Germany's Car Production Under Threat: VDA Warns of Chinese Rare Earth Shortages
Production Concerns Mount Among VDA Despite Steady Output
Hang tight, folks! Germany's automobile production is on the line, and it's all thanks to China's hardheaded approach to exporting rare earths. Germany's automotive association, VDA, has raised the red flag, warning about potential delays and halts in German car production, courtesy of China's export restrictions.
According to Hildegard Müller, VDA's president, China's stingy issuance of export licenses and sluggish customs clearance process for valid licenses are causing quite the ruckus. If things don't shape up soon, she warns, production stoppages could be unavoidable.
Back on May 9, the Alliance for Automotive Innovation in the US already sounded the alarm on production setbacks due to this very issue.
The VDA is urging the German government and EU Commission to plead their case with China's government and fast-track a solution. China clamped down on key raw materials, including those used in electric motor magnets and sensors, as part of its trade spat with the US. But small fry like us? We're caught in the crossfire, too.
China requires new licenses for each contract with foreign companies, making the process a real bee-atch. And, yep, you guessed it, it's primarily aimed at the US, but it's making waves for all global buyers.
Sources: ntv.de, RTS
By the Way...
In case you're curious, here's what's actually happening: As of April 4, 2025, China's tightened the screws on seven rare earth elements, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium. That means they now require special export licenses for these elements and related magnets, citing national security and non-proliferation concerns. This move, in response to US trade actions, has thrown a wrench in the works for many countries, including Europe.
And, in case you didn't know, these rare earth elements are like gold dust for electric vehicles. They're vital for electric motors and other parts. European auto suppliers have already shut down due to a lack of access to these critical materials. European companies are going hat in hand to Chinese officials, pleading for a speedy resolution to their stalled export licenses.
In short, things are a mess. But it's Germany that's front and center right now, and German automakers will likely feel the heat. European companies, like German ones, rely on these rare earth elements for electric vehicle production. Production slowdowns or halts may soon be on the horizon. Stay tuned, folks—this story's far from over!
The community policy dialogue should address the issues impacting small and medium-sized undertakings (SMEs) within the automotive industry, as these SMEs heavily rely on rare earth elements supplied from China, mainly used in electric vehicle production. Financial institutions, including those in Germany, should be prepared to support these SMEs during potential production setbacks due to delays in transportation of these critical elements from China.
