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ArabGT
2 days ago
- Automotive
- ArabGT
China's Magnet Dominance May Disrupt Global Car Production
The global automotive industry is entering uncertain territory as China's recent export restrictions on rare earth magnets begin to disrupt critical supply chains. Automakers across Europe, Asia, and North America are warning that continued delays in securing these vital components could soon halt vehicle production lines. German auto manufacturers have sounded the alarm, citing growing difficulties in acquiring the necessary materials used in essential components like brake sensors and electric motors. According to Hildegard Müller, head of Germany's automotive industry association, delays in export licensing and customs clearance—even for approved shipments—are already hampering parts suppliers' ability to maintain uninterrupted production. Similar concerns have been raised in the U.S., India, and Japan, where automotive firms and diplomats are engaging in urgent discussions with Chinese officials to ease the bureaucratic hurdles introduced in April 2025. This is not a localized issue. The ripple effects are global. China's move to tighten control over exports of rare earth materials—particularly magnets—has left many companies grappling with a slow and opaque permitting process. Although a few export licenses have been granted, they are insufficient to meet the demands of the global auto sector. Bosch, the German automotive supplier, described the new approval system as burdensome and time-consuming. Rare earth magnets are anything but optional in modern vehicle production. These powerful and durable magnets—especially Neodymium-Iron-Boron (NdFeB) and Samarium-Cobalt (SmCo)—are indispensable in electric motors, sensor systems, infotainment units, and climate control components. Over 90% of EVs depend on these magnets for propulsion, making them a cornerstone of automotive electrification. The magnets are composed of elements such as neodymium, praseodymium, dysprosium, and terbium. While not geologically scarce, their refinement and production require specialized and environmentally taxing processes—sectors where China commands overwhelming dominance. The country accounts for 60–70% of global rare earth production and nearly 90% of global processing capacity. India's Maruti Suzuki has stated there's no immediate disruption to production, though internal sources suggest that specific models could be impacted if supply issues persist into June. The broader sentiment among automakers is one of cautious concern, with inventories thinning and contingency plans being quietly drawn. U.S. officials have expressed frustration with China's pace in granting export licenses, with the issue reaching the diplomatic agenda in recent trade talks. The Trump administration, while optimistic about progress, acknowledges that supply has not returned to expected levels. Automaker alliances in the U.S. have warned that if rare earth access doesn't stabilize soon, it could lead to significant production cutbacks—or even temporary plant closures. Looking ahead, the path remains uncertain. Will China ease its restrictions and restore the flow of materials essential to global industry? Or will it continue to leverage its dominance in rare earths as a strategic tool, further complicating the global transition to electric mobility? For now, the world's automotive sector is left waiting—watching—and bracing for impact.
Economic Times
3 days ago
- Automotive
- Economic Times
China's rare earth chokehold tests the mettle of global industry
TIL Creatives China's Rare Earth Mining Power. Global concern over China's control of critical mineral exports intensified this week, as a growing list of automakers and governments sounded the alarm over mounting supply disruptions. Beijing's decision to impose strict curbs on rare earth magnet exports, which are vital for electric and petrol vehicles, defence equipment, and clean energy systems, has begun to strain global production lines and diplomatic ties restrictions, which took effect on April 4, mandate special export licences for seven rare earth elements (REEs) and related magnets, citing national security and non-proliferation concerns. According to the International Energy Agency and the United States Geological Survey (2025), China still produces 60% of the world's REEs and controls a staggering 90% of global refining critical materials, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, are essential in electric motors, braking systems, smartphones, aerospace components, and missile supply crunch is already prompting global manufacturers and trade bodies to seek urgent interventions. As Reuters reported, diplomats, automakers, and industry executives from India, Japan, and Europe are urgently seeking meetings with Chinese officials to expedite stalled export licences. A Japanese business delegation is expected in Beijing in early June, while European envoys have requested 'emergency' meetings on the Financial Times previously reported that the licensing process has led to delays lasting weeks or even months, affecting European manufacturers and placing countries like India and South Korea on high alert. Wolfgang Niedermark of the Federation of German Industries (BDI) warned that Europe has a rapidly closing window to prevent serious disruptions, according to the Financial Times. On Tuesday, Hildegard Müller, head of Germany's powerful automotive lobby, echoed that concern. 