Auto Stocks Today: Shares of local automakers gained in trade on June 11 as several media reports suggested that China might allow Indian auto and auto-component companies to procure rare earth elements, a key raw material for the industry.
If this development gets through, it could provide a much-needed relief for India's auto sector, especially the electric vehicle (EV) segment. The auto sector has been facing pressure because the cost of rare earth elements has been rising, mainly due to a shortage caused by Chinese export restrictions. The potential easing of supply constraints would prove to be a boon for the industry.
Earlier this year, China tightened export controls on rare earth elements, in a bid to counter the US President Donald Trump's tariff pressures on China.
Hero MotoCorp, Bajaj Auto, Tata Motors Lead
The Nifty Auto index, which tracks to performance of the auto sector in financial markets, rose as much as 0.95 in early trade. Around 1 PM, the index pared some gains to trade with 0.5 per cent gains. From the 15-constituent auto index, Hero MotoCorp led the gains, rising over 1.55 per cent, followed by Bajaj Auto and Tata Motors, both of which gained between 1 per cent and 1.5 per cent.
Exide Industries, Bosch, TVS Motor Company, and Mahindra & Mahindra (M&M) also traded in the green around the same time.
What Are Rare Earth Elements
Rare earth elements are a group of 17 essential metals, including neodymium, dysprosium, samarium, gadolinium, and others. What makes them "rare" is the difficulty and expense involved in extracting and processing them in a way that is economically viable.
These rare elements are an important component for manufacturing EV motors, wind turbines, and smartphones. These elements are also used in military technologies, such as missile guidance systems and radar, as well as in medical imaging devices.
China dominates the processing and refining of these metals, handling approximately 85-95 per cent of the global supply. This gives China an upper hand in controlling the pricing and availability of rare earth elements.
