Suppliers Are Starting To Suspend Production Due To China Restrictions
Automakers and suppliers are starting to feel the pressure from China’s decision to restrict exports of rare earth elements, with some production lines already idled and further disruptions expected in the coming weeks.
Key Points
- China’s export restrictions on rare earth materials are disrupting global automotive supply chains.
- Only a quarter of export license applications from auto suppliers have been approved, and inconsistent procedures across Chinese provinces are delaying access to critical materials needed for EV motors and other vehicle components.
- Automakers are lobbying for government intervention and pursuing alternatives.
According to Bloomberg, BMW confirmed this week that its supplier network is experiencing shortages, although the company says its assembly plants remain operational.
The bottleneck is born from China’s decision to tighten export controls on a range of rare earth materials and the subsequent magnets produced from them. The materials are essential for a variety of industries—including automotive, aerospace, defense, and electronics—and China accounts for roughly 90 percent of global production.
China's play was made in retaliation against the U.S., but the restrictions apply globally.
CLEPA, the European Association of Automotive Suppliers, said that multiple production lines have already been shut down due to rare earth shortages. Of the export license requests submitted since the announcement, only a quarter have reportedly been approved.
Many applications have been rejected or stalled due to procedural inconsistencies and requests for sensitive intellectual property information.
The export controls have become a focal point in renewed trade tensions between China and the United States. President Donald Trump has criticized the slow pace of China’s licensing process and has accused Beijing of failing to honor a recent agreement aimed at de-escalating trade restrictions. Chinese President Xi Jinping and Trump spoke this week about a trade deal, but nothing has been finalized.
The standoff over rare earths magnifies the global auto industry’s vulnerability to concentrated supply chains. Even as automakers invest in new powertrain technologies and attempt to localize production, they remain exposed to risks in regions where key raw materials are extracted and processed.
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An experienced automotive storyteller and accomplished photographer known for engaging and insightful content. Michael also brings a wealth of technical knowledge—he was part of the Ford GT program at Multimatic, oversaw a fleet of Audi TCR race cars, ziptied Lamborghini Super Trofeo cars back together, been over the wall during the Rolex 24, and worked in the intense world of IndyCar.
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