Auto companies ‘in full panic’ over rare-earth bottleneck

— Frank Eckard, chief executive officer (CEO) of a German magnet maker, has been fielding a flood of calls in recent weeks. Exasperated automakers and parts suppliers have been desperate to find alternative sources of magnets, which are in short supply due to Chinese export curbs.

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Some told Mr. Eckard their factories could be idled by mid-July without backup magnet supplies. “The whole car industry is in full panic,” said Mr. Eckard, CEO of Magnosphere, based in Troisdorf, Germany. “They are willing to pay any price.”

Car executives have once again been driven into their war rooms, concerned that China’s tight export controls on rare-earth magnets — crucially needed to make cars — could cripple production. US President Donald J. Trump said on Friday that Chinese President Xi Jinping agreed to let rare-earth minerals and magnets flow to the United States.

A US trade team is scheduled to meet Chinese counterparts for talks in London on Monday.

The industry worries that the rare-earth situation could cascade into the third massive supply chain shock in five years.

‘A semiconductor shortage wiped away millions of cars from automakers’ production plans, from roughly 2021 to 2023. Before that, the coronavirus pandemic in 2020 shut factories for weeks.

Those crises prompted the industry to fortify supply chain strategies. Executives have prioritized backup supplies for key components and reexamined the use of just-in-time inventories, which save money but can leave them without stockpiles when a crisis unfurls,

Judging from Mr. Eckard’s inbound calls, though, “nobody has learned from the past,” he said.

This time, as the rare-earth bottleneck tightens, the industry has few good options, given the extent to which China dominates the market. The fate of automakers’ assembly lines has been left to a small team of Chinese bureaucrats as it reviews hundreds of applications for export permits.