China's Rare Earth Controls Halt Ford Production

In 2025, China's tightened export controls on rare earth elements like neodymium, dysprosium, and terbium sent shockwaves through the global automotive sector. Ford was forced to halt Explorer production as magnet supplies dwindled to 'day to day' levels, according to CEO Jim Farley. European suppliers under CLEPA also saw factory lines go dark, underscoring how these critical components underpin electric vehicle motors and power electronics.

Rare earth magnets are indispensable for high-performance EV traction motors due to their unmatched magnetic strength and heat resistance. Dysprosium and terbium, in particular, enable magnets to withstand the extreme temperatures in hybrid and electric drivetrains, boosting efficiency and power density. Without them, alternatives like induction motors suffer from lower performance and higher reliance on copper or other materials, compromising range and acceleration.

The crisis highlighted China's dominance-controlling 90% of magnet production and over 85% of processing capacity. This prompted frantic diversification: General Motors secured long-term deals with MP Materials for U.S.-sourced magnets in its Ultium platform EVs, including the Hummer EV and Silverado EV. REalloys emerged as a key player, locking in exclusive offtake from North America's only non-Chinese processing facility in Saskatchewan, set to scale to 600 tonnes annually by 2028.

Looking ahead, Pentagon DFARS rules effective 2027 will ban Chinese rare earths in defense contracts, spilling over to automotive suppliers. McKinsey forecasts dysprosium and terbium demand growing at 8.8% CAGR through 2035, outpacing neodymium, driven by EV adoption. Companies like REalloys, with Ohio-based alloying facilities qualified for defense specs, are racing to fill the gap, targeting 20,000 tonnes of heavy rare earth magnets yearly. This shift promises supply resilience but faces hurdles in scaling non-Chinese tech and chemistry.

For automakers, the lesson is clear: rare earth dependency isn't just a cost issue-it's an existential risk to electrification goals. As EV sales surge toward 2040, securing diverse, traceable supplies will define winners in the race for sustainable mobility.