Several major automakers are considering moving some parts of production to China in response to the country’s export controls on rare-earth magnets that are vital to car manufacturing, The Wall Street Journal reports.
The companies, which are not named in the article, include multiple traditional and electric-vehicle manufacturers who say they could face factory shutdowns if they’re unable to obtain rare-earth magnets.
China in April announced new export restrictions on rare-earth magnets and other elements used in a wide range of industries in response to President Donald Trump’s tariffs on most Chinese products.
“While efforts are underway to bolster supply chains and suppliers of these elements outside of China, this will take additional time and will not alleviate the immediate shortage of elements vital for automotive components used to produce vehicles here at home,” read a letter sent to the Trump administration last month by multiple auto industry groups, including the heads of the Alliance for Automotive Innovation and MEMA, the Vehicle Suppliers Association.
China, which controls 90% of the world’s supply of rare-earth magnets, heavily restricts their sale overseas. But the sale of parts that include rare-earth magnets are not covered by these restrictions, meaning U.S. automakers are considering shifting production of these parts to China. In May, Ford had to shutter production at its Chicago plant on the Ford Explorer due to a shortage of rare-earth magnets, according to a spokesperson.
“If you want to export a magnet [from China] they won’t let you do that. If you can demonstrate that the magnet is in a motor in China, you can do that,” one supply-chain manager at a major automaker told the Journal.
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