Sourcing Materials
Modern cars use multiple raw materials that aren’t abundant everywhere; as we all know, certain regions and countries have specific raw material endowments. Most rare earth materials essential to car production are found in China, which supplies most of the world.
With supply not necessarily stable and with the rest of the world, it makes sense for some automakers to invest in new sources, and it would be more beneficial to have them closer to home.
MP Materials
GM’s Long-term Investment
Automotive News published a report that highlights General Motors (GM), which made a long-term investment in a local supplier of rare earth materials. Most rare earth materials are used to produce electric vehicles (EVs), and as demand for more efficient vehicles rises, GM’s gamble is starting to pay off.
GM’s U.S. supplier is MP Materials, and the partnership began during the turbulent supply chain issues brought about by the COVID-19 pandemic. At the time, the world was running out of semiconductor supply, which led to shortages of technological products as well as cars. GM then decided to reevaluate its own supply chain and took a risk with MP Materials.
Shifting from a global supply chain, GM went for a more regional approach that follows the mindset of “buy where you build.” As a result, GM’s 5-year-old gamble is starting to bear fruit, with the automaker now set to begin receiving its first supplies of rare earth materials from MP Materials.
MP Materials
The Rare Earth Effect
Rare earth materials are a group of 17 metallic elements found mostly in the Earth’s crust. Despite their relative abundance, the problem is the cost of mining these vital materials. The list of products and technologies that use these elements is extensive, with notable examples including hybrid car batteries, fiber optic cables, audio technology, and data storage.
