How does the mobility industry adapt to geopolitical challenges nowadays?

Hyundai has just invested in a US company that makes electric motors without rare earths. Daniel Wu of Hyundai Cradle said the carmaker would never have needed to if supply from China, which is fairly cheap, had stayed consistent and stable. It has also invested in a recycler that extracts lithium and graphite from used batteries, so the materials can be sourced locally. China controls 80–90% of the battery supply chain, Daniel said, and has already used exports of batteries and rare earths as a weapon.

Daniel and Aurianne Legris of Honda Innovations both invest for their carmakers from Berlin. Their Ripple was about how two engineering-led Asian groups are adapting to geopolitics. Most of the answers came with a cost attached.

Two suppliers for every part

Hyundai used to ship parts and raw materials from Korea to its plants around the world. Over the past two or three years, Daniel said, it has looked for local suppliers instead, and for two or three of them for each part, so that one failure does not stop production. Each supplier wants a minimum order quantity, so the price rises. With Europe's labour and energy costs, a part made in Europe cannot be as cheap as one imported from China, even after shipping. Whether European consumers will pay a bit more for a locally made product, Daniel said, is yet to be seen.

So Hyundai's scouts look for European materials start-ups with a better product at the same cost, which gives the company a reason to switch. Daniel called the wider logic friend-shoring. For a Korean company, a supplier in the US is far away but carries low political risk, and one in Europe almost none. China is close and risky.

Aurianne said both companies work under much tighter cost limits than European carmakers. Honda sells mainly in the US, Asia and Africa, to customers who do not buy premium, and a start-up has to fit that benchmark to get into its products.

If you ever hear about a sodium ion battery which has the same energy density as lithium-ion, call me anytime in the night.

Cheaper cars, cancelled models

A participant asked whether the parent companies already see the damage in their numbers. For Hyundai the answer was straightforward. Margins are being squeezed and sales are below forecast. Chinese cars are very cheap, Daniel said, and they have been on the market for only a year or two, too short for buyers to feel the difference in quality that shows over five to ten years of driving. If a car is 30% cheaper and the economy is weak, people buy it.

Honda's current business is not hurt, Aurianne said, because Europe is not its market. The electric vehicles of tomorrow are another matter. Honda recently dropped three electric models in Canada after estimating they would be too expensive against the competition to earn the profit it had targeted. Aurianne called it realigning before making mistakes.

For Honda the question is when to go electric, not whether. Hyundai, Daniel said, is not afraid to become a fully electric company. What decides adoption, in Aurianne's view, is autonomy, safety, charging, software and, above all, the battery. "If you ever hear about a sodium ion battery which has the same energy density as lithium-ion, call me anytime in the night."

Beyond the car

The global car market is not growing, so every new entrant squeezes the rest. Daniel said Hyundai is betting on robotics, including humanoid robots through Boston Dynamics, and on services for electric-vehicle owners. It could manage their energy contracts, or treat the car as energy storage and computing power on the street. A founder at the Ripple is building exactly that, virtual data centres built on the GPUs inside cars. Honda was never only a carmaker, Aurianne said. It makes boat engines and lawnmowers, and last year its Formula One engine team launched and landed a reusable rocket.

For start-ups, the hosts were candid about the pace. Founders arrive promising to change the world, Aurianne said, and Honda's answer is "maybe in four years". That is not disbelief. The fund is purely strategic, an investment needs consensus across many internal stakeholders before it reaches the board, and the chief executive signs. A proof of concept is the easiest way in, and Honda always pays for one, as a matter of principle. Founders should explain what Honda gains beyond a financial return. Daniel said Hyundai sometimes tests before investing and sometimes after, because investment decisions usually have to be made within three months, too little time for a proper trial.

Asked for the biggest geopolitical risk, one participant named chaotic tariffs, shocks that arrive faster than an industry with long timescales can plan for, so that everyone freezes. Aurianne named losing access to essential parts such as semiconductors and magnets, since a car missing one cannot be sold at any discount. A founder said it has never been a better time to be an engineering company in Europe, provided it builds boldly on what Europe does well and combines that with what China does well. Aurianne took the pressure as a push. Japanese companies are very slow, Aurianne said, and a company that sits still and changes nothing would go bankrupt.

This Ripple was hosted by Daniel Wu (Hyundai Cradle) and Aurianne Legris (Honda Innovations) at The Drop 2026 on 16 September.