Highlights

• Harvard Fellow Elaine Buckberg reveals that U.S. auto policy has quietly shifted from focusing on jobs and competitiveness to prioritizing economic security.
• This shift involves treating electric vehicles (EVs), batteries, chips, and rare earth magnets as strategic dependencies rather than ordinary inputs.
• China's dominance in rare earth processing and magnet manufacturing creates supply chain choke points, which can throttle both EV and internal combustion vehicle production.
• Ford's CEO has described the magnet supply as unstable and 'hand-to-mouth.
• While tariffs and subsidies can help domestic industry scale, they risk reducing competitive pressure and slowing innovation.
• Mining alone won't solve the problem without securing midstream processing, refining, and magnet manufacturing capacity.

---

Elaine Buckberg (opens in a new tab), a Senior Fellow at Harvard University’sSalata Institute for Climate and Sustainability, argues in a new Mossavar-Rahmani Center for Business & Government (opens in a new tab) (M-RCBG) working paper (opens in a new tab) that U.S. auto policy has quietly evolved from “jobs and competitiveness” to economic security—with electric vehicles (EVs), batteries, chips, and rare earth magnets now treated as strategic dependencies rather than ordinary inputs.

In Driving Security? U.S. Auto Industrial Policy in a Changing World (Nov. 2025), Buckberg connects the EV transition to a harder reality: China’s industrial policy and processing dominance—especially in rare earths—can pressure U.S. automakers through supply shocks, while America’s response mixes tariffs, subsidies, and national-security rules that may protect production but also risk slowing innovation and raising consumer costs.

Study Methods: A Policy Synthesis, Not a Lab Experiment

This is not a geology or engineering study. It is a policy analysis that weaves together:

• Recent U.S. industrial-policy tools (tariffs, tax credits, grants, procurement, security rules)
• Evidence from clean investment tracking and subsidy estimates
• Supply-chain risk examples (rare earth magnets, chips, and EV competition)
• A national-security framework that treats autos as both an economic engine and a potential “surge capacity” industry in crises

Importantly, it is published as an associate working paper intended to elicit debate; it is not positioned as a peer-reviewed journal article. Harvard Kennedy (opens in a new tab)

Key Findings, in Plain English

Auto industrial policy never left—it just changed clothes.

Buckberg’s core point is that autos have long received special policy treatment, but today’s justification is increasingly security: supply resilience, defense-adjacent manufacturing capacity, and strategic technology control.

EVs reshape the supply chain—and China sits on the choke points.

EVs are not simply “cars with batteries.” They pull forward new dependencies: battery materials, power electronics, and—crucially—rare earth permanent magnets used in many traction motors and other vehicle systems. The IEA’s 2025 outlook underscores the broader concentration problem: refining and processing have become more concentrated since 2020, with China a dominant player in several critical minerals, including rare earths.

China’s leverage isn’t theoretical; automakers feel it.

Reuters documented Ford’s CEO describing rare-earth magnet supply as unstable and “hand-to-mouth” following tighter Chinese export licensing—an example Buckberg uses to illustrate why Washington increasingly frames auto supply chains as a security issue.

Subsidies and tariffs can buy time—but also reduce pressure to compete.

Buckberg discusses a familiar industrial-policy dilemma: protection can help domestic industry scale, learn, and invest—yet high barriers can also reduce competitive pressure, slowing efficiency gains and innovation over time. Related research on EV and battery support shows that government support is large and uneven across regions, complicating “free market” narratives around EV competitiveness.

Vehicle software is now treated like a national-security surface.

Beyond minerals, Buckberg highlights a second security vector: the “computerization” of vehicles. U.S. rules now restrict certain connected-vehicle software/hardware transactions tied to foreign adversaries—an explicit shift from trade policy into security regulation.

Implications for the Rare Earth Supply Chain

Are the magnets the message?

For REEx readers, the most actionable takeaway is simple: rare earth processing and magnet-making are not side plots in the EV story—they are the plot. If China can throttle magnets or the processing steps behind them, it can interrupt not only EV output but also parts of the internal combustion fleet (because rare earth magnets are used across many components).

This reinforces a reality REEx has emphasized: mining alone does not equal independence. The strategic battleground is separation, refining, alloying, and magnet manufacturing—the midstream and downstream layers where China retains a durable advantage.

Limitations and Controversies Readers Should Watch

• Not peer reviewed: This is a working paper designed to encourage debate, and some figures and claims rely on secondary sources that may evolve.
• Security framing can be overused: Treating broad sectors as “national security” can justify almost any intervention; critics argue this risks inefficient subsidies, higher prices, and retaliation spirals.
• Tariffs vs. innovation tension: Protection may preserve domestic production, but long-term competitiveness still requires learning curves, scale, and technology leadership—not permanent shelter.

REEx Bottom Line

Buckberg’s paper lands on a hard truth: America’s auto future depends on building secure, non-Chinese supply chains for batteries, chips, and rare earth magnets—and doing so fast enough to remain globally competitive. For policymakers and investors, the message is blunt: if the U.S. can’t process and make magnets, it doesn’t control the EV era—it rents it.

Citation: Buckberg, Elaine. Driving Security? U.S. Auto Industrial Policy in a Changing World. M-RCBG Associate Working Paper Series No. 267, Harvard University, November 2025.

© 2025 Rare Earth Exchanges™ – Accelerating Transparency, Accuracy, and Insight Across the Rare Earth & Critical Minerals Supply Chain.