The automotive industry in both the U.S. and Europe faces a looming crisis as China’s ongoing export restrictions on rare earth minerals and magnets threaten to bring production to a halt within weeks. Several European auto parts manufacturers have already paused their operations, according to the European Association of Automotive Suppliers (CLEPA).
Export licenses are now required for these critical materials, but obtaining them has proven to be a major challenge. Reports indicate that only about 25 percent of license requests have been approved, creating significant supply chain disruptions. The New York Times highlights that Chinese magnet manufacturers are also halting production temporarily while they await export permits, which could lead to even more shortages down the line.
This situation isn’t limited to the automotive sector—it impacts robotics, defense, and other industries reliant on rare earth materials. These magnets are vital for hybrid and electric vehicle motors but are also found in catalytic converters, car seats, and various electronic components.
U.S. auto industry leaders are warning that vehicle production could slow or stop entirely within just a few weeks. Meanwhile, several European suppliers have already begun to scale back operations following last week’s initial warnings.
Benjamin Krieger, secretary general of CLEPA, emphasizes the gravity of the issue: “With a deeply intertwined global supply chain, China’s export restrictions are already shutting down production in Europe’s supplier sector. We urgently call on both the EU and Chinese authorities to engage in a constructive dialogue to ensure the licensing process is transparent, proportionate, and aligned with international norms.”
This developing crisis underscores the critical importance of diversifying supply sources and fostering international cooperation to prevent a potential automotive industry shutdown.
