Automakers Worldwide are Scrambling to Get China’s Blessing to Import Rare Earth Metals

Source: disrupts production across major industries. Earlier in April, China’s Ministry of Commerce began enforcing export license requirements. The restrictions apply to rare earth elements and magnets essential to vehicles, energy systems, and defense applications. Now, industry groups and executives warn that the impact is spreading quickly.

Factory Lines Halted in Europe and Japan

European supplier group CLEPA reports that several automotive production lines have already shut down. The group warns that more factories could suspend operations as inventories shrink. Only about 25% of rare earth export license requests have been approved so far.

Germany’s VDA, the country’s main auto lobby, is pressing European lawmakers to demand urgent solutions from Beijing. Mercedes-Benz said that its current supplies remain stable but highlighted plans to reduce reliance on heavy rare earth materials in future vehicles. Meanwhile, BMW acknowledged supplier disruptions but declined further comment even as Volkswagen confirmed a stable supply for now and said its vendors are pursuing license approvals.

In Japan, Nissan is working with government partners to find alternatives and maintain production. CEO Ivan Espinosa confirmed that the company expects near-term challenges. Meanwhile, Suzuki halted output of its Swift model, citing the same rare earth shortage.

U.S. Parts Makers Push for Government Response

In the U.S., the Motor & Equipment Manufacturers Association (MEMA), now known as the Vehicle Suppliers Association, is calling for immediate federal action. The group said rare earth constraints pose “serious, real-time risks” to automotive parts production. MEMA’s joint letter with the Alliance for Automotive Innovation warned that critical parts such as sensors, power steering systems, motors, and lighting components are now vulnerable. Ford temporarily suspended production of its Explorer SUV at a plant in Chicago in May due to the shortage. The shutdown adds to pressure on U.S. policymakers to secure new sources of rare earths through mining, recycling, or international agreements.

Meanwhile, President Donald Trump accused China of reneging on a recent trade truce and hinted at countermeasures. These could include export restrictions on advanced U.S. technologies or energy materials used by many Chinese firms.

Export Licenses, Bureaucracy, and Investor Risk

To ease supply delays, European businesses proposed a whitelist program that would fast-track licenses for companies with strong compliance records. So far, little progress has been made. One European exporter reported that they got approval for only 75 kilograms out of a planned 2,000-kilogram shipment.

Chinese officials claim their licensing process is consistent with international practices. However, the surge of applications overwhelmed local regulators and led to delays that halted production lines in multiple countries.

For now, demand for rare earth metals is expected to rise sharply as clean energy adoption increases, and this will give China significant leverage. Beijing has already used the rare earth policy as a trade tool in discussions with Japan and South Korea.

Rare Earth Material Strategy Now a Market Signal

Investors now see rare earth independence as more than a supply chain concern and more of a market differentiator. Automakers that have secure mineral strategies or are actively pursuing substitutes are better positioned to handle volatility.

Mercedes-Benz, for example, is working to cut its use of heavy rare earth metals in electric drive units. Volkswagen said its partners are adjusting materials sourcing to mitigate delays. These moves reflect a growing trend among global automakers to future-proof their operations against politically driven supply disruptions.

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