Magnets, Motors and Motives: Is China Using Rare Earths to Force Its Way Into India’s EV Market?

Retaliation or Negotiation? China’s Magnet Squeeze Raises Eyebrows

The clean mobility wave sweeping across the world is being quietly shaped by something far less clean: hard geopolitics. In recent weeks, a subtle shift in the availability of rare-earth magnets has begun to ripple across India’s electric vehicle (EV) ecosystem. The magnets, essential to making EV motors run, are sourced predominantly from China. And China, many suspect, may be tightening the taps.

The timing has raised eyebrows. Just months after India denied Chinese giant BYD permission to set up an electric vehicle manufacturing plant in the country, reports have emerged of sudden delays and complications in magnet supplies to Indian manufacturers. No formal ban, no official announcement, just the kind of slow squeeze that is hard to pin down but even harder to ignore.

So is this payback for BYD’s rejection? Or is it something more calculated, a strategic negotiation using the world’s EV ambitions as leverage?

Magnets: The Quiet Force Behind Every Electric Motor

To understand why this matters, it helps to know how crucial these magnets are. Rare-earth magnets, particularly neodymium-based ones, sit at the heart of most modern EV motors. Without them, performance drops, efficiency suffers, and manufacturers are forced to look for heavier or bulkier alternatives.

China currently produces around 90 percent of the global supply of these magnets. This gives it immense, and mostly invisible, control over the pace and cost of the global EV transition. And as some Indian automakers are now discovering, that control can be exercised subtly but effectively.

Negotiation by Discomfort

Insiders in the automotive and policy circles suggest that this may not be outright retaliation but rather negotiation through discomfort. The logic is simple. Deny Chinese carmakers access to a growing EV market like India, and the response won’t be a headline-grabbing embargo but a quiet tightening of the noose in places that hurt, like access to critical minerals.

It wouldn’t be the first time. When the United States clamped down on Chinese access to advanced chipmaking tech, China responded by restricting gallium and germanium exports. Once trade talks resumed and certain understandings were reached, those restrictions were lifted. The pattern seems consistent: pressure first, concessions later.

And India may now be caught in a similar loop, not necessarily because it matters deeply to China’s overall economic play, but because it’s a smaller fish that can be used to set an example.

Not Just BYD: Other Signs of Strategic Obstruction

This theory gains more weight when viewed alongside China’s approach to other foreign players. Take Foxconn, for instance. The Taiwanese firm has been a key Apple supplier and a vital part of India’s ambitions to become a major electronics manufacturing hub.

But its efforts to ramp up production in India have faced unexplained hurdles, including restrictions on Chinese engineers travelling to train Indian workers. China reportedly barred its own citizens from helping build the talent pipeline India needs.

It’s the same pressure through disruption playbook, and it appears to be designed not just to retaliate, but to slow down competing ecosystems before they take off.

India’s Strategic Blind Spot

What’s troubling is how little public conversation there has been around rare-earth magnet dependency. While the country has focused on battery manufacturing, charging infrastructure, and EV incentives, the quiet reliance on China for magnets has remained largely unaddressed.

If China is indeed using magnet supplies as a pressure valve, it reveals a major strategic gap. India needs to diversify sources, fast-track local magnet manufacturing, and invest in alternatives such as induction motors or magnet recycling technologies. This won’t be easy or cheap, but the cost of continuing dependence could be far higher.

A Future Negotiated Behind the Scenes

In this unfolding geopolitical drama, China may not even need to say anything out loud. The signal is already clear. Want steady magnet supplies? Rethink your position on Chinese automakers. Approve BYD, or at least reopen talks. Allow deeper trade access in return for smoother supply chains.

That might explain why the disruption hasn’t triggered a diplomatic standoff. It’s subtle, deniable, and utterly effective.

The bigger question now is whether India will bend or build. Will it negotiate, retaliate, or quietly absorb the discomfort? The answers may define not just the future of EVs here, but the nature of how small economies navigate their electric ambitions under the shadow of a global power that controls the magnets.