China's export restrictions threaten the global auto industry
After the COVID-19 pandemic, vehicle production stoppages due to component shortages and disrupted supply chains were commonplace, but now industry organisations fear new problems. This time the cause may be restrictions on rare earth exports from China.
Here's What We Know
The European Car Parts Suppliers Association (CLEPA) is sounding the alarm in statements to Reuters and other publications. Several European production lines have already suspended operations or at least reduced production. If nothing changes, according to CLEPA, this could lead to much bigger problems.
The cause should be sought in export restrictions imposed by the Chinese government on rare earth metals, magnets and other components that are vital to the electrifying automotive industry. Exporting such elements from China requires an export licence, and out of hundreds of applications in April, only a quarter were approved.
German industry organisation VDA (Verband der Automobilindustrie) also foresees great risks for the European auto industry if the situation with the export of rare earth elements from China does not change soon. Especially since many European carmakers are already going through a difficult Zeiten. These automakers are already actively negotiating with the Chinese government through various diplomats and government officials from other parts of the world to find a solution, according to Reuters.
China controls almost all of the world's production of rare earth elements. Other countries can only produce them in minimal quantities, effectively on a laboratory scale. According to Andreas Kroll, managing director of Noble Elements, there is no solution for car and component makers in the next three years other than to come to an agreement with China.
Source: Reuters