'If the situation is not changed quickly, production delays and even production outages can no longer be ruled out,' she said, as reported by Read: Global alarms rise as China's critical mineral export curbs takes hold India, the world's third-largest automobile market, is among the hardest-hit nations. The Society of Indian Automobile Manufacturers (SIAM) warned in early April that component inventories could run out by June. Though Maruti Suzuki, India's largest passenger carmaker, had earlier claimed there was no immediate impact, concerns have grown louder across the of Maruti's export-focused models, such as the Jimny, Fronx, and the upcoming e-Vitara electric SUV, rely heavily on Chinese-supplied magnets. Meanwhile, Bajaj Auto has warned that any further delays could seriously impact India's electric vehicle production, as reported by car and component manufacturers told govt officials last week that auto production could grind to a halt within days due to Chinese export restrictions. This comes after rare earth magnet consignments remain stranded at Chinese ports due to licence bottlenecks, according to light of this, SIAM and the Automotive Component Manufacturers Association (ACMA) are expected to send a delegation to China next week to seek expedited the Ministry of Heavy Industries is preparing a stakeholder meeting to discuss the formation of a domestic rare earth magnet industry. Proposals under consideration include public-private partnerships and production-linked is concerning is that Indian firms are reportedly being asked by Chinese suppliers to purchase entire motor assemblies to bypass red tape. This significantly increases costs, The Indian Express reported. Prolonged disruption could derail India's electric mobility targets. SIAM warned on May 19 that although production has not yet stopped, the risk remains. Also Read: Magnet crisis: Auto giants rush to China for rare earth rescue The United States, which sources over 61% of its rare earth imports and 93% of yttrium compounds from China, according to USGS data, is bracing for severe shortages. On June 2, The Economic Times reported that Tesla and General Motors have flagged the risk of production consultant Michael Dunne said that China could bring American automotive assembly plants to a standstill, reported ET.A May letter from the Alliance for Automotive Innovation, which represents GM, Toyota, Volkswagen, Hyundai, and others, urged the Trump administration to address the crisis. 'Without reliable access to these elements and magnets, automotive suppliers will be unable to produce critical automotive components,' the group warned, listing everything from throttle bodies and sensors to speakers and power steering systems, reported Pass, the United States' only operating rare earth mine, still depends on Chinese processors. Even MP Materials' upcoming facility in Texas will only produce 1,000 tonnes annually by 2027. In comparison, China produces 300,000 tonnes, according to has reduced its reliance on Chinese REEs from 98% to 46.3%, according to the European Commission, but current stockpiles may last only until mid-2025. Carmakers such as BMW and Volkswagen and aerospace firms like Airbus are reviewing long-term supply which still imports 60% of its rare earth elements from China, has attempted to reduce exposure through strategic investments in Australia's Lynas Rare Earths. Lynas is the largest producer of separated rare earths outside China. However, Japan's electronics and electric vehicle sectors remain vulnerable to supply to the Korea Institute of Geoscience and Mineral Resources (KIGAM), Korea's imports of 37 rare minerals from China amounted to 7.03 billion dollars in 2023. This marks a 3.3-fold increase from 2.13 billion dollars in 2018. China's share of Korea's rare mineral imports grew from 23% to 36%, with its dependency on Chinese imports for major minerals now surpassing 50%.Even Australia, despite possessing significant rare earth reserves, sends 90% of its heavy REEs to China for processing, as reported by the Australian Financial Review. While Lynas Rare Earths leads in separated REE production outside China, it still sends certain oxides to China for final refining. Australia is expected to remain reliant on Chinese REE refining capabilities until at least 2026. Also Read: A new era of trade warfare has begun for the US and China Beyond the economic fallout, the export curbs also offer China a strategic advantage. Beijing now requires end-user disclosures as part of the export licensing process, giving it deeper insight into global industrial ecosystems. The issue is now surfacing at the highest diplomatic levels. US President Donald Trump and Chinese President Xi Jinping are expected to discuss the export ban during a scheduled call this week, according to White House spokeswoman Karoline Leavitt. 'Our administration officials continue to be engaged in correspondence with their Chinese counterparts,' she said. Trump has accused Beijing of violating the Geneva trade agreement due to the slow pace in easing restrictions. This is not the first time China has weaponised rare earths. In 2010, it briefly cut off exports to Japan during a territorial dispute, prompting Tokyo to diversify its supply sources and invest in refining abroad. Other nations, however, failed to act decisively. The United States attempted to reduce its reliance, but domestic processing projects stalled and manufacturers resisted higher China's grip is tighter than ever. Its state-controlled refining sector dictates the flow of rare earth magnets that are crucial for a wide range of strategic industries, from electric vehicles to military Frank Fannon, a former US Assistant Secretary of State and now a minerals consultant, put it: 'We have a production challenge, 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.'Once again, China has pulled the same lever. And once again, the world finds itself unprepared.
