MP Materials CEO James Litinsky on Thursday touted the company’s new collaboration with General Motors, telling CNBC’s Jim Cramer it helps advance efforts to develop resilient electric vehicle supply chains in America.
Earlier Thursday, the two companies announced a long-term partnership focused on the sourcing of rare earth magnets, which are essential for EV motors. About 90% of that supply chain currently is located in China, Litinsky said in a “Mad Money” interview, calling it “the single point of failure for the industry.”
“We’ve got to execute, but we think it’ll be very attractive for our shareholders and a great partnership. It’ll be great for GM. It’ll be great for the country. We’re going to get this supply chain home,” Litinsky said.
Automotive supply chains have been hit hard during the Covid pandemic, with chip shortages in particular prompting a round of calls to relocate more production to the U.S. The vast majority of semiconductor manufacturing occurs in Southeast Asia.
Rare earth elements are also crucial for the production of electric vehicles, but similarly to chips, they are mostly produced in China, a country with which the U.S. has a frosty relationship. The Department of Energy, and other agencies, have prioritized greater domestic production of components and raw materials, including rare earth elements, to bolster American manufacturing.
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, according to a press release.
Traditional car companies like GM and Ford are investing heavily in electric vehicles as part of a shift away internal combustion engines that are powered by fossil fuels. A slew of startups such as Rivian and Lucid also populate the crowded, yet burgeoning EV industry.
Litinsky pointed to Wall Street’s optimistic targets on electric vehicle production over the next decade, but he stressed there will be tough competition along the way.
“The first movers like GM today are going to be the ones who are able to produce three, five, seven years out,” Litinsky said. “When you look at the Street numbers for electric vehicles, what you’re going to see across a lot of these commodities — and whether it’s semiconductors or different pieces of the upstream — there’s just not going to be enough for everybody.”
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— CNBC’s Lora Kolodny contributed to this report.
