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The Star
18 hours ago
- Automotive
- The Star
Auto companies hit the panic button
LONDON: Frank Eckard, chief executive officer (CEO) of a German magnet maker, has been fielding a flood of calls in recent weeks. Exasperated automakers and parts suppliers have been desperate to find alternative sources of magnets, which are in short supply due to Chinese export curbs. Some told Eckard their factories could be idled by mid-July without backup magnet supplies. 'The whole car industry is in full panic,' said Eckard, CEO of Magnosphere, based in Troisdorf, Germany. 'They are willing to pay any price.' Car executives have once again been driven into their war rooms, concerned that China's tight export controls on rare earth magnets – crucially needed to make cars – could cripple production. US President Donald Trump said last Friday that Chinese President Xi Jinping agreed to let rare earths minerals and magnets flow to the United States. A US trade team was scheduled to meet Chinese counterparts for talks in London. The industry worries that the rare earths situation could cascade into the third massive supply chain shock in five years. A semiconductor shortage wiped away millions of cars from automakers' production plans, from roughly 2021 to 2023. Before that, the Covid pandemic in 2020 shut factories for weeks. Those crises prompted the industry to fortify supply chain strategies. Executives have prioritised backup supplies for key components and re-examined the use of just-in-time inventories, which save money but can leave them without stockpiles when a crisis unfurls. Judging from Eckard's inbound calls, though, 'nobody has learned from the past', he said. This time, as the rare earths bottleneck tightens, the industry has few good options, given the extent to which China dominates the market. The fate of automakers' assembly lines has been left to a small team of Chinese bureaucrats as it reviews hundreds of applications for export permits. Several European auto-supplier plants have already shut down, with more outages coming, said the European Association of Automotive Suppliers (CLEPA). 'Sooner or later, this will confront everyone,' said CLEPA secretary-general Benjamin Krieger. Cars today use rare earths-based motors in dozens of components: side mirrors, stereo speakers, oil pumps, windshield wipers and sensors, for fuel leakage and braking sensors. China controls up to 70% of global rare earths mining, 85% of refining capacity and about 90% of rare earths metal alloy and magnet production, consultancy AlixPartners said. The average electric vehicle uses about 500g of rare earths elements, and a fossil fuel car uses just half that, according to the International Energy Agency. China has clamped down before, including in a 2010 dispute with Japan, during which it curbed rare earths exports. Japan had to find alternative suppliers, and by 2018, China accounted for only 58% of its rare earth imports. 'China has had a rare earth card to play whenever they wanted to,' said Mark Smith, CEO of mining company NioCorp, which is developing a rare earth project in Nebraska, scheduled to start production within three years. Across the industry, automakers have been trying to wean off China for rare earth magnets, or even develop magnets that do not need those elements. But most efforts are years away from the scale needed. As auto companies scout longer-term solutions, they are left scrambling to avert imminent factory shutdowns. Automakers must figure out which of their suppliers need export permits. Mercedes-Benz, for example, is talking to suppliers about building rare earth stockpiles. Analysts said the constraints could force automakers to make cars without certain parts and park them until they become available, as GM and others did during the semiconductor crisis. Automakers' reliance on China does not end with rare earth elements. A 2024 European Commission report said China controls more than 50% of global supply of 19 key raw materials, including manganese, graphite and aluminum. Andy Leyland, co-founder of supply chain specialist SC Insights, said any of those elements could be used as leverage by China. — Reuters
Nikkei Asia
6 days ago
- Automotive
- Nikkei Asia
China's rare-earth controls stall some European auto parts production
LONDON -- Some auto parts manufacturers in Europe have halted operations due to China's restrictions on rare-earth exports, the European Association of Automotive Suppliers (CLEPA) said on Wednesday. European parts makers have made hundreds of requests for export licenses since the restrictions were enacted in April, the organization said, but only about 25% have been approved.
