Highlights
- Major automakers are seeking alternatives to China’s control over rare earth magnets, critical for electric motor production.
- The current supply chain dependence represents a significant national security risk across green technology and defense industries.
- Experts recommend long-term investment in domestic and allied rare earth supply chains as the only viable strategic solution.
Four major automakers are now urgently exploring alternatives to China’s chokehold on rare earth magnets—critical components for electric motors and modern drivetrains—according to a new Wall Street Journal report (opens in a new tab). With factory shutdowns looming, several companies are reportedly considering relocating key parts of their supply chains to China to preserve access to the very materials Beijing is restricting. The development lays bare just how deeply dependent Western industry remains on Chinese rare earth processing.
This is no longer a theoretical vulnerability. Traditional and EV manufacturers alike are running out of time and options. Rare earth magnets, made from neodymium, praseodymium, and dysprosium, are irreplaceable in high-efficiency electric motors. With China throttling exports and the U.S.-China tariff détente failing to unlock supplies, the scramble has begun—and it’s revealing a stark truth: the West’s entire green and defense-industrial ecosystem rests on a supply chain it does not control.
Rare Earth Exchanges, launched in October 2024 to chronicle the development of an “ex-China” rare earth element market, has all along warned that reliance on Chinese refining and magnet production is a national security risk. Today, that risk is materializing. The only viable path forward is bold, long-term investment in domestic and allied rare earth supply chains—from mine to magnet. Tactical workarounds, such as President Donald Trump traveling to China to meet with that nation’s leadership to devise a solution, won’t address a strategic failure. The crisis is here, and it’s a direct consequence of failing to treat rare earths as the industrial linchpin they are.
To chat about this and other unfolding trends, visit the Rare Earth Exchanges Forum (opens in a new tab).
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