The Tightening Trend of Rare Earth Supply has Disrupted the Automotive Industry Chain

Recently, Suzuki Motor Corporation of Japan announced that due to rare earth material issues, some of its car production lines have temporarily ceased operations. The company's statement pointed out that the shortage of components mainly affects the electronic systems and engine parts of automobiles, directly impacting production plans. Besides Suzuki, the Society of Indian Automobile Manufacturers also issued an emergency notice, stating that the inventories of rare earth magnets of India's three major automakers, Tata, Maruti Suzuki, and Mahindra, can only sustain normal production for three days. If the shortage is not replenished in time, a complete shutdown of the Indian automotive industry is inevitable. Ford Motor Company also had to suspend the production of its main SUV model, the Explorer, at the end of May for the same reason.

CITIC Securities stated that the rare earth industry has recently received multiple positive signals, and domestic rare earth prices have risen accordingly, gradually narrowing the price gap between domestic and international markets. Previously, export controls led to a significant increase in overseas rare earth prices, while domestic prices lagged behind, creating a significant price difference. With marginal policy adjustments, the domestic supply and demand situation has continued to improve, and the growth in downstream demand from new energy and humanoid robots has further highlighted the strategic value of rare earths. Additionally, disruptions in supply from Myanmar and changes in domestic quota policies also need attention. Under the dual drivers of "policy and demand", the industry has long-term investment value.

Zhongtai Securities stated that Tesla's humanoid robot Optimus is expected to enter mass production in 2025, with an estimated production volume of 50,000 to 100,000 units by 2026. Assuming a unit usage of 2,000 to 4,000 grams of neodymium iron boron per humanoid robot, if the production reaches 100 million units in the long term, the demand for magnetic materials will reach 200,000 to 400,000 tons, equivalent to creating another rare earth permanent magnet market, with a vast market space.