Economic Times
6 days ago
- Automotive
- Economic Times
European auto suppliers shut plants as China blocks rare earth flow, association says
A growing shortage of rare earth elements has forced several European auto component plants to shut down, the European Association of Automotive Suppliers (CLEPA) said, blaming recent Chinese export restrictions for the disruption, reported Reuters on Wednesday. ADVERTISEMENT Since early April, hundreds of European auto suppliers have applied for export licences to access rare earth materials critical for manufacturing electric motors and components. But CLEPA said only a quarter of those applications have been approved, while others were rejected on what the group described as 'highly procedural grounds.' 'Procedures seem to vary from province to province, and in several instances, IP-sensitive information has been requested,' CLEPA said in a statement. The group warned that unless the process is standardised and accelerated, more plants are likely to halt operations within the next three to four weeks as inventories run dry. Also Read: Not just India's worry, China's rare earth chokehold tests the mettle of global industry Beijing's decision to suspend exports of a broad range of rare earths and related magnets in April has sent shockwaves through global supply chains. The restrictions have affected not just the automotive sector, but also aerospace manufacturers, semiconductor producers, and military contractors across Europe, the United States, and bodies in Germany, the US, and India have called on their governments to engage with China and seek urgent solutions to avoid long-term supply disruptions. ADVERTISEMENT CLEPA's warning highlights the depth of Europe's dependence on Chinese rare earths and the broader vulnerabilities facing global industries that rely on critical raw materials from a single source. (You can now subscribe to our Economic Times WhatsApp channel)
Yahoo
04-04-2025
- Automotive
- Yahoo
How is the European auto industry responding to Trump's tariffs?
US president Donald Trump's 25% tariff on foreign-made cars imported into the US was implemented on Thursday, with a 25% levy on imported auto parts due to come into effect from 3 May onwards. This has dealt a severe blow to the worldwide car industry, with potential decreases in investment, and job losses and plant closures looming. Euronews spoke to the Secretary General of the European Association of Automotive Suppliers (CLEPA) , Benjamin Krieger, about what impact these tariffs could have on the global auto supply industry. CLEPA acts as a link between the policy sphere in Europe and the automotive supply industry. Krieger highlighted that these tariffs have the potential to significantly increase the cost of production for auto supply companies. This is particularly since the industry is very globally integrated, with European auto supply companies often having investments in manufacturing facilities in the US, Europe, Canada, Mexico and Asia. 'Sometimes components cross multiple borders. If we introduce a tariff between where the vehicle is manufactured and where the inputs come from, that increases the cost and often, it's the automotive suppliers that have to absorb this cost,' he said. These extra costs could also have a severe impact on investments in the industry, while also causing layoffs down the line. 'Increased cost for production certainly will have a consequence for investments in the industry and in the long run also on plants and employment. We are already an industry with very small, very slim profit margins. This additional negative impact will lead to further cost pressure, will lead to closure of factories, will lead to loss of employment, certainly,' Krieger warned. Related What to know about President Donald Trump's vast array of tariffs Trump open to tariff negotiations as Wall Street wipes out trillions The automotive supply industry could now have some hard decisions to make. 'For suppliers, we either have to relocate production and abandon investments potentially that have been made in the past years, that we absorb cost or that we lose market share. So there is no good solution right now from our perspective,' Krieger said. The introduction of these tariffs also threatens the success of the auto supply industry so far, according to Krieger. 'There's a real risk that we are going to lose what we have built in the last decades,' he added. Regarding how the EU should react to these tariffs, Krieger said that it was essential for the bloc to provide some clarity on how to proceed. 'We need to better understand what the way forward looks like. We need clarity on tariffs that will be applied, what these mean for our trade relationships, and then we can also better quantify what the problem is, and what the impact will be on different European countries.' However, Krieger also emphasised the importance of improving the European auto supply industry's competitiveness within Europe, in terms of manufacturing, employment and innovation. Within the EU, countries like Germany that have a thriving auto industry could be hit harder by US tariffs than other member states, subsequently pushing them to seek buyers in other markets. 'I would hope for a measured response from the European Union, that we show unity in that situation, that we try to come to agreements with the US, but at the same time that we are serious about our strategic independence,' Krieger said.
