China's rare-earth export controls are causing European auto production stoppages, forcing manufacturers to seek recycling, redesigns, and new suppliers.
China's tightened export controls on rare earth elements are disrupting automotive supply chains and prompting emergency talks between EU officials and Beijing.
Several European production lines have paused after limits on export licences tightened access to materials such as neodymium and dysprosium, which are critical for high-strength permanent magnets used in electric vehicle motors, powertrain inverters and various sensors. Manufacturers report uneven effects: BMW and Mercedes-Benz say operations remain broadly stable but warn that constrained licences and longer lead times pose material risk, while some firms, including Suzuki, have already halted operations.
The immediate impact is production delays and component shortages, with suppliers and OEMs drawing down inventories and reprioritising allocations. Technical mitigations being explored include increased magnet recycling, redesigns to reduce rare-earth content, temporary shifts to induction motor designs, and diversification of supply chains outside China. Longer-term responses may accelerate onshoring of processing capacity and strategic stockpiling.
Negotiations between the EU and China are ongoing, and automakers are rapidly assessing engineering and procurement changes to limit downtime and cost inflation as the market reacts to constrained rare-earth flows.
Auto Industry Braces for China's Rare-Earth Curbs | Samarium