Yahoo
25-04-2025
- Automotive
- Yahoo
Trump Tariffs Shock European Auto Industry
Via Metal Miner The 'Trump Tariffs' continue to shock global markets, affecting multiple major sectors. Recently, European auto manufacturing ombudsmen reacted with alarm to President Donald Trump's imposition of a 25% import tariff on auto imports into the United States. Hildegard Müller, president of the German Association of the Automotive Industry, said in an April 3 statement, 'This protectionism will only produce losers. Consumers in the US will be particularly affected, as they will directly feel the effects of the additional tariffs through rising inflation and a reduced product selection.' On April 2, Trump officially announced the import duties on all automotive imports into the United States, which took effect starting on April 3. Müller added, 'The consequences of the 25% tariffs, which will be imposed on passenger cars, light commercial vehicles and certain auto parts starting April 3, are still difficult to assess. However, it is already clear that this development will have negative effects on economic growth worldwide. This will also affect jobs.' She went on to say, 'The EU is now called upon to act with unity and strength, while at the same time continuing to signal its willingness to negotiate. The EU can and must act confidently and put all options on the table.' One trader expressed real surprise at the tariffs, telling MetalMiner, 'Nobody could even imagine that this would happen,.' Meanwhile, the European Automobile Manufacturers' Association (ACEA) expressed a similar sentiment to the VDAs, calling for a quick resolution to trade tensions between the EU and the United States. 'We urge our leaders to meet…so that they can find a solution to any issues preventing free and fair trade between historic allies and allow the EU-U.S. relationship to flourish once again,' the ACEA said in an April 3 statement. The United States is EU automakers' second largest export market by volume following the United Kingdom. Citing Eurostat as its source, the ACEA stated that the EU exported almost 750,000 new automobiles to the United States in 2024. While that volume represents a 6.2% decline on the year from almost 800,000 new units, it is nonetheless 16.5% of total exports. Meanwhile, the U.S. is the leader in export trade value, with Eurostat data showing it accounted for 24.9% in 2024, at €38.5 billion ($42.7 billion). This is a decline of 4.6% from the €40.3 billion ($44.8 billion) seen in 2023. The latest export volumes to the United States also comprised about 6.58% of overall production by the EU's top 10 automakers (Germany, Spain, Czech Republic, Slovakia, France, Italy, Hungary, Romania, Belgium and Sweden). Using data from S&P Global Mobility, the ACEA showed that this exceeded 11.4 million units in 2024. That volume was also off 6.2% from about 12.2 million units in 2023. 'The current drop is a result of supply and demand realignment, following a phase of catch-up driven by sales backlogs and inventory replenishment,' the ACEA noted. One trader also did not rule out the possibility that the Trump tariffs could have flat-rolled steel prices facing some downward pressure points in the short term. 'I believe there will be an impact, but it should be manageable,' they told MetalMiner, referring to the percentage that U.S.-bound exports covered. The tariffs could potentially impact the steel sector as the EU automotive sector is also the second-largest steel-consuming sector at 17%. About 90% of steel used by the automakers comes from local steelmakers. In late March, hot rolled coil in northern Europe transacted at €640-650 ($710-717) per metric ton EXW. There was also a report that ArcelorMittal was seeking €700 ($770) on flat rolled coil due to the EU seeking higher tariffs on steel imports. However, the source believed buyers would not pay more than €660 ($730). One of HRC's applications is feedstock for the production of cold rolled coil, which commands an average premium of about €100 ($110) per metric ton over the former. This CRC serves as feedstock for hot dipped galvanized production, commonly used in autobody manufacturing. HDG commands a €90-250 ($100-275) premium over CRC, depending on zinc's market value. The London Metal Exchange's three-month closing price was $2,780 per metric ton on April 2, down 6.44% from $2,972 on March 25. MetalMiner's source stated that one possible option to protect against the Trump Tariffs would be for the EU to set up trade agreements with other entities, such as sovereign states or trading blocs, the trader opined. 'I think that the biggest impact will be to the U.S. economy, which could start to crumble as a result,' the trader added. By Christopher Rivituso More Top Reads From this article on
