Bajaj Auto, India’s second-largest maker of two-wheelers by volume, said on Friday that it has overcome constraints caused by global rare earth magnet availability. Consequently, the delivery of its Bajaj Chetak electric scooters has resumed.

The Pulsar-maker also said in a statement that production has been restored ahead of schedule. Production and deliveries of the Bajaj Chetak resumed on August 20, which, according to Bajaj, was a faster-than-anticipated return to full capacity.

Additionally, Bajaj Auto said that it has secured a sufficient supply of rare-earth magnets and other key materials to ensure a robust supply for the upcoming festive season. “Demand for Chetak remains robust, supplies have normalised, and deliveries against bookings have commenced. We are scaling up production to meet rising demand,” said Erik Das, President, Urbanite Business Unit, Bajaj Auto, in a statement.

When China imposed the blockade on the export of rare-earth magnets, the industry’s view was that a prolonged ban on exports would take its toll on the production of different automakers, given the ubiquitous nature of rare-earth magnets in both ICE and electric vehicles.

However, it was Bajaj Auto that shook the industry by making a public admission that the paucity of heavy, rare-earth magnets alarmingly affected production in June and July, causing the production output of the Chetak electric scooter to drop by 50%. The jarring production came at a time when the volumes of Chetak have doubled, according to brokerage reports.

“At this point in time, it looks like we might be able to deliver about 50-60% of our two-wheelers for this (current) quarter and about 70-80% of the three-wheeler,” Dinesh Thapar, chief financial officer at Bajaj Auto, said in a media conference call at Bajaj Auto’s first-quarter results.

Alarm bells had also rung at Bajaj Auto when Thapar also hinted at the shortage of heavy, rare-earth grade magnets spilling into the festive season. “With the festive season ahead in September, even if we unlock a lot of supply after this, there is likely to be an impact in terms of the festive sales we would have liked. Given the buoyancy that was building up for Chetak, we had a very big plan for the festive season. We will likely meet only 50% of that plan,” he had said.

In the short term, Bajaj Auto said that it was redesigning motors used in EVs with less rare-earth permanent magnet (LRE) grades instead of heavy rare-earth grades. It also stated that it was also looking at sourcing magnets from countries other than China.

Over the long term, Bajaj Auto plans to potentially de-risk this supply issue by designing components that do not involve rare earths. “We should be able to de-risk all of the by the end of the financial year,” Thapar had said earlier.

In July, Bajaj Auto MD Rajiv Bajaj had said in what was a foreboding statement that the company stared at the possibility of ‘zero’ EV production in August because of China’s blockade on rare earth magnets. However, CFO Thapar said that the situation had positively evolved to an extent that the company could salvage some output in August. “It could be about 40% of volume, which might have looked near zilch,” he said.

However, Bajaj now tells CNBC-TV18 that the supply of rare-earth magnets has improved. “We started receiving clearance for our shipments of light rare earth magnets about three to four weeks back,” he said. Bajaj added that the current level of production of Chetak is 15,000 units in August, and it will be ramped up to 40,000 units in September, once the supply of rare-earth magnets improves.