China's latest rare earth curbs threaten European auto supply chains: VDA

China's latest export restrictions on rare earths and related technologies will have far-reaching consequences for the battery and semiconductor industries that supply the European automotive sector, Germany's Automotive Industry Association, VDA, said Oct. 15.

In an emailed statement to Platts, part of S&P Global Energy, a spokesperson for the VDA said that the new regulations, issued by China's Ministry of Commerce on Oct. 9, expand Beijing's control over critical mineral value chains at a time when European manufacturers are already grappling with severe supply shortages.

The German association warned that the new measures build upon export restrictions implemented in April, which have already "significantly exacerbated the supply situation for rare earths and strategic materials."

The latest restrictions come as European automakers face mounting pressure to secure stable supplies of rare earth elements essential for electric vehicle production, particularly permanent magnets used in EV motors. China controls roughly 60% of global rare earth mining and over 85% of processing capacity, making it a critical chokepoint for the automotive industry's electrification efforts.

"Through extraterritorial export restrictions on rare earths and the associated processing technologies, China is further expanding its control over value chains—especially in the field of permanent magnets—from raw material supply and processing technologies to the transfer of know-how," the VDA spokesperson said.

The association called on both the European Commission in Brussels and the German government in Berlin to "continue to address this issue forcefully with the Chinese side in order to find a viable solution quickly."

Europe is currently seeking to reduce its dependence on Chinese critical mineral supplies through initiatives like the Critical Raw Materials Act and partnerships with alternative suppliers in Canada, Australia and Africa.

China's new restrictions drew a swift response from US President Donald Trump, who threatened to impose 100% tariffs on all Chinese imports beginning Nov. 1 and casting doubt on a planned meeting with Xi.