Media: Auto industry in full panic as China’s rare-earth export curbs threaten production

The global automotive industry is facing a mounting crisis as a severe bottleneck in rare-earth magnets—essential components in modern vehicles—threatens to disrupt production lines worldwide.

Frank Eckard, CEO of German magnet manufacturer Magnosphere, described the situation bluntly. "The whole car industry is in full panic. They are willing to pay any price," he said, Caliber.Az reports, citing foreign media.

The shortage stems from Chinese export restrictions on rare-earth magnets, which are critical for numerous car parts, including motors in side mirrors, speakers, oil pumps, windshield wipers, and safety sensors. China dominates the rare-earth market, controlling up to 70 per cent of global mining, 85 per cent of refining capacity, and about 90 per cent of metal alloy and magnet production, according to consultancy AlixPartners.

Despite efforts to diversify supply chains after recent shocks—the semiconductor shortage and COVID-19 factory shutdowns—automakers remain heavily dependent on China. "Nobody has learned from the past," Eckard lamented, highlighting the industry's vulnerability as Chinese authorities review hundreds of export permit applications, leaving supply chains at the mercy of bureaucratic decisions.

US President Donald Trump recently announced that Chinese President Xi Jinping agreed to ease restrictions on rare-earth minerals and magnets flowing to the United States, with trade talks scheduled in London. However, the situation remains precarious, with European auto supplier plants already shutting down. CLEPA Secretary-General Benjamin Krieger warned, "Sooner or later, this will confront everyone."

Automakers are exploring alternative solutions, from rare-earth-free magnets developed by companies like Minneapolis-based Niron and England’s Warwick Acoustics to European initiatives like the Critical Raw Materials Act. Yet, most alternatives are years from widespread adoption and struggle to compete with China on cost.

Joseph Palmieri of supplier Aptiv summed up the challenge: "It's really about identifying ... and finding alternative solutions" outside China. Meanwhile, automakers scramble to build stockpiles and manage export permits to prevent imminent factory shutdowns, echoing previous supply chain crises.

Analysts caution this rare-earth bottleneck is a "warning shot" amid China's growing leverage over essential raw materials, posing a systemic risk to global manufacturing.

By Vafa Guliyeva