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Euronews
12 hours ago
- Automotive
- Euronews
Could China's rare earth pivot ease strain on the automotive sector?
China has approved a number of rare earth export licences, a move that could provide modest relief to global manufacturers struggling with supply disruptions. But with export volumes still sharply down and no transparency on which firms benefit, Europe's automotive industry remains vulnerable to further disruption. At a press conference on Thursday, China's commerce ministry confirmed it had approved 'a certain number' of export licence applications for rare earths and magnets. These minerals are used in an array of high-tech products such as smartphones and jet engines. Rare earths such as neodymium, dysprosium and terbium are indispensable for producing lightweight, high-efficiency motors in electric and hybrid vehicles. China's announcement follows months of tension sparked by Beijing's decision in April to impose new export controls on seven rare earth elements and related products — just days after Washington introduced steep tariffs on Chinese goods. According to commerce ministry spokesperson He Yadong, China will 'continue to strengthen the review and approval' of licence applications and remains 'willing to enhance communication and dialogue' on export controls. The updated tone from Beijing also arrives just weeks before a major EU-China summit set for 24 to 25 July in Beijing, commemorating 50 years of diplomatic relations. Chinese customs data shows the stark impact of the restrictions. Exports of rare earth magnets plunged 74% in May compared to a year earlier, the steepest drop in over a decade. Shipments to the United States fell by 93%, according to a Wall Street Journal analysis. Total export volumes for May stood at just 1.2 million kilograms, the lowest since the start of the COVID-19 pandemic in early 2020. Earlier April exports also dropped by 45% year-on-year. JL Mag Rare-Earth, a major Chinese magnet supplier to Tesla, Bosch and General Motor, said last week that it had begun receiving licences for shipments to the US, Europe and Southeast Asia. Since April, hundreds of export licence applications have been submitted to Chinese authorities, but only about one-quarter have reportedly been approved. Some firms have encountered requests to disclose IP-sensitive information, while others have faced outright rejections based on unclear procedural grounds. ING economist Rico Luman indicated that with 'nearly 70% of global rare earth production and more than 90% of processing taking place in China, the world remains heavily reliant' on the country. Though rare earths are not geologically scarce — cerium, for instance, is more abundant than copper — their extraction is costly, and mineable concentrations are rare. "It's not a question of scarcity, but of concentration," Luman added. China also supplies more than 90% of the world's demand for rare earth permanent magnets, frequently used in electric motors and wind turbines. Without access to these materials, the European automotive supply chain risks paralysis. The automotive sector relies heavily on rare earth magnets for electric motors, power steering, sensors and other components used in both combustion and electric vehicles. 'China's export restrictions are already shutting down production in Europe's supplier sector,' Benjamin Krieger, Secretary General of CLEPA, warned earlier this spring. His call for 'transparent, proportionate' licensing remains relevant, even as some licences begin to clear. The European Chamber of Commerce in China confirmed that while some progress has been made, challenges persist. 'The situation is improving, although the percentage of cleared licences does vary. Additionally, even once the licence is given, delays can still be seen in customs clearances,' said Adam Dunnett, the Chamber's secretary general. Beijing's latest move to ease export restrictions on key components for the automotive industry offers only limited relief to a sector under strain. The European automotive industry, already grappling with competition from lower-cost Chinese electric vehicles, remains vulnerable to material shortages, delays and discretionary actions from Beijing — thereby reinforcing China's leverage in global trade negotiations. The second season of My Wildest Prediction has come to an end. Over the last eight months, we have delved into the business world through the words of entrepreneurs, researchers, futurists and experts from around the globe. Our goal has been to understand the challenges facing our economy and society, exploring how they affect our lives now and in the years to come. My Wildest Prediction is a podcast series from Euronews Business where we dare to imagine the future with business and tech visionaries. Among other topics, we discussed work. Some guests, like bestselling author Bruce Daisley, painted a pessimistic picture, predicting that 'work will get worse before it gets better'. Others, like futurist Dom Price, offered a more radical point of view, arguing that we will abandon the productivity myth — the idea that constantly working is the key to success. Overall, our guests agreed that work will become increasingly mobile, with entrepreneur Karoli Hindriks arguing that 'passports will be obsolete' and marketing expert Rory Sutherland saying that people will adopt a nomadic lifestyle. We also explored the future of our cities and our relationship with the environment. Urbanist Greg Clark predicted that by 2080, there will be more than 10 billion people on Earth, with 90% living in cities. Additionally, explorer Bertrand Piccard forecast that hydrogen planes will fly commercially by 2035. And of course, artificial intelligence (AI) was extensively discussed in our podcast and remained a polarising topic. Human resources expert Patty McCord believes 'AI will not be the big scary thing we think', while others like professor Scott Galloway predicted that AI will fuel US domestic terrorism. This is just a glimpse of the predictions shared during our season. Watch the wrap-up and listen to the episodes on YouTube or your favourite audio platforms.
