Auto Industry Faces Rare-Earth Magnet Shortage Due to China Export Controls

Rare-Earth Magnet Bottleneck

• 🚗 Automakers and parts suppliers are in a state of panic due to China's strict export controls on rare earth magnets.
• 💡 These magnets are crucial for producing motors used in dozens of car components, including mirrors, speakers, pumps, wipers, and various sensors.
• ⚡ Electric vehicles require more rare earths than traditional combustion engine cars, exacerbating the potential impact.

China's Dominance in Rare Earths

• 🌍 China controls approximately 70% of global rare earth mining, 85% of refining capacity, and about 90% of rare earth metal alloy and magnet production.
• 📉 This near-monopoly leaves the automotive industry with few alternatives as China reviews export permit applications.

Potential for Production Shocks

• ⚠️ The current rare earth shortage is feared to be the third major supply chain shock for the auto industry in five years, following the semiconductor shortage and pandemic-related shutdowns.
• 📉 Several European auto supplier plants have already experienced shutdowns, with more anticipated.
• ⚙️ The fate of automotive assembly lines is currently dependent on decisions made by a small group of Chinese bureaucrats overseeing export permits.