Automotive News Europe — 2025-06-04
Automotive Industry
Several European parts plants and production lines have been shut down because of rare earth shortages caused by China imposing restrictions on exports, Europe’s auto supplier association CLEPA said, with the situation likely to worsen.
Of the hundreds of requests for export licenses made by auto suppliers since early April, only a quarter have been granted so far, CLEPA said, with more production outages expected in three to four weeks if a solution is not found.
The shortage threatens to wreak havoc to the supply chains of automakers including Volkswagen Group, Mercedes-Benz and BMW, as well as suppliers including Robert Bosch and others that rely on rare earths for applications including motors for electric cars.
The parts plant shutdowns came as Germany’s VDA auto lobby group said the export restrictions posed a serious risk to the industry. Slow granting of export licenses, as well as lags in customs clearance of exports with valid licenses, were causing significant problems for automakers, VDA President Hildegard Mueller said.
“Although some licenses have now been granted, this is currently insufficient to ensure smooth production. If the situation is not changed quickly, production delays and even production outages can no longer be ruled out,” Mueller said.
BMW said that part of its supplier network was affected by the shortages, but that its own plants were running as normal.
China said to use rare earths as leverage against Trump tariffs
China’s decision in April to suspend exports of a wide range of rare earths and related magnets has upended the supply chains central to automakers, aerospace manufacturers, semiconductor companies and military contractors around the world.
The move underscores China’s dominance of the critical mineral industry and is seen as leverage by China in its ongoing trade war with U.S. President Donald Trump.
Shipments have been halted at many Chinese ports while license applications make their way through the Chinese regulatory system.
Chinese state media reported last week that China was considering relaxing the curbs for European semiconductor companies while the Ministry of Foreign Affairs has said it would strengthen cooperation with other countries over its controls.
However, rare-earth magnet exports from China halved in April as exporters grappled with the opaque licensing scheme.
GM, Toyota, Hyundai raised concerns with Trump administration
Frank Fannon, a minerals industry consultant and former U.S. assistant secretary of state for energy resources during Trump’s first term, said the global disruptions are not shocking to those paying attention.
“I don’t think anyone should be surprised how this is playing out. We have a production challenge (in the U.S.) and we need to leverage our whole of government approach to secure resources and ramp up domestic capability as soon as possible. The time horizon to do this was yesterday,” Fannon said.
In May, the head of the U.S. trade group representing General Motors, Toyota, VW, Hyundai and other major automakers raised similar concerns in a letter to the Trump administration.
“Without reliable access to these elements and magnets, automotive suppliers will be unable to produce critical automotive components, including automatic transmissions, throttle bodies, alternators, various motors, sensors, seat belts, speakers, lights, motors, power steering, and cameras,” the Alliance for Automotive Innovation wrote in the letter.
India, where Bajaj Auto warned that any further delays in securing the supply of rare earth magnets from China could “seriously impact” electric vehicle production, is organizing a trip for auto executives in the next two to three weeks.
Diplomats, automakers and executives from Europe, Japan and India are urgently seeking meetings with Beijing officials to push for faster approval of rare earth magnet exports, sources told Reuters on June 3.