Mumbai, June 12, 2025 – Hyundai Motor India’s shares rose over 1 percent on Wednesday as the automaker allayed fears of a short-term production hit caused by the global rare earth magnet shortage. The company reportedly has enough inventory and is leveraging its parent firm’s global supply chain to secure raw materials.

The positive sentiment in an otherwise cautious stock market environment helped Hyundai outperform several of its auto sector peers.

Tapping Global Supply Chain Amid Rare Earth Curbs

The rare earth magnet crisis escalated earlier this year after China mandated exporters to submit end-use certificates, effectively slowing shipments and tightening global supplies. China controls over 90 percent of global rare earth supply, making the new rules a major disruption, especially for electric vehicle (EV) makers.

However, Hyundai India appears relatively insulated. CNBC-TV18 reported that the company is accessing rare earth magnets through its parent entity, Hyundai Motor Company, enabling it to continue production without interruption.

Further backing the claim, Reuters noted that Hyundai Motor is well-stocked for the remainder of the year and does not anticipate any immediate production cuts.

Shares Rise on Stable Outlook

The stock traded at ₹1,955 on the NSE at 2 pm, up 1 percent from the previous close. Investor confidence was visibly higher, owing to Hyundai’s clear communication and preparation.

The stock has delivered an impressive 18 percent gain in the last three months, supported by its strong EV strategy, robust supply chain, and competitive product lineup.

Contrasting Peers Struggle

In sharp contrast, Maruti Suzuki has reportedly faced near-term production delays due to a shortage of rare earth materials. This divergence has further strengthened Hyundai’s investor appeal.

Two-wheeler majors like TVS Motor Company and Bajaj Auto have also flagged concerns, warning that EV production may come to a halt as early as this month unless supply resumes.

Analysts Warn of Broader Impact

“If the rare earth disruption continues, automakers may have to pass on rising costs to customers. We could see up to 8 percent price hikes in EV models,” said Shridhar Kallani, Auto Analyst at Axis Securities.

He also cautioned that product launches could get delayed, and the industry might suffer margin erosions of 50–100 basis points, particularly in the two-wheeler EV space.

Rare Earths: A Critical Input

Rare earth magnets, used in EV motors, infotainment systems, sensors, and other critical components, are vital to the functioning of electric vehicles. Their shortage has emerged as a key bottleneck in the global auto supply chain.

The latest Chinese regulation requiring detailed end-use disclosures for exports has made it difficult for Indian manufacturers to receive timely shipments, prompting many to explore alternative sources and strategies.

Hyundai’s Preparedness Offers Edge

Hyundai’s ability to tap into its parent firm’s diversified global logistics has emerged as a strategic advantage, positioning it well ahead of peers in managing raw material volatility.

The company’s robust preparedness has not only stabilised short-term EV production but also strengthened investor confidence, which is reflected in today’s stock performance.

Conclusion

As the global rare earth crunch begins to squeeze EV manufacturers, Hyundai Motor India’s proactive approach, aided by its parent’s global presence, has helped it sidestep potential disruptions. With ample inventory and no production cuts anticipated, Hyundai has emerged as a rare winner in a challenging environment.

Investors and market watchers will be keenly observing whether this strategic insulation can be sustained as the year progresses, especially if the supply disruption continues or escalates.

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