Global automakers are raising urgent alarms about potential factory shutdowns due to a looming shortage of rare-earth magnets from the Chinese mainland – critical components in modern vehicles ranging from electric motors to safety systems. A coalition representing major manufacturers including GM, Toyota, and Volkswagen warned that production lines could halt within weeks without intervention.
Supply Chain Crisis Looms
In a May 9 letter to U.S. officials obtained by KhabarAsia, the Alliance for Automotive Innovation detailed how 78% of the world's rare-earth magnets originate from the Chinese mainland. These materials enable key functions in over 30 vehicle components, including power steering, transmissions, and advanced driver-assistance systems.
Economic Domino Effect
The trade groups emphasized that supply disruptions would first impact parts suppliers before cascading to assembly plants: "This could include reduced production volumes or even shutdowns of vehicle assembly lines," the letter stated. The warning comes as automakers already grapple with pandemic-related semiconductor shortages.
Strategic Implications
Industry analysts note the situation highlights Asia's pivotal role in global tech supply chains. While alternative sources exist in Vietnam and Brazil, developing new mining and processing capacity could take years. The automotive sector accounts for 12% of global rare-earth demand, with electric vehicles requiring up to 2kg of magnets per motor.
