Automotive News Europe — 2025-06-04
Automotive Industry
Automakers in the U.S. and Europe raised concerns about China’s export controls on rare earth metals, as Beijing’s move threatens to disrupt global car production.
Mercedes-Benz Group, BMW and Volkswagen Group are in talks with suppliers to prevent shortages of components containing these materials.
Meanwhile, it’s taking longer for some parts to get through China’s approval process for exporting rare earths, with shipping costs rising in some cases, Ford Motor Co. said.
“It just puts stress on a system that is highly organized,” Ford’s Chief Financial Officer Sherry House said June 4 at a UBS auto conference in New York. The controls mean automakers must find alternative parts or ways to source supplies, she said. Ford had to idle a factory in Chicago producing the Explorer for an entire week last month due to a rare earths shortage.
VW said there are no bottlenecks in its supply chain as yet.
“Our suppliers are working continuously with their sub-suppliers to obtain the necessary export licenses. We have received indications that a limited number of these licenses have been issued,” a VW spokesperson told Automotive News Europe sister publication Automobilwoche.
Mercedes production chief, Joerg Burzer, said the company is closely coordinating with its tier 1, tier 2 and tier 3 suppliers about building rare earth stockpiles even though the carmaker has not seen any impact from a shortage.
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“If you come into such a risk situation, then we’re in constant, constant dialogue with our suppliers,” Burzer told reporters June 4 at a plant in Rastatt, Germany. “Naturally, we discuss with them what the best tool is for risk management, so physical buffers play a role.”
While its car factories are operating as usual, parts of BMW’s supply network are affected by China’s curbs, a spokesperson said, without giving further detail.
Europe’s auto supplier association CLEPA said several European parts plants and production lines have been shut down because of rare earth shortages caused by China’s restrictions, with the situation likely to worsen.
Why are rare earths are key to automakers
In response to tariffs from President Donald Trump, China in April imposed controls on rare earth exports that threaten to disrupt the global supply of key materials widely used in high-tech manufacturing, from electric vehicles to weaponry.
Automakers need rare earths such as terbium for motors in electric cars, while others are used in combustion engine vehicles, such as in sensors and electronic systems. China dominates the market for processing these materials.
While carmakers don’t typically purchase rare earth metals directly, major suppliers use them in electric motors and hybrid systems delivered to automakers.
The potential squeeze on rare earth magnets is drawing comparisons to the global semiconductor crisis that disrupted automotive production in the wake of the coronavirus pandemic.
Rivian Automotive has been working to educate the Trump administration on the complexity of supply chains, including how challenging it would be to process rare earths in the U.S., CEO RJ Scaringe said at the UBS conference.
“These are 24-hour days, full-court press. We have a giant team on this,” Scaringe said.