026 revealed a mixed picture. Operating revenue fell nearly 50% year-on-year to Rs 828 crore in the June quarter. Net loss widened by 23% to Rs 428 crore annually. However, compared to the March quarter, the company managed to reduce its net loss by 50% from Rs 870 crore.
Vehicle deliveries also declined to 68,192 units, down from 1,25,198 in the same quarter last year. Despite the drop in sales, the company improved its gross margin in the automotive segment to 25.6% from 18.4% a year earlier. Ola Electric also reduced total expenses by 42.4% to Rs 1,065 crore, mainly due to lower material costs and employee expenses.
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