China's Export Controls Trigger Global Auto Industry Panic Over Rare-Earth Magnets

Global Auto Industry Faces Crisis Amidst Rare-Earth Magnet Shortage The global automotive industry is facing a major crisis due to a shortage of rare-earth magnets, crucial components in both electric and conventional vehicles. China's recent export controls on these magnets have sent shockwaves through the industry, with some experts predicting widespread production halts as early as mid-July. Frank Eckard, CEO of German magnet supplier Magnosphere, painted a grim picture, stating, “The whole car industry is in full panic.” This sentiment is echoed throughout the industry, as automakers scramble to secure alternative sources of rare-earth magnets, often at exorbitant costs. The current crisis follows two recent supply chain shocks: the global semiconductor shortage and COVID-19-related factory closures. While many companies attempted to diversify their supply chains after these events, Eckard claims that little has fundamentally changed. China's dominance in the rare-earth sector, controlling up to 70% of global mining, 85% of refining, and 90% of magnet production, leaves the global auto industry highly vulnerable. The European auto supplier association CLEPA reports that several factories have already been forced to shut down, with more closures expected. Secretary-General Benjamin Krieger warned that the issue will eventually affect the entire industry. While US President Donald Trump claims an agreement with China to allow exports, the long-term solution remains uncertain. Companies are investing in domestic production, but these efforts are years from fruition. The situation highlights the critical need for global diversification of rare-earth resources and supply chains to mitigate future risks to essential industries.