Hyundai COO Dismisses Rare Earth Magnet Crisis Impact-But Strategic Questions Remain

Highlights

• Hyundai claims no production disruption from rare earth magnet supply chain crisis, leveraging global group integration.
• China controls over 90% of global refined magnet output and has implemented new export licensing restrictions.
• Hyundai plans 26 new model launches by FY2030, including six EVs, despite potential supply chain challenges.

In an exclusive interview with Moneycontrol (opens in a new tab), Hyundai Motor India’s COO Tarun Garg (opens in a new tab) asserted that the rare earth magnet supply chain crisis, triggered by China’s April 2025 export licensing restrictions, has not impacted the automaker’s production of electric or internal combustion engine (ICE) vehicles. “We have no issues in the immediate future,” Garg stated, crediting Hyundai’s global integration for shielding its India operations from current market disruptions.

Rare earth magnets—primarily Neodymium-Iron-Boron (NdFeB) and Samarium-Cobalt (SmCo)—are essential for electric vehicle (EV) traction motors and several internal combustion engine (ICE) components, with EVs requiring up to 3 kg per unit and ICE vehicles using around 100 grams. China supplies over 90% of the world's refined magnet output and now mandates end-use certification, complicating supply for global manufacturers.

Hyundai, however, appears insulated. Garg emphasized that being part of the Hyundai Motor Group (opens in a new tab) gives it an advantage in navigating crises, referencing the company’s superior performance during the COVID-era semiconductor crunch. He dismissed any immediate need to reassess the sourcing strategies for rare earths.

Still, strategic questions linger. Garg’s confidence may reflect short-term buffer stock or internal sourcing leverage, but with China controlling the global magnet tap, the sustainability of supply remains a concern. Hyundai’s future-proofing strategy remains vague.

India is Hyundai’s second-largest market globally. In FY25, Hyundai was the second-largest domestic automaker, selling nearly 600,000 vehicles. Yet, in FY26 to Date, Mahindra has overtaken it in domestic sales. Hyundai is now banking on exports, new product launches, and the upcoming Talegaon facility (which will add 200,000 units annually) to regain momentum. The company aims to export 30% of its total production in the long run, up from 21% today.

Hyundai has committed to launching 26 new models, including six electric vehicles (EVs), by FY2030. Whether the magnet crisis truly poses “no problem at all,” as Garg claims, will depend on China’s licensing practices, global competition, and Hyundai’s ability to pivot if the storm deepens.