Highlights

• Nissan scales back new Leaf EV production due to China's rare earth export restrictions.
• Rare earth elements are crucial for EV motor manufacturing, creating significant supply chain challenges.
• China's strategic control over critical minerals threatens global electric vehicle industry expansion.

In a direct consequence of China’s tightening grip on rare earth exports, Nissan Motor Co. has scaled back its production plans for the new Leaf electric vehicle (EV) model set to launch later this year, according to Kyodo News and confirmed by Reuters (opens in a new tab).

The rare earth shortage, sparked by China’s ongoing export restrictions, is impacting critical EV component supply lines. The new Leaf’s adjusted rollout is particularly damaging for Nissan’s broader restructuring efforts, which include seven factory closures and a 15% workforce reduction globally.

The impact doesn’t stop with Nissan. Suzuki Motor Corp. has also suspended production of its popular Swift subcompact, citing the same supply shock from China’s restrictions, Reuters reported last month.

Rare earth elements, especially neodymium, praseodymium, dysprosium, and terbium, are essential to the permanent magnets used in EV motors and drivetrain systems. Without consistent access to these materials, automakers are forced to delay launches, alter designs, or scale back output, potentially costing billions in lost sales and eroded market share.

REEx Investor Analysis:

• Will other Japanese and Western automakers with China-dependent supply chains also face cuts?
• Can rare earth supply chain alternatives—like Australia’s Lynas, USA’s MP Materials, or Vietnam’s Dong Pao mines—ramp up quickly enough to fill the gap?
• How soon before China’s curbs drive EV companies to vertically integrate or shift to alternative motor technologies (e.g., induction motors or ferrite magnets)?

This disruption spotlights the strategic leverage China holds over global EV ambitions—and underscores how vulnerable even top-tier manufacturers are to material supply decisions made in Beijing.

Rare earths aren’t just a strategic material—they’re now a production bottleneck. Nissan’s setback serves as a wake-up call: the EV transition cannot progress faster than the availability of critical minerals allows.