CNBC
13-06-2025
- Business
- CNBC
China's tight grip on rare earths shows little sign of weakening
China's dominance of the global rare earths supply chain won't dwindle easily, even if Beijing decides to approve more export licenses through deals with Europe and the U.S. Three Shenzhen-listed Chinese companies this month said that Beijing approved their exports of magnets with rare earths — metals critical for cars, defense, semiconductors and other industrial products. But another firm, Baotou INST Magnetic New Materials, said last month the export licenses can only be used for one shipment. In Europe, automotive industry groups have said that, in the case of magnets and heavy rare earths, long-term export licenses from China were only valid for a maximum of six months. Diversifying away from Chinese sourcing of rare earths is likely to be "extremely difficult" and, at best, a limited long-term solution, according to a Tuesday note from Rico Luman, senior sector economist for transport and logistics at Dutch bank ING. China is the undisputed leader of the critical minerals supply chain, producing roughly 60% of the world's supply of rare earths and processing almost 90%, which means it is importing these materials from other countries and refining them. "Europe currently produces no rare earths, and the U.S. has only recently begun small-scale production of neodymium and praseodymium. However, both regions hold only a fraction of global reserves, limiting their ability to scale up," Luman said. Already, European automakers and U.S. high-tech businesses in China have halted production or warned of a shortage this summer. China announced export controls on seven rare earths in early April, following a series of tighter restrictions in the last two years on a broad range of critical minerals. Washington had expected a rollback of the April controls once the U.S. and China agreed to a 90-day tariff reprieve in mid-May. After trade talks in London this week, U.S. officials indicated Beijing will soon allow more rare earths exports. China has approved "a certain number" of export permits for rare earth elements and related items, a spokesperson for the commerce ministry said Thursday, adding that China will continue to step up examination and approval for such license applications. This has yet to significantly improve business conditions. The market remains "volatile" even after the U.S.-China trade negotiations in London, said Philippe Kehren, CEO of Belgian chemicals group Solvay, which operates the largest rare earths processing plant outside of China in La Rochelle, France. In response to that unpredictability, he said the company is using recycled material and studying sourcing alternatives to China. "This is how we adjust to the current, unpredictable situation and I think the best mitigation in this type of circumstance is indeed to master the technology," Kehren said. Solvay aims to supply 30% of Europe's processed rare earth demand for permanent magnets by 2030. Beijing will likely keep up its restrictions on rare earths to deter Washington from ratcheting up restrictions on high tech exports to China, said Dennis Wilder, a former senior White House intelligence official. "If new export controls [against China] are implemented, China may pull back again from the rare earth understanding," said Wilder. Gabriel Wildau, managing director at risk consultancy Teneo, echoed the view and warned that even as Beijing signaled a willingness to ease rare earth exports, "supply cutoffs will remain an ever-present threat." Beijing has made the licensing regime "permanent," despite perceptions that it was an "act of retaliation" amid tit-for-tat escalation with the U.S., Wildau noted. That would allow China to deter stockpiling of the critical mineral by U.S. firms and ensure its negotiating leverage remains undiminished, he added. "Firms now have no choice but to invest in and develop alternative sources, substitutes, and re-export solutions to hedge against the risk of a supply loss from China," said Matt Gertken, senior vice president at BCA Research. That's easier said than done, as China has built up control over vast amounts of global supply chains. In batteries, for example, China has mined 68% of the graphite needed, refined 60% of the world's lithium and 72% of cobalt used globally, according to a U.S. Congressional report citing data from 2019. In a sign of the challenge for global businesses to shake off reliance on Chinese rare-earth supplies, several automakers, including General Motors and BMW and major suppliers, have been developing electric vehicles with little to no rare-earth content. Few have managed to scale production to levels that could reduce costs. Automakers will have to "operate two ecosystems: one exclusively for China in China, and one outside of China," said Lei Xing, an independent analyst on China's auto industry. Separately, Lewis Black, CEO of Almonty Industries, said it's going to take "a significant amount of time" to find alternatives to China's supply of rare earths. Speaking to CNBC's "Squawk Box Asia" on Friday, Black said China has protected its market share by pushing prices down to levels at which other countries' companies went out of business and investors weren't incentivized to pour in capital. Late last year, China increased restrictions on exports of civilian-use products deemed likely to end up having military use. The rules aren't bounded by geographical location, meaning they could cover any Chinese transaction with a foreign entity or individual, pointed out law firm Morrison Foerster. In February, China then announced export controls on five critical minerals, including tungsten, an extremely hard metal used for precision cutting tools, weapons and semiconductor production. The country controls 80% of the tungsten supply chain. Last week, a European company that needs tungsten powder shut down for a week, said Oliver Kleinhempel, executive director of EQ Resources, which says it is one of the top two tungsten recycling companies. He warned of a "complete structural shift" if Western businesses that consume tungsten are forced to shut down, incentivizing their Chinese peers to take that market share. Almonty Industries is working to reopen a large tungsten mine this year in South Korea, but the company expects its supply of the metal will only be able to satisfy U.S., EU and South Korean defense needs. "This was always going to happen, it was inevitable, it was not something that caught anyone by surprise until it happened, and then everyone['s question] was: 'What do we do?'" Black said. He said he is hopeful that the company's tungsten lab can make progress in the next two years on recovering more of the metal from tailings currently wasted in production.
Yahoo
26-05-2025
- Automotive
- Yahoo
BYD launches attempt to crush Tesla in China
BYD has slashed the price of its electric vehicles (EVs) in China as it steps up its war with Tesla. The Chinese EV maker is now selling its entry-level car for 75pc less than the cheapest Tesla after cutting the price of the Seagull hatchback by 20pc to 55,800 yuan (£5,712). That is around a quarter of the cost of Tesla's cheapest car, the Model 3, which sells for 231,900 yuan. The