Highlights
- Mercedes-Benz India CEO claims no current impact from rare earth supply chain disruptions
- Global dependence on China for rare earth magnets creates significant vulnerability for EV manufacturers
- Short-term stability does not guarantee long-term supply chain security in electric vehicle technology
Santosh Iyer, (opens in a new tab) Mercedes Benz India (opens in a new tab) CEO downplays the impact of rare earth supply chain disruptions on the company’s operations. But retail investors—and policymakers—should not take this comfort at face value.
Rare Earth Exchanges (REEx) reviewed a July 13 article from The Economic Times in India to better understand the reasoning and the rationale for the point of view. Let’s start with what’s true. The article accurately reports that Mercedes-Benz India is implementing its third price hike this year, citing currency depreciation (INR vs. EUR) as the primary driver. Iyer also notes that the company’s EMI strategy helps consumers absorb higher vehicle costs and confirms stable demand despite global uncertainty. So far, so grounded.
But where the piece veers into under-examined territory is Iyer’s blanket assurance that rare earth magnet supply chain issues are not impacting operations. His comment, “We are not affected yet by any of these topics, because we are managing it well,” implies internal stockpiling and upstream procurement foresight. Fair enough—for now. But for a company manufacturing electric vehicles, this is not a long-term guarantee.
Permanent magnets made with neodymium, dysprosium, and terbium are essential to EV motors and luxury car tech. Global dependence on China—especially for heavy rare earths sourced from Myanmar and magnet processing—creates a fragility Mercedes cannot wish away. While Stuttgart’s strategic sourcing team deserves credit, recent export restrictions from China and instability in Myanmar’s mining regions present real risks. The fact that Mercedes hasn’t yet hit a bottleneck does not mean the threat is resolved. It means the clock is ticking.
The article also neglects to mention that Mercedes-Benz has recently invested in rare earth reduction and magnet recycling research in Europe—an implicit acknowledgment that current supply models are unsustainable.
REEx Bottom line
The ET piece presents a narrow, short-term lens that offers a calming narrative to consumers. Still, it omits the broader geopolitical and resource security risks that loom over the EV and luxury auto industries. Investors should note the distinction between being unaffected and being invulnerable.
Verdict: Mostly factual, but suffers from corporate gloss. Supply chain risk is real—don’t let Stuttgart’s cool demeanor, or for that matter, the poker planning in Pune, Maharashtra, fool you.
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