The Impact of China’s Rare Earth Export Controls on the European Automotive Industry

1.Supply Chain Disruption Risks

Since April 2025, when China implemented export controls on certain medium and heavy rare earths (such as dysprosium, terbium, and samarium) and related magnets, the rare earth inventories of European automotive component suppliers have nearly been depleted. The European Association of Automotive Suppliers (CLEPA) has warned that many production lines and factories have already shut down due to rare earth shortages, and with inventories running out, more production lines are likely to halt in the coming weeks.

The German Association of the Automotive Industry (VDA) has also noted that the slow issuance of export licenses has prevented some suppliers from delivering products on time, thereby affecting the production schedules of automakers.

 2. Production and Economic Impacts

Rare earth magnets are core materials for key automotive components such as electric motors and sensors. Disruptions in the supply of rare earths can lead to production standstills in automotive assembly lines. For example, the Society of Indian Automobile Manufacturers has warned that the rare earth magnet inventories of India’s three major automakers can only sustain normal production for three days. If timely replenishment is not possible, the entire Indian automotive industry may face a complete shutdown.

In Europe, some companies have already been forced to suspend production due to their inability to obtain key rare earth magnets. This not only affects the production plans of automakers but also impacts the automotive industry, a pillar of the European economy.

 3. Industry Response Measures

Some automakers are considering relocating certain production processes to China to circumvent the export controls on rare earth magnets. In addition, some companies are accelerating the development of alternative technologies such as rare earth-free motors to reduce their dependence on rare earths.

The Impact of Rare Earth Policies on Strong Magnetic Rods in the New Energy Industry

Strong magnetic rods, often made from rare earth permanent magnets, are directly affected in terms of production costs by changes in rare earth policies and market conditions. When rare earth prices rise, the production costs of strong magnetic rods increase, putting cost pressure on manufacturers. However, on the other hand, the regulatory policies on the rare earth industry also prompt companies to focus more on product quality and technological innovation to enhance product value, thereby offsetting some of the cost increases.

In the new energy industry, the application of strong magnetic rods is extremely important. For example, in the production of batteries for new energy vehicles, the raw materials for batteries require a very high level of purity. The presence of ferromagnetic impurities can severely affect battery performance. Strong magnetic rods can efficiently adsorb these impurities to ensure the purity of battery raw materials. With the rapid development of the new energy vehicle market, the demand for high-quality batteries continues to grow, which in turn increases the market demand for strong magnetic rods. Despite cost pressures, the rapid development of the new energy industry provides a broad market space for strong magnetic rods.

To cope with the challenges brought about by changes in rare earth policies and market conditions, manufacturers of strong magnetic rods are actively taking measures. On one hand, they are increasing R&D investment to improve the utilization rate of rare earth materials through technological innovation, thereby reducing the amount of rare earths used per unit of product. On the other hand, they are strengthening cooperation with upstream and downstream companies to establish long-term and stable supply chain relationships to jointly address the risks of price fluctuations. For example, some companies have signed long-term agreements with rare earth suppliers to lock in rare earth purchase prices for a certain period, ensuring the stability of raw material supplies.

Amid the regulatory policies and market fluctuations in the rare earth industry, strong magnetic rods in the new energy industry face both challenges such as rising costs and opportunities for increased market demand. Through measures such as technological innovation and optimization of supply chain management, manufacturers of strong magnetic rods are expected to achieve sustainable development in the complex market environment and continue to provide strong support for the high-quality development of the new energy industry.