WSJ: US auto giants race against time to beat China’s rare-earth magnet monopoly

Several top US automakers are urgently seeking solutions to China’s tightening grip on rare-earth magnets—critical components for electric vehicle (EV) motors and many other car parts.

Industry insiders warn that supply disruptions could force some US car plants to shut down within weeks, Caliber.Az reports via The Wall Street Journal. 

To avoid shutdowns, automakers and their suppliers are considering shifting parts of their production to China or sending unfinished motors there for magnet installation. This approach exploits China’s export controls, which apply only to magnets, not fully assembled components. China, which controls about 90 per cent of the world’s rare-earth supply, began requiring export licenses for these magnets in April, delaying shipments worldwide.

The rare-earth metals dysprosium and terbium help magnets operate at high temperatures and are essential in technologies ranging from smartphones to fighter jets. Although China agreed to ease restrictions during a 90-day tariff truce with the US, license approvals have been slow, prompting accusations and counterclaims between the two countries. In May, US automakers warned the government that without more rare-earth imports, production cuts or plant closures were imminent. Efforts to develop alternative supply chains outside China will take time and won’t solve immediate shortages. 

The shortage is particularly severe for EVs, which use more rare-earth magnets than conventional cars. Simply reverting to gasoline models isn’t a viable option due to strict emissions regulations and limited regulatory credits. Other potential responses include reverting to older motor technologies that don’t require rare-earth magnets or removing premium features relying on tiny electric motors.

By Naila Huseynova