European automotive suppliers are grappling with significant operational challenges following China's recent restrictions on rare earth exports. The European Association of Automotive Suppliers (CLEPA) reports that several manufacturing plants have already ceased operations due to a shortage of these critical materials.
Since April, China has approved only about a quarter of the export license applications submitted by auto suppliers, citing procedural issues and requesting sensitive intellectual property information. This bottleneck has disrupted the supply chain for rare earth elements, essential for producing high-performance magnets used in electric vehicles and other automotive components.
CLEPA warns that without a streamlined export approval process, more plants could face shutdowns within weeks as existing inventories deplete. The situation underscores the global reliance on China's dominance in the rare earth market, which supplies approximately 90% of these elements worldwide.
Automakers are exploring alternatives, including shifting motor assembly to China to circumvent export controls and seeking non-Chinese suppliers in Europe and Asia. However, these measures are costly and time-consuming, highlighting the urgent need for diversified supply chains.
The current crisis emphasizes the vulnerability of global industries to geopolitical decisions and the importance of developing resilient and diversified supply networks.