The global automotive industry is racing to find sources of rare earth minerals.

Supply is shrinking.

Rare earth elements are used in magnet motors to power many parts of a vehicle, such as rearview mirrors, speakers, oil pumps, windshield wipers, fuel leak sensors, and brakes. For electric vehicles (EVs), their role is even more crucial.

Although a recent agreement between the US and China helped to alleviate the risk of supply disruptions, global rare earth reserves have been depleted due to similar restrictions earlier this year. China has also made obtaining export licenses more difficult and significantly expanded the list of goods subject to export controls, causing global supply shortages.

According to estimates by consulting firm AlixPartners, China currently holds 70% of global rare earth mining output, 85% of refining capacity, and 90% of rare earth alloy and magnet production. The new export control list includes elements such as ytterbium, holmium, and europium, which are also used in automotive manufacturing.

Nadine Rajner, CEO of the German materials firm NMD, said that many customers are "looking for ways to buy rare earth minerals outside of China."

In an effort to reduce dependence on China, on October 20, US President Donald Trump and Australian Prime Minister Anthony Albanese signed a strategic minerals agreement, including US investment in rare earth mining projects in Australia. However, Ms. Rajner stated that while many countries like Sweden have large reserves of rare earths, they lack the mines and refining facilities for efficient extraction. For heavy rare earths, China controls up to 99.8% of global refining capacity, leaving alternative sources almost negligible.

Rare earth elements can be recycled from old cars, but the industry is still in its infancy. Neutral, backed by Renault, currently recycles rare earth elements from 400,000 old cars annually in France and collaborates with 15 European car brands. However, CEO Jean-Philippe Bahuaud acknowledges: “The big challenge is scaling this operation.”

The risk of supply chain bottlenecks.

Even if Chinese suppliers manage to deliver goods before the November 8 export control deadline, sea shipping to Europe could take up to 45 days, making the risk of rare earth supply bottlenecks a major concern for the automotive industry.

In addition to rare earth elements, China has also imposed export restrictions on lithium-ion batteries and battery materials, raising concerns about the supply of components for electric vehicles.

Last week, an intellectual property dispute between China and the Netherlands involving chipmaker Nexperia also raised concerns about the risk of factory closures, as the company is a crucial chip supplier for the automotive industry.

Automakers are also facing new US tariffs, which are expected to drive up costs and be reflected in their third-quarter 2025 earnings reports. However, dependence on China for rare earth minerals remains the most pressing issue.

Ryan Grimm, Vice President of Supply Chain at Toyota North America, warned: "China could bring the entire automotive industry to a standstill in just two months." Bruno Gahery, President of Bosch's France-Benelux-Western and Southern Europe region, predicted the automotive industry would ramp up its rare earth stockpiles before China's export controls take effect.

However, the head of a magnet supplier for Hyundai said: "We stocked up since the beginning of the year, but most of it has been used up, and supply is very scarce."

According to three industry sources, Chinese rare earth exporters received a surge in orders from overseas immediately after China announced its controls on October 9th.

The race to develop "rare earth-free" engines.

To reduce dependence, major automakers are exploring new avenues. General Motors, along with suppliers like ZF and BorgWarner, is developing electric vehicle motors that use little or no rare earth elements, while BMW and Renault have already produced motors that are free of rare earth elements.

The UK-based company Monumo applies AI and advanced simulation technology to help automakers reduce their average use of rare earth elements in engines by 24%. Monumo's clients include many of the world's top 10 automakers.

However, experts believe that most of these technologies are still years away from commercialization, similar to rare earth mining and refining projects outside of China, which could be undermined by China lowering global prices. Andy Leyland, co-founder of the consulting firm SC Insights, noted that the US government is reacting more strongly than Europe to this threat.

Source: https://vtv.vn/nganh-o-to-toan-cau-chay-dua-tim-nguon-cung-dat-hiem-100251022083159023.htm