The Voice News: Experts warn of a looming crisis in the auto industry as rare-earth element shortages threaten widespread production disruptions—what some are calling a “chip shortage on steroids.”
China controls nearly all of the world’s supply of 17 rare-earth minerals, essential for manufacturing everything from cars and jet engines to smartphones and medical equipment like MRI contrast dyes and some cancer treatments. Recently, China tightened export controls by introducing new licensing requirements in April, restricting shipments to much of the world, including the U.S.
This week, U.S. and Chinese delegations are meeting in London at Lancaster House near Buckingham Palace to negotiate a new trade deal, with rare-earth elements high on the agenda. According to Gracelin Baskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies, U.S. companies currently hold only two to three months’ supply of these minerals. Without an agreement, manufacturing could grind to a halt.
President Donald Trump announced last Friday that Chinese President Xi Jinping had agreed to resume exports of rare-earth products. However, Baskaran cautions that temporary lifting of restrictions may not be enough for manufacturers to plan ahead reliably. Prior to the announcement, exports had slowed significantly, failing to meet the pace needed to maintain stable supply chains.
Industry insiders, speaking on condition of anonymity, suggest the auto sector is bracing for extensive shutdowns in the coming months. The 2021 chip shortage, which forced production halts and skyrocketing car prices, is now seen as a mild precursor to what could happen with rare-earth shortages. These minerals aren’t just critical for electric vehicles; they are used in nearly every component of modern cars, from windshield wiper motors to seatbelt sensors.
Ford, for example, reportedly paused production at its Chicago plant that assembles the Explorer for a week—likely due to a lack of rare-earth magnets—though the company has not confirmed the cause. Reuters sources say that suppliers to major U.S. automakers, including General Motors, Ford, and Stellantis (Jeep’s parent company), have been granted temporary export licenses for rare earths but only for up to six months. The companies declined to comment on their inventory levels.