In 2023, China cut off exports of heavy rare earth elements on April 4, leaving the global automotive industry facing a major crisis. Assembly lines were halted, factories closed, and within a week, panic erupted globally. Companies in Europe faced difficulties, Ford's production lines were stalled, severely impacting automakers reliant on these minerals. This unexpected situation was unforeseen, causing strong disruptions in the supply chain.
The impacts of the export ban from China
The automotive industry relies heavily on rare earth elements to produce from the smallest electronic components to the largest battery systems. China's ban on exporting these elements has led to global production disruptions. Dan Hearsch, a managing director at AlixPartners, emphasized that this decision came quickly and no one had time to react.
These rare earth elements are not only present in cars but also in many other devices such as smartphones, military aircraft, and satellites. In automotive applications, they play a critical role in the pollution filters of gasoline vehicles and in the electric motors of electric vehicles.
Rare earth elements and China's control
Rare earth elements consist of 17 types of critical resources, divided into three groups: light, medium, and heavy. While light elements are easier to extract, China holds 70% of the reserves and 90% of global processing capacity for heavy elements. This creates a significant monopoly in the processing industry.
Gracelin Baskaran, who runs the Critical Minerals Security Program at the Center for Strategic and International Studies, stated that no cars can be produced without rare earth elements. They appear in each part such as seat belts, steering wheels, and many other electronic components.
Reactions to the ban and the current situation
The then-President of the United States, Donald Trump, expressed concern over the production disruptions. His administration attempted to negotiate with China to expedite the shipment of some rare earth elements and magnets to the United States. However, this agreement has not been clearly announced, and many doubt its sustainability.
Companies are looking to respond to this situation by increasing exploration for new minerals while researching technologies that do not require rare earth elements. However, developing and applying new technologies will take time and may not timely address the current crisis.
Challenges due to instability in the global supply chain
Looking from a global perspective, China's abuse of power in managing resources not only affects the automotive industry but also creates a series of other potential crises. Everything can be disrupted without a clear strategy to deal with this situation.
The industry has experienced many fluctuations, but this crisis has opened opportunities for countries and companies to seek more sustainable supply sources while developing self-sufficiency in production.
The future of the automotive industry and rare earth elements
In the current context, it is important for automakers and governments to reconsider how they approach their supply chains to avoid relying solely on China. By diversifying supply sources and increasing investment in new technologies, future risks can be somewhat mitigated.
Ultimately, the automotive industry needs to prepare for rapid changes in the market. A crisis today can lead to a boom in new technology tomorrow. Players in this field need to have a longer-term vision, identifying and responding quickly to future hot topics.
Source: https://tintucbitcoin.com/dong-thai-cua-trung-quoc-de-doa-san-xuat-o-to/
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