Hyundai Is Prepared For EV Supply Chain Problems

One of the difficult sticking points for EVs is sourcing materials for them, especially because one country dominates that market: China. According to Reuters, the country controls 90% of magnet and metal production using rare earths, 85% of rare earth refining capacity, and 70% of the mining for the rare earth materials in the first place. It leaves automakers from all countries, not just the US, extremely dependent on the country for those materials in both electric and combustion vehicles. It also makes them vulnerable to changes in how China decides to distribute those parts and materials. That’s forcing automakers to take steps to avoid problems, and Reuters reports that one of Hyundai’s strategies is having big stockpiles to keep the flow of Ioniq 5s and more, flowing.

Hyundai Has A Horde

The news outlet got information from people who were part of a private investor call with Hyundai officials. They told Reuters that Hyundai has put together a stockpile of rare-earth supplies that should last at least a year. With those stockpiles, it should be resilient against any kinds of trade restrictions. For instance, China recently put some of those restrictions on rare earth materials into effect that have made other manufacturers quite concerned. With those stockpiles, the company could potentially avoid raising prices for materials and the subsequent cars, plus it’s less likely to have to shut down production for extended periods.

Reuters couldn’t get confirmation about whether those materials were strictly for Hyundai, or would be used for all the company’s brands. While Hyundai’s different brands do operate with more independence than those of, say, General Motors or Volkswagen Group, we couldn’t imagine that Hyundai would leave its other brands out to dry if they ran into shortages.

Finding Alternatives Could Be Good For More Than Just Business

With China’s firm grip on rare earth materials, it’s no surprise that automakers and countries are looking both for alternative sources, but also reducing the amount of rare earths needed in the first place. With nearly every revision of an electric car, automakers tout the reduction in those materials in both motors and batteries. It’s also a major driving force behind the development of new battery chemistries such as lithium-iron phosphate, rather than the nickel-cobalt-manganese batteries that are more common today.

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Long-term, moving away from rare earth materials could help reduce costs, and even the environmental and human impacts of making some EV components. While it doesn’t necessarily help change which country that owns and sells the materials, automakers have been making efforts to source materials that are obtained cleanly and humanely. Audi, for example, has been looking into a “Battery Passport” to track and certify the materials used. All of this also contributes to the need for battery and component recycling, as it can reduce the impact of mining, and it can diversify where the materials come from. A recent example of a company working on all of these aspects comes from Lucid. It recently announced it’s partnering with US-based companies for the manufacturing, mining and recycling of graphite components for its batteries. Those companies have facilities in Alaska, Ohio, and Louisiana. While these new technologies develop, though, we’ll likely see occasional international friction over obtaining these resources.

Source: Reuters