The global auto industry is facing a new crisis as China’s rare earths export curbs threaten to cut off vital magnet supplies. German magnet maker CEO Frank Eckard has been flooded with calls from desperate automakers and parts suppliers, who are struggling to find alternative sources of magnets. The situation has reached a boiling point, with some factories expected to shut down by mid-July without backup magnet supplies.
China controls up to 70% of global rare earths mining, refining capacity, and production, leaving the industry scrambling for alternatives. Automakers have tried to diversify their supply chains, but most efforts are years away from being scaled up. The European Union has launched initiatives to boost European rare earth sources, but it’s unclear if they will be enough.
Industry analysts warn that this crisis could cascade into another massive supply chain shock, similar to the semiconductor shortage and coronavirus pandemic shutdowns. Automakers may be forced to make cars without certain parts and park them until alternative supplies become available.
The situation highlights the industry’s reliance on China for rare earth elements, which also control over 50% of global supply of key raw materials like manganese, graphite, and aluminum. Any disruption in these supply chains could have far-reaching consequences for the global auto industry.
Source: https://www.reuters.com/business/autos-transportation/auto-companies-in-full-panic-over-rare-earths-bottleneck-2025-06-09