European Auto Suppliers Hit by Factory Closures Amid China’s Rare Earth Curbs
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Europe’s main auto supplier association said on Wednesday that China’s export restrictions on rare earth elements have led to the shutdown of several production lines and plants across the continent.
CLEPA said affected components are “critical to both combustion engine and electric vehicles.”
The association said that since early April, hundreds of export license applications have been submitted to Chinese authorities, yet only about “one-quarter appear to have been approved.”
It added that procedures “are opaque and inconsistent across provinces, with some licenses denied on procedural grounds and others requiring disclosure of IP-sensitive information.”
CLEPA Secretary General Benjamin Krieger said, “With a deeply intertwined global supply chain, China’s export restrictions are already shutting down production in Europe’s supplier sector.”
On Wednesday, German automaker Mercedes-Benz said it is talking to its top suppliers about building rare earth stockpiles, though it said it has not seen any impact from the shortage.
“We have learnt a lot from the semiconductor situation in the automotive industry and are constantly ... looking at what risk portfolio we still have in the supply chain,” Joerg Burzer, Mercedes-Benz’s board member in charge of production, told journalists at a roundtable.
“We are of course in constant dialogue with our suppliers and of course we also discuss with them what the best tool is for risk management and the topic of physical buffers naturally plays a role here.”
Sefcovic said on Wednesday that he and his Chinese counterpart had agreed to clarify the rare earth situation as quickly as possible.
The lack of access to China’s rare earth elements is adding to the European car industry’s woes.
EU law stipulates that from 2035, all new cars that come on the market cannot emit any carbon dioxide (CO2), making it illegal to sell new fossil fuel-powered internal combustion engine vehicles in the bloc.
U.S. Trade Representative Jamieson Greer testifies before the Senate Finance Committee in the Dirksen Senate Office Building in Washington on April 8, 2025. Kayla Bartkowski/Getty Images
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U.S. Trade Representative Jamieson Greer said on CNBC on May 30 that the United States has been monitoring China’s compliance with the latest agreement and is “very concerned with it.”
“The United States did exactly what it was supposed to do, and the Chinese are slow rolling their compliance, which is completely unacceptable,” Greer said. “Time and time again, you know, we see the Chinese come down and not comply with their agreements, slow roll compliance, not open their economy like they should.”
Greer said the Chinese regime was the only government to counter U.S. tariffs when Trump first announced them, restricting exports of rare earth magnets and blacklisting U.S. companies, and after the Geneva Agreement on May 12, the regime has been slow to remove these countermeasures.
“You can see that Europe, Japan, United States, elsewhere, we haven’t seen the flow of some of those critical minerals as they were supposed to be doing,” Greer said.
While some rare earth elements, such as dysprosium, samarium, and praseodymium, are called “rare,” they are not actually rare in the Earth’s crust and are abundant in many places.
These critical elements are typically found in low concentrations and are difficult to separate from other materials, often requiring specialized or even toxic extraction processes.
Under the Chinese Communist Party, China holds a near-monopoly on the global rare earths market, dominating both mining and processing through state-controlled companies and strict export regulations.
China accounts for nearly 90 percent of global refined output and has designated rare earths as protected and strategic minerals since 1990.
