12 hours ago
Car companies ‘in full panic' over rare earths bottleneck
Even players that have developed marketable products struggle to compete with Chinese producers on price. David Bender, co-head of German metal specialist Heraeus' magnet recycling business, said it is only operating at 1% capacity and will have to close next year if sales do not increase.
Minneapolis-based Niron has developed rare earth free magnets and has raised more than $250m (R4,442,200,000) from investors including GM, Stellantis and car supplier Magna.
"We've seen a step change in interest from investors and customers" since China's export controls took effect, CEO Jonathan Rowntree said. It is planning a $1bn (R17,768,800,000) plant scheduled to start production in 2029.
England-based Warwick Acoustics has developed rare earth-free speakers expected to appear in a luxury car later this year. CEO Mike Grant said the company has been in talks with another dozen carmakers, though the speakers are not expected to be available in mainstream models for about five years.
As car companies scout longer-term solutions, they are left scrambling to avert imminent factory shutdowns. Carmakers must figure out which of their suppliers – and smaller ones a few links up the supply chain – need export permits. Mercedes-Benz, for example, is talking to suppliers about building rare earth stockpiles.
Analysts said the constraints could force carmakers to make cars without certain parts and park them until they become available, as GM and others did during the semiconductor crisis.
Carmakers' 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 aluminium.
Andy Leyland, co-founder of supply chain specialist SC Insights, said any of the elements could be used as leverage by China.
"This is a warning shot," he said.
