According to reports, as global automakers brace for China's impending export controls on rare earth materials, industry executives express concern over potential shortages of automobile parts and possible factory shutdowns. Rare earth magnets are essential for electric motors used in various automotive components, including mirrors, speakers, oil pumps, windshield wipers, fuel leakage sensors, and brake sensors, playing a particularly crucial role in electric vehicles. Although a recent agreement between the U.S. and China alleviated some supply chain anxieties, similar restrictions introduced earlier this year have already depleted inventories, and the process to obtain export licenses from China has become more stringent. Subsequently, China significantly expanded its export restrictions, leading to a global shortfall in rare earth supplies. Consulting firm AlixPartners estimates that China controls up to 70% of global rare earth production, 85% of refining capacity, and approximately 90% of the manufacturing of rare earth metal alloys and magnets. The new export control list from China includes elements such as ytterbium, holmium, and europium, which are also utilized in automobile manufacturing. Nadine Leiner, CEO of German metal powder supplier NMD, noted, "The situation is very tense," adding that clients are eager to source rare earths from outside China. While countries like Sweden possess abundant rare earth deposits, they lack operational mines or refining capacity. China dominates the refining of heavy rare earths, holding 99.8% of global capacity, making alternative sources negligible. Leiner stated, "Our products are basically sold out, and inventory is limited." Rare earths can be recycled from end-of-life vehicles, but this industry is still in its infancy. The startup Neutral, supported by Renault, currently recovers rare earths from 400,000 vehicles each year in France and has secured contracts with 15 brands across Europe. However, Neutral CEO Jean-Philippe Baulu acknowledged that "the challenge lies in scaling up these activities." Even if Chinese suppliers fulfill new orders before the export restrictions take effect on November 8, transporting these supplies to Europe via sea would take roughly 45 days, adding to the automotive industry's supply challenges. China has also implemented export restrictions on lithium-ion batteries and battery materials, raising concerns over the supply of components for electric vehicles. Last week, an intellectual property dispute between China and the Netherlands involving chip manufacturer Nexperia ignited fears of factory shutdowns, as the company supplies a significant volume of chips for automotive components. Automakers also face the challenge of U.S. tariffs, which are expected to be detailed in third-quarter financial reports. However, controlling rare earth supplies is among the most pressing issues for the automotive sector. Ryan Grimm, Vice President of Supplier Development at Toyota North America, emphasized, "They can halt our production in two months, bringing the entire automotive industry to a standstill." Bruno Gehrig, President of Bosch in France, Belgium, Luxembourg, Western and Southern Europe, expressed his expectation that the automotive sector will "stockpile rare earths" before deadlines. Still, an executive from a magnet supplier to Hyundai conveyed that despite having built up inventory earlier this year, "most of it has now been consumed," indicating supply constraints. Three industry insiders reported that some Chinese rare earth exporters received a surge of orders from overseas clients shortly after the announcement of new export controls on October 9. New motor developers are actively working to reduce reliance on rare earths. Automakers like General Motors, along with major suppliers such as ZF and BorgWarner, are developing electric motors aimed at reducing rare earth content to minimal or zero levels, while BMW and Renault have already produced rare earth-free motors. Monumo leverages artificial intelligence and deep tech simulations to assist clients in reducing rare earth content in their existing motor production. CEO Dominique Verge stated that the company's clients have seen an average reduction of 24% in rare earth content, including several of the world's top ten automakers. Furthermore, automakers are making significant advancements in developing next-generation electric motors that do not use rare earths. However, industry experts note that most of these motors are still years away from commercialization, similar to plans for developing new rare earth mines and processing plants outside of China. China continues to maintain lower prices for rare earths, undermining these projects. Experts believe that the U.S. government is more acutely aware of this threat than European counterparts. Andy Leland, co-founder of supply chain consultancy SC Insights, remarked that "China has consistently focused on pricing out competitors and will continue doing so." He noted that automakers may find it challenging to justify higher costs for components in the face of lower-priced motors containing rare earth magnets, stating, "This is a very high-risk investment." Meanwhile, it is expected that China will continue to assert its dominance in the rare earth supply chain. Jan Giese, senior manager at rare earth trading firm Tradium, stated, "The export controls on rare earths are not going to end here."