What if we can't make cars?

The "nation on wheels" almost couldn't build cars...

Yes, it's hard to believe that China not only has an enormous auto market but also controls the critical lifelines of the global automotive industry! As the saying goes, you never know until you're tested—and this test has revealed the truth. The production shutdowns at car factories across the Pacific have laid bare our hidden strengths.

If there is no reliable channel to obtain certain components and magnets, some automotive suppliers may be unable to produce key auto parts, potentially causing car factories to shut down.

Important auto parts familiar to us all, such as automatic transmissions, throttle bodies, alternators, various motors, sensors, speakers, lights, power steering systems, and cameras...

 

Due to the U.S. insistence on launching trade and tariff wars, it is now finally backfired by its own unreasonable bullying behavior.

This "nation on wheels" may thus fail to produce cars smoothly, even affecting global listed automakers and industrial chains.

On June 4, the Motor & Equipment Manufacturers Association (MEMA), an industry organization representing U.S. automotive parts suppliers, called on the U.S. government to take immediate action to address China's export restrictions on rare earths, minerals, and magnets, warning that the move could rapidly disrupt U.S. automotive parts production.

"Severe scenarios may involve production cuts or even shutdowns of vehicle assembly lines," MEMA stated, noting that for automotive listed companies with domestic operations in the U.S., it is only a matter of time before car factories are affected.

Recently, as China tightens export controls on rare earths, several listed automakers in the U.S., Japan, and Europe are facing production line shutdown crises.

U.S. listed automakers have already felt the impact of the restrictions. Ford Motor stated that due to rare earth shortages, its Explorer SUV production line in Chicago was forced to suspend operations for a week in May.

 

Suzuki Motor has paused production of its Swift model due to limited rare earth exports from China, becoming the first Japanese automaker affected.

German luxury giants Mercedes-Benz Group and BMW Group have held urgent consultations with suppliers to ensure stable supplies of components containing rare earth materials. Specifically, Mercedes-Benz Group is exploring the possibility of stockpiling specific parts.

On May 9, MEMA jointly sent a letter to the Trump administration with the Alliance for Automotive Innovation, which represents major automakers including General Motors, Toyota, Volkswagen, and Hyundai, expressing concerns about export restrictions on materials like rare earths.

As is well known, China is the world's largest supplier and exporter of rare earth magnets, controlling approximately 70% of global rare earth production capacity and over 90% of magnet processing capacity.

 

Magnet products are used in various fields, from automobiles and fighter jets to household appliances. Given the clear dual-use nature of rare earths (civilian and military), China announced in April this year that it would impose export controls on seven categories of rare earth-related items, which is also a common international practice.

These export control measures may include not only mined minerals but also permanent magnets and other hard-to-substitute finished products.

In fact, China's regulation of rare earths is not intended to "weaponize" rare earths, but rather a strong response to U.S. tariff measures and U.S. actions on Taiwan-related issues. However, due to the blurred line between civilian and military uses of rare earth products, the supply chains of some multinational listed automakers will inevitably be affected.

On May 30, automotive issues became a topic of discussion during U.S.-China talks in Geneva. China also agreed to lift restrictions on rare earth magnet exports to U.S. companies.

In response, the U.S. expressed its willingness to lift some tech export restrictions in exchange for China's commitment to relax rare earth export controls.

In the past, people only knew that the U.S. could use chips to exert a stranglehold on other countries, but now it has been realized that China's rare earths can influence not only semiconductors and military industries but also play a pivotal role in the critical supply chains of industries such as automobiles and aerospace.