South Korea’s top electric vehicle maker Hyundai Motor may turn out to fare far better than most of its global rivals against an ongoing rare earths blockade by China, thanks to stockpiles of the critical minerals that would last it for about a year.
A Hyundai investor relations official revealed in an investor call the world’s third-biggest automaker, along with its affiliate Kia Corp, had “far more wiggle room” than rivals with regard to rare earths, an attendee on the call said.
The carmaker should be able to produce electric vehicles or hybrid cars without disruptions “for at least about one year,” the official said.
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The company official also asserted that Hyundai’s efforts to diversify supply chains and improve procurement had succeeded. The carmaker did not expect any near-term impact from China’s blockade, the official said.
Hyundai also significantly boosted its rare earth inventories during a recent period when China slightly relaxed its export restrictions, the official said, according to the attendee. The investor call was not open to the public.
The South Korean automaker’s stockpile of the key minerals has not been reported previously. It was not clear whether the inventory was solely stockpiled by Hyundai and its affiliate Kia, or also included stocks held by their suppliers.
In a statement to Reuters, Hyundai declined to comment on specific inventory details or procurement strategies.
“We continuously evaluate market conditions to ensure operational stability and maintain a diversified global supply chain,” Hyundai said. “As part of our standard business practices, we maintain appropriate inventory levels to support uninterrupted production.”
Hyundai Motor Group also holds about a one-year inventory of rare earths-related magnets needed for its mainstay EVs and hybrid vehicles, said a person familiar with the matter, declining to be named due to the sensitivity of the subject.
Widespread panic
Details around Hyundai’s rare earth stockpile have emerged in light of widespread panic in the auto industry about its inability to access the minerals that are needed to produce dozens of different car parts ranging from seat belts and windshield wipers to motors and a variety of sensors.
China produces around 90% of the world’s rare earths, but has, since April, clamped down on their exports in response to a bitter trade and tariff war with the United States.
China’s blockade has also tripped up the supply chains of aerospace manufacturers, semiconductor companies and military contractors around the world.
Meanwhile, groups representing automakers in the US and Europe have said that many auto suppliers have had to shut shop already, and carmakers are also facing the threat of production delays and stoppages.
China’s blockade has already impacted production and supplier networks of major firms such as Ford and BMW.
Over the past week, China has reportedly authorised some rare earth exports for some buyers in Japan and the US, but industry insiders say they will believe the blockade will only be over when shipments reach their buyers.
US President Donald Trump and his trade envoys, meanwhile, are amid negotiations with China to ease the rare earth blockade. Talks between the two economic rivals extended to a second day in London on Tuesday.
Trump is also reportedly considering easing curbs on exports of advanced semiconductors to China as part of the negotiations.
- Reuters, with additional editing by Vishakha Saxena
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