rare earth crunch: ford idles us plant amid china export curbs
New York, Thursday, 5 June 2025.
the global auto industry is facing a new crisis. china’s restrictions on rare earth exports have already forced ford to halt production at a us factory. european automakers are also sounding the alarm. these materials are essential for electric vehicle components. the move draws parallels to the semiconductor shortage. experts fear this disruption could impact nvidia, asml, and tsmc. china controls 70% of global rare earth production. the restrictions have already tripled rare earth prices.
Automakers scramble for solutions
The rare earth export restrictions by China are causing significant concern among global automakers [1]. Mercedes-Benz and BMW are increasing their efforts to avoid potential shortages [1]. These restrictions require exporters to obtain licenses from the Commerce Department for certain rare earth materials [5]. The slow pace of approvals is hindering suppliers’ ability to produce critical components needed to maintain car production [5]. The German Association of the Automotive Industry (VDA) has warned that production disruptions are imminent if the situation does not change quickly [5].
impact on european suppliers
The European Association of Automotive Suppliers (CLEPA) reports that several production lines of European auto parts suppliers have already been shut down due to the rare earth shortage [7]. Of the hundreds of export license applications submitted since early April, only a quarter have been approved [7]. Some applications were rejected for ‘procedural reasons’ [7]. CLEPA warns that more factories could be affected within three to four weeks if the process is not streamlined [7]. This situation is causing companies to feel abandoned by politicians [7].
china’s response and global concerns
When asked about the possibility of easing export restrictions, Chinese Foreign Ministry spokesperson Lin Jian suggested referring to the relevant Chinese authorities for specific details [4]. Diplomats and executives from India, Japan, and Europe are urgently seeking meetings with Chinese officials to expedite the approval of rare earth magnet exports [5]. Trade groups representing companies like General Motors, Toyota, and Volkswagen are also cautioning that factories may close within weeks if suppliers cannot obtain the necessary rare earth components [5].
market reactions and strategic shifts
The rare earth crisis is pushing automakers and suppliers to develop motors with low or no rare earth content [7]. BMW is already equipping its latest generation of electric vehicles with magnet-free motors [7]. However, rare earths are still needed for smaller motors used in components like windshield wipers [7]. The EU is also seeking to diversify its rare earth supply chain to reduce reliance on China [7]. Industry experts suggest that these export controls may continue, but China might expedite approval times [7].
investor considerations
Investors should monitor companies heavily reliant on rare earth metals, particularly those in the automotive, aerospace, and semiconductor industries [7]. Companies with diversified supply chains or those investing in alternative technologies may be more resilient [7]. The share prices of companies like Ford, which has already experienced production halts, could face downward pressure [2]. Conversely, companies involved in rare earth mining and processing outside of China, such as MP Materials, may see increased investor interest [6].