Beijing rejects many applications from European parts manufacturers requesting rare earths.
China’s rare earth export cuts shake the global auto industry
China is tightening its control over rare earth exports, placing global supply chains under serious pressure. These critical raw materials are essential to several industries, including the automotive sector, where production could soon grind to a halt in both Europe and the United States. According to the European Association of Automotive Suppliers (Clepa), some factories are already shutting down due to lack of resources. The situation highlights how deeply the industry depends on China, and how vulnerable it has become.
Tensions are growing fast. In a geopolitical move reminiscent of Trump-era tariffs, Beijing is wielding its market dominance. Meanwhile, the war in Ukraine, another key source of critical minerals, adds further instability, with Russian interests intensifying.
Major automakers already feeling the impact
Some of the world’s biggest car manufacturers have sounded the alarm. BMW reports supply issues affecting several of its partners, while Volkswagen and Mercedes-Benz say they haven’t seen shortages yet.
Germany’s auto industry association warns that “China’s rare earth export restrictions pose a major threat to supply security across the entire production network.” While a few licenses have been granted, they are insufficient to maintain regular output, president Hildegard Müller told CNBC.
Export licenses blocked or delayed
The squeeze affects not just automakers, but also aerospace companies and semiconductor producers. With U.S.–China relations under strain, a call between Donald Trump and Chinese President Xi Jinping was expected on June 5, with a possible meeting to follow.
Since April, thousands of export license applications have been submitted by component makers, but only about 25% have been approved. China is demanding stricter guarantees, while the EU Chamber of Commerce in China is negotiating to ease restrictions. “With global supply chains tightly connected, China’s export limits are already stopping production at key supplier facilities,” said Clepa secretary general Benjamin Krieger.
Japanese automakers such as Suzuki and Nissan are also facing delays for several vehicle lines. While China holds a firm grip on critical materials, its electric vehicles are making aggressive inroads in global markets.
Global hunt for new raw material sources
In an effort to reduce reliance on China, new mining projects are being launched across several continents. Strategic initiatives are now targeting graphite in Ukraine, nickel and copper in Norway, cobalt in Canada, lithium in Serbia, manganese in South Africa, and tungsten in the UK. Additional agreements include Kazakhstan, Brazil, Madagascar, and overseas territories such as Greenland and New Caledonia.