Yahoo
03-04-2025
- Automotive
- Yahoo
German car industry faces 'massive burden' as US tariffs take effect
Germany's vital carmaking industry faces a "massive burden and challenge" after steep US tariffs went into force on Thursday. Hildegard Müller, president of the German Association of the Automotive Industry (VDA) trade group, said the 25% tariff on all car imports "mark a fundamental break in trade policy." "The announced measures are also a massive burden and challenge for both companies and the global supply chains of the automotive industry," she added. The United States is the most important export market for the German automotive industry, which produces iconic brands such as Volkswagen, Mercedes-Benz, BMW and Porsche. According to VDA figures, almost 450,000 German-made vehicles were exported to the US in 2024. The consequences of the tariffs for the German sector are hard to assess, Müller said. "However, it is already clear that this development will have a negative impact on economic growth worldwide," she stated. "This will also affect jobs."
Chicago Tribune
27-03-2025
- Automotive
- Chicago Tribune
Europe lashes out over President Donald Trump auto tariffs and the economic threat to both continents
FRANKFURT, Germany — European automakers, already struggling with tepid economic growth at home and rising competition from China, on Thursday decried the U.S. import tax on cars as a heavy burden that will punish consumers and companies alike on both sides of the Atlantic. The new 25% import tax announced by President Donald Trump on Wednesday 'will hurt global automakers and US manufacturing at the same time,' the European Automobile Manufacturers' association said in a statement. The head of Germany's auto industry association, VDA, said the tariffs would weigh on car makers and every company in the deeply interwoven global supply chain 'with negative consequences above all for consumers, including in North America.' 'The consequences will cost growth and prosperity on all sides,' Hildegard Müller said in a statement. The stakes are enormous for BMW, Volkswagen, Mercedes-Benz, Volvo, Stellantis and their vast network of suppliers, as well as the entire European economy. The U.S. is the biggest export destination for the European auto industry and in 2023, European automakers exported 56 billion euros worth of vehicles and parts to the U.S.. Europe's auto industry supports 13.8 million jobs, or 6.1% of total EU employment. Europe's carmakers already face a shrunken domestic market and new competition from cheaper Chinese electric vehicles. Any trouble in the auto industry would weigh on European economy that did not grow at all in the last quarter of 2024 and just 0.9% for the entire year. The most exposed are German and Italian carmakers since 24% of German and 30% of Italian non-EU exports go to the U.S.. Germany is home to major automakers such as Volkswagen, Mercedes-Benz and BMW. 'This would deliver a substantial blow to a sector that not only sustains millions of jobs but also contributes to a large proportion of the bloc's GDP,' wrote analyst Clarissa Hahn at Oxford Economics. She estimated a decline in German exports of 7.1% and a fall of 6.6% for Italian ones. U.S. carmakers are less exposed to possible retaliation because they export only 2% of their production to the EU. Still, shares of Detroit's Ford and General Motors tumbled sharply before the opening bell in the U.S. Thursday because the U.S. industry relies heavily on cross-board trade by suppliers. 'The EU and the US must engage in dialogue to find an immediate resolution to avert tariffs and the damaging consequences of a trade war,' the European manufacturers' association said. German auto association head Müller called for immediate negotiations between the EU and U.S. on a bilateral agreement that would offer 'a forum to discuss the various tariff and non-tariff barriers for automobile products and could lead to a more balanced approach.' Originally Published: March 27, 2025 at 8:20 AM CDT
