Necessity has always been the mother of invention. With China attempting to hold the world at ransom by restricting the supply of rare earths, leading automakers in the United States, Germany, Japan, and India are now developing electric vehicles (EVs) that do not rely on rare earth elements for their batteries.
China first began weaponizing rare earth supply in 2010. To pressure Tokyo into accepting its claims in the Senkaku Islands dispute, Beijing restricted the export of rare earths to Japan — a move that threatened Japan’s automobile industry. Since then, Japanese manufacturers have been working to develop products independent of Chinese rare earths.
China’s latest export curbs, imposed on October 9, target rare earth elements (REEs) and associated technologies. The decision clearly demonstrates Beijing’s intent to exploit its vast reserves — estimated to account for about half of the world’s rare earth deposits — as leverage to blackmail other nations.
The timing of these curbs appears strategic, aimed at increasing pressure on the United States to allow China access to advanced semiconductors for defense purposes. U.S. President Donald Trump and Chinese President Xi Jinping are expected to meet at the end of October in Kuala Lumpur. According to Reuters, a White House official said, “The White House and relevant agencies are closely assessing any impact from the new rules, which were announced without any notice and imposed in an apparent effort to exert control over the entire world’s technology supply chains.”
In 2018, China expanded its controls globally on rare earth exports, primarily affecting the U.S. military industry. However, the U.S. managed to secure supplies through intermediary countries such as Thailand and Mexico, which sourced materials directly from China.
In December 2023, China once again tightened restrictions — this time on rare earth processing and refining technologies — and introduced additional regulations to further control exports. The move was aimed at using rare earths as a bargaining chip to gain access to advanced microchips from Western nations.
In April last year, following President Trump’s decision to impose additional tariffs on Chinese products, Beijing retaliated by restricting exports of various heavy rare earth materials to the U.S. and other countries, including India. This placed considerable strain on India’s automobile industry.
China’s new export license requirements for rare earth elements, introduced in April, have disrupted global supply chains. Companies are now required to obtain export licenses from the Commerce Department of the State Council before shipping seven types of medium and heavy REEs from China. The approval process takes a minimum of 45 days, and even longer for “sensitive” supplies.
Although Beijing appeared to ease export restrictions in May following Washington’s partial lifting of tariff barriers, the gesture has proven largely symbolic. On July 28, China strengthened state control over the rare earth supply chain — from mining to processing and export — while introducing stricter environmental regulations. These measures have significantly disrupted global supply chains, increased production costs for high-tech industries, and are likely to slow down manufacturing in sectors such as electric vehicles and defense systems.
Under the new regulations, every rare earth-producing company in China must now report its monthly and annual production targets to local county-level industry, IT, and natural resource departments. These reports are then consolidated and forwarded to higher authorities. Additionally, companies are required to track and upload data on the flow of rare earth products to the Ministry of Industry and Information Technology by the 10th of each month.
As a result, major automakers such as Ford and Suzuki have faced production halts due to the unavailability of components containing REEs. Japanese car manufacturers, in particular, have been subjected to burdensome demands — such as providing detailed lists of every end-use product that contains rare earth materials. European automakers have also been severely affected by delays in shipments from Chinese exporters, especially in the supply of rare earth magnets.
Though Beijing lifted export restrictions on rare earth magnets to India in August, by September 9 not a single import application from Indian companies had been approved, leaving India effectively cut off. Reports suggest that China has demanded assurances from India that any rare earth imports would not be re-exported to the U.S.
China’s October 9 export control order imposed even stricter rules on mining and processing of rare earth minerals, citing concerns that foreign firms were using the materials for military purposes. Five additional elements have been brought under export licensing, and extra scrutiny has been introduced for semiconductor-related users. Furthermore, foreign rare earth producers utilizing Chinese materials will now also be subject to these new regulations.
However, Beijing may have to wait before seeing the full impact of these measures. The United States, European Union, and other countries are racing to establish alternative supply chains independent of China. Global auto majors are simultaneously working on new technologies to reduce or eliminate the use of rare earths.
Tesla, BMW, General Motors, BorgWarner, Jaguar Land Rover, ZF, Vitesco, Renault, Nissan, Mercedes-Benz, Toyota, and Bentley are among the companies developing next-generation EV models that use little or no rare earth materials.
Tesla has already reduced heavy rare earth usage by 25 percent per vehicle and plans to eliminate them entirely in upcoming models. BMW has achieved the use of zero rare earth permanent magnets in its EVs, instead developing electric motors that generate magnetic fields using electric current. The company’s fifth-generation electric motors have been described as a “masterpiece” — blending traditional engineering with cutting-edge EV technology to improve efficiency without rare earths.
General Motors is also exploring options to reduce or eliminate rare earth components in its EV motors. Mercedes-Benz has reduced the heavy rare earth content in its next-generation electric vehicles to “close to 0 percent.” Toyota is developing permanent magnets with a 50 percent reduction in heavy rare earths, while Marelli is experimenting with alternative materials for magnet-free motors.
In India, the Indian Institute of Technology, Delhi, is actively developing motors that require minimal or no rare earth elements. Currently, neodymium and dysprosium — essential for conventional permanent magnet motors — are imported mainly from China, creating vulnerabilities in supply chains amid rising political and trade tensions.
Ultimately, global automakers are positioning themselves to break free from China’s dominance in rare earth supplies, signaling the dawn of a new era in sustainable and independent EV production.
