Rare Earth Supply Chain Rupture Threatens European Electric Vehicle Industry

Strategic Insights -

As trade tensions between China and the US continue to escalate, the European electric vehicle industry is facing a critical supply chain rupture. A report by Berylls by AlixPartners warns that rare earth supplies are perilously low, with just five to six weeks of stockpiles left, and production lines across the continent may grind to a halt by mid-June. The warning comes as China has imposed export restrictions on several high-demand minerals, including neodymium, which is essential for electric motor production.

Key Takeaways:

  • The European and American suppliers of rare earth elements are operating on a precariously narrow margin, with stockpiles expected to run dry within five to six weeks.
  • China has required special permits for the export of several high-demand minerals, including neodymium, since April, in a move widely seen as retaliation against US trade policies.
  • China controls about 90 percent of global rare earth extraction and virtually 100 percent of its processing, giving it unrivaled leverage in the sector.
  • The consequences of the supply chain rupture are severe and wide-ranging, with permanent magnets made from rare earths being essential to EV motors, power steering systems, audio devices, climate control systems, and wind turbines.
  • Automakers have largely remained silent on the issue, with some industry observers attributing this to caution.
  • European governments have begun floating emergency options, including tapping into strategic reserves or easing import routes from countries like Japan, but no concrete actions have been announced.

Statistics:

  • 90 percent: the percentage of global rare earth extraction controlled by China.
  • 100 percent: the percentage of global rare earth processing controlled by China.
  • 40-50 percent: the recent surge in cost of rare earth components.
  • 5-6 weeks: the expected timeframe for rare earth stockpiles to run out.
  • 90: the percentage of global renewable energy installations that have been affected by the rare earth shortage.

Sources:

  • "America's 8.4 billion metric ton massive rare earth element mining demand" by Daily Galaxy, 2025-03.
  • "China's rare earth export curbs disrupt global EV supply chains" by Supply Chain World magazine, April 2025.
  • Daily Galaxy, 2025-02, "Map of world's rare earth minerals are hidden".