Quick HighlightsAther Energy defers ₹262.5 crore subsidy claims under PM E-DRIVE.Up to 52,500 Ather scooters impacted by rare earth supply disruption.China’s export restrictions on rare earths hit global EV motor supply.Ather develops Heavy Rare Earth Free (HREF) motor with ARAI approval.Ather Energy Defers Subsidy Claims Amid Rare Earth Supply CrisisBengaluru-based Ather Energy, one of India’s leading electric two-wheeler manufacturers, has temporarily deferred demand incentive claims worth ₹262.50 crore under the government’s PM E-DRIVE scheme . This decision comes as a direct consequence of China’s export restrictions on heavy rare earth magnets , which are critical components in electric vehicle (EV) traction motors.The disruption has forced Ather to temporarily deviate from its domestic motor manufacturing process, impacting compliance for up to 52,500 vehicles . By holding back subsidy claims, the company has chosen regulatory caution over short-term gains, reinforcing its long-term credibility and alignment with government policy.The China Rare Earth FactorIn late 2023, China introduced mandatory export licenses for certain rare earth elements, including dysprosium and terbium , both of which play an essential role in EV traction motors. Given that China controls the majority of the world’s rare earth supply, this policy shift immediately disrupted global EV production lines.For Ather Energy, the move directly impacted suppliers’ ability to comply with India’s Phased Manufacturing Program (PMP) requirements for domestic sourcing. Specifically, the domestic fitment of rare earth magnets—a key parameter for subsidy eligibility—became unviable under the new restrictions.Ather’s Response: Seeking Exemptions and InnovatingRather than rushing non-compliant claims, Ather is actively engaging with the Ministry of Heavy Industries to seek a temporary exemption from PMP guidelines. At the same time, the company is pushing forward with an innovative technological solution.Ather has developed a groundbreaking Heavy Rare Earth Free (HREF) motor , which has already received type approval from the Automotive Research Association of India (ARAI) . With PM E-DRIVE eligibility certificates beginning to arrive for Ather’s new motor-equipped models, the company is signaling a strong comeback path to compliance.Broader Implications for India’s EV IndustryThe current situation highlights a deeper vulnerability in the global EV supply chain— overdependence on China’s rare earth dominance . With supply concentrated in a single country, automakers face heightened exposure to geopolitical risks and sudden policy changes.For India, where the government has set ambitious Make in India goals and aggressive EV adoption targets , this disruption raises pressing questions:How can manufacturers diversify rare earth sourcing ?Will India accelerate domestic mining and refining of critical materials?Can HREF motor technology reduce dependence on imports?Ather’s Commitment to Localization and Self-RelianceDespite the temporary setback, Ather has reiterated its commitment to the PM E-DRIVE scheme and Phased Manufacturing Program . The company emphasized that it remains dedicated to localization and self-reliance, even though short-term supply shocks are beyond its direct control.By delaying subsidy claims instead of risking non-compliance, Ather is sending a clear message of policy alignment and credibility. This approach is likely to strengthen trust among both regulators and customers, while reinforcing Ather’s position as a responsible leader in India’s EV transition.