Bajaj Auto , a leading Indian automobile manufacturer, has reported significant progress in its electric vehicle (EV) segment, with the portfolio approaching double-digit operating margins and contributing over 20% to the company's domestic revenue. This development marks a notable milestone in Bajaj Auto's transition towards electric mobility.

EV Segment Performance

CFO Dinesh Thapar revealed that the electric three-wheeler segment is operating at near parity with internal combustion engine (ICE) margins when production-linked incentives are factored in. This achievement underscores the growing competitiveness of electric vehicles in the commercial segment.

Chetak's Market Share and Profitability

The Chetak, Bajaj Auto's electric scooter offering, has shown remarkable improvement in its unit economics. Some models of the Chetak have already achieved positive EBITDA, indicating a path towards profitability in the electric two-wheeler segment. The scooter's market share in the electric two-wheeler segment reached 21% in Q1, attributed to higher volumes and an improved product mix.

Technological Advancements

Bajaj Auto has taken a significant step forward with the entire Chetak portfolio transitioning to a new floorboard battery platform. The launch of the 30 Series brings improved functionality and better unit economics, potentially enhancing the scooter's appeal and profitability.

Overall Company Performance

While the EV segment is showing promising growth, it's worth noting that Bajaj Auto's overall operating margin stood at 19.70% for the June quarter. This indicates that while the company is making strides in the electric vehicle market, its traditional business continues to perform strongly.

Future Outlook

The approaching double-digit operating margins in the EV portfolio and its growing contribution to domestic revenue signal Bajaj Auto's successful foray into the electric vehicle market. As the company continues to innovate and improve its electric offerings, it appears well-positioned to capitalize on the growing demand for electric vehicles in India.

The progress in Bajaj Auto's EV segment reflects the broader trend of traditional automobile manufacturers adapting to the shift towards electric mobility. As the company continues to refine its electric vehicle strategy, it will be interesting to observe how this impacts its overall business performance and market position in the coming quarters.

Bajaj Auto , a leading Indian automobile manufacturer, is grappling with a significant supply chain disruption that threatens to slash its Q2 production numbers. The company is facing a shortage of rare earth metals, crucial components in the manufacturing of its vehicles.

Production Impact

The supply issues are expected to have a severe impact on Bajaj Auto's Q2 production:

• Scooter production is anticipated to face a staggering 50% reduction
• Three-wheeler production is likely to see a 30% decrease

Root Cause and Global Context

The supply challenges stem from China's April export restrictions on rare earth minerals. This move has sent shockwaves through global supply chains, particularly affecting industries reliant on these critical materials. China's dominance in the rare earth market is significant:

• Produces 60% of the global rare earth minerals supply
• Accounts for 90% of the world's processed rare earth output

Company Response and Timeline

Rakesh Sharma, Executive Director of Bajaj Auto, addressed the issue, outlining the company's strategy to mitigate the crisis:

• Actively working on alternate sourcing options
• Investing in R&D to find solutions
• Expects to address the issue within four months
• Aims to fully de-risk the supply chain in 6-9 months

Two-Wheeler Market Outlook

Despite the supply chain challenges, Bajaj Auto remains cautiously optimistic about the two-wheeler market:

• The motorcycle industry is expected to achieve mid-single-digit growth of 5-6% this year
• However, the segment is experiencing muted demand post-festive season
• Early and intense monsoons have disrupted June sales

Q1 FY26 Financial Highlights

Amidst these challenges, Bajaj Auto reported its Q1 FY26 results:

While the company has shown growth in key financial metrics, the Ebitda margin saw a slight decline of 50 basis points.

As Bajaj Auto navigates through these supply chain disruptions, the company's ability to find alternative sources and implement effective R&D solutions will be crucial in maintaining its market position and production capabilities in the coming quarters.