Car factories in Europe are shutting down. The reason? China’s restrictions on exporting rare earth elements. These elements are crucial for making electric cars and other high-tech products.
The European association of automotive suppliers, CLEPA, says many factories and production lines have already closed due to the shortage. Only a quarter of the export license requests made by car manufacturers since April have been approved. Some requests were rejected for what CLEPA calls “highly procedural” reasons.
As one expert notes, “procedures seem to vary from region to region, and in several cases, sensitive information regarding intellectual property was requested.” This has led to a complex and frustrating process for companies trying to get the elements they need.
According to Reuters, if the process isn’t simplified soon, more factories will likely be affected in the next three to four weeks as stocks run out. This could have a significant impact on the global economy.
Global Impact of China’s Rare Earth Restrictions
The alarm over China’s dominance of critical minerals has been sounded. Global car manufacturers have joined their American counterparts in warning that China’s export restrictions could cause production delays and interruptions if a solution isn’t found quickly.
German car manufacturers are the latest to sound the alarm, warning that the restrictions threaten to shut down production and harm local economies. This follows a similar complaint from an Indian electric vehicle manufacturer last week.
China’s decision in April to suspend exports of a wide range of critical minerals has disrupted essential supply chains for car and aerospace manufacturers, semiconductor companies, and military suppliers worldwide.
The trade war is having a global impact. US President Donald Trump and Chinese President Xi Jinping are expected to meet this week, with export restrictions at the top of the agenda. The US, Europe, Japan, and India are all seeking solutions and understandings.
As the situation continues to unfold, one thing is clear: the world is heavily reliant on China for rare earth elements, and any disruptions to the supply chain can have far-reaching consequences.