A severe shortage of rare earth elements has led to the shutdown of several European auto component plants, as reported by the European Association of Automotive Suppliers (CLEPA). This disruption is directly linked to China’s recent export restrictions on rare earths, which are critical for manufacturing electric motors and various automotive components.

Since early April, hundreds of European auto suppliers have applied for export licenses to access these essential materials. However, only about 25% of these applications have been approved, with many others rejected on what CLEPA describes as “highly procedural grounds.”

The approval process has been criticised for its inconsistency, varying from province to province in China, and in some cases, for demanding information sensitive to intellectual property. CLEPA has warned that unless the licensing process is standardised and expedited, more plants will likely be forced to halt operations within the next three to four weeks as their existing inventories are depleted.

China’s decision in April to suspend exports of a wide range of rare earth elements and related magnets has caused significant disruption across global supply chains.

The impact is not limited to the automotive sector; it also affects aerospace manufacturers, semiconductor producers, and military contractors in Europe, the United States, and Asia. The restrictions have exposed the vulnerability of industries that rely heavily on a single source for critical raw materials.

Industry associations in Germany, the US, and India have called on their respective governments to engage with China and seek urgent solutions to prevent long-term supply disruptions. The situation underscores Europe’s deep dependence on Chinese rare earths and highlights the broader risks facing global industries due to concentrated supply chains.

The ongoing rare earth shortage—driven by Chinese export curbs—has already forced several European auto supplier plants to shut down, with the threat of further closures looming unless international and regulatory interventions can resolve the bottleneck.

This crisis has brought renewed attention to the strategic importance of diversifying sources of critical raw materials to ensure industrial resilience.

Based On A Reuters Report