The U.S. is in a dire situation.
Right now, it’s estimated that millions of cars will go electric over the next few years.
According to NBC News, “The auto industry is shifting from internal combustion technology to emissions-free battery and hydrogen powertrains. Several traditional brands have also committed to a complete transition, with Bentley recently laying out a target date of 2030 to switch entirely to battery-electric vehicles, or BEVs. Nissan this week said it will electrify all models by the ‘early 2030s,’ but that will include gas-electric hybrids as well as BEVs.”
All of those EVs must have rare earths, like neodymium and praseodymium, which make up 30% of the magnets.
Unfortunately, we’re running into a major problem that could put the brakes on EVs, and a greener future. You see, for years we’ve been over-dependent on China for rare earth supply.
However, that arrangement isn’t reliable, nor is it safe — forcing us to look elsewhere. Making the situation far worse, China has threatened to withhold rare earth, well aware that if they choke supply, they rattle markets. Far worse, tensions with China are at a boiling point.
It’s why companies, like MP Materials (MP) are gaining a good deal of attention.
Over the last few weeks, MP popped from about $30 to $50. But the run may have just started – especially after General Motors agreed to a strategic collaboration with MP Materials.
According to CNBC, “MP Materials owns and runs the Mountain Pass rare earth mine, located in California near the Mojave National Preserve. Under the deal with GM, MP Materials will supply the Detroit automaker with rare earth materials, alloy and finished magnets that will go into electric motors for vehicles such as the not-yet-launched Chevrolet Silverado EV.”
With many U.S. companies likely to shift away from China for rare earth, this may be the start of a mad rush of deals for MP Materials.
Investors may want to keep it on the buy screen.
