Shares of EV makers Ola Electric et al. up today on hopes of resolution of rare earth magnets shortage

Shares of automobile companies are experiencing a rally today and are up by as much as 5%. The main reason is the announcement by the government of China that it will address concerns related to the shortage of rare earth magnets. Rare earth magnets are key raw materials used in the manufacturing of electric vehicles (EVs).

As at 1:40 PM, the shares of Ola Electric are up by 5.07%, at ₹43.33, followed by Hyundai Motors at 3.98%. Tata Motors is up by 3.42%; Bajaj Auto is up by 2.80%; Eicher Motors by 0.74%, and Hero MotoCorp is up by 2.67%. The broader Nifty Auto index is up by 0.38% at this time.

China’s foreign minister Wang Yi is visiting India and met India’s external minister S Jaishankar yesterday. Today, he made an announcement to provide surety that his country will address the concerns around rate earth magnets, along with the supply of tunnel boring machines.

Indian automobile manufacturers have been struggling with the inadequate supply of rare earth magnets. China, which accounts for 90% of the rare earth magnet’s production and supply, has been disinterested in rectifying the acute supply until now.

Although most Indian automobile companies, such as Hero MotoCorp and Tata Motors have not been hit hard till now because of the shortage, they have still flagged the inadequate supply as problematic.

If China’s assurances hold true, it will provide a much-needed relief to the Indian automakers. They will potentially receive an undisrupted supply of rare earth magnets, which will add to their operational efficiency along with the recent announcement of the likely lowering of the GST liability. It remains to be seen how the talks go ahead with China’s foreign minister on the last day of his visit to India.

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Source: NSE