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European car manufacturers are facing a critical shortage of rare earths and magnets, essential components used in electric vehicle motors and other car parts. The shortage has been worsened by Chinese export restrictions, prompting carmakers to seek alternative sources for these vital materials.
In response to the supply chain challenges, companies like Germany’s Mercedes-Benz are in talks with western magnet and rare earth companies to secure future output. For instance, Mercedes-Benz is reportedly in discussions with the UK’s Rainbow Rare Earths to ensure a stable supply of rare earths from its South African mine. Rainbow, backed by TechMet, aims to start production in 2027 to meet the demand for permanent magnets.
The shortage has led to concerns among carmakers like Porsche, who have reached out to suppliers like German magnet maker Magnosphere for additional supplies to prevent production line shutdowns. The urgency to find alternative sources for magnets is crucial, with forecasts suggesting that car production could be halted by mid-July without a solution.
The impact of the shortage is not limited to Europe, as Ford temporarily halted production at its Chicago plant due to a magnet shortage. Companies are exploring options to diversify their supply chains and reduce reliance on Chinese rare earth materials.
Despite efforts to secure rare earths from sources outside of China, challenges remain as the majority of magnet manufacturing is concentrated in Asia. Industry experts emphasize the need for Europe to ramp up its production capabilities to address the supply chain vulnerabilities.
In light of the geopolitical tensions surrounding rare earths, some European companies have received fast-tracked approvals for export licenses from China. However, delays in shipments are still expected due to a backlog of applications, posing potential disruptions to global supply chains.
As the automotive industry navigates the challenges posed by the rare earth shortage, companies like Hyundai have taken proactive measures to maintain inventory levels for uninterrupted production. With ongoing discussions and efforts to secure alternative sources, carmakers are working towards mitigating the impact of the supply chain disruptions.
Stay tuned for more updates on the evolving situation in the automotive industry as companies adapt to the changing landscape of rare earth and magnet supply. Subscribe to the Automobiles myFT Digest for the latest news and insights.
