China’s export restrictions on rare earth magnets, brought in as a response to U.S. tariffs, threaten to halt vehicle production in Germany, an automotive lobby group warns.
Germany’s VDS auto group adds that the restricted exports of these essential elements in the modern automobile will, at the very least, cause serious disruption for domestic automakers, Reuters reports.
China's decision to limit exports of rare earth magnets hits European automakers who use these in multiple components, from windshield wiper motors to brake sensors, and would see them struggle to keep production running smoothly, says the head of VDA, Hildegard Mueller, in a statement.
While admitting that China has issued some permits to a handful of rare earth producers, including suppliers to Volkswagen, Mueller adds that it is not enough to prevent severe vehicle production disruptions even to the point of a complete halt.
“If the situation is not changed quickly, production delays and even production outages can no longer be ruled out,” she adds.
In written comments, Mercedes-Benz says it was “evaluating and monitoring the situation very closely.”
Most industry observers consider China’s decision to restrict rare earth exports as a bargaining chip in its ongoing trade war with President Donald Trump.
However, because China controls 90% of global processing capacity for rare earth magnets, the impact is global and is hitting the major automakers in Europe among the hardest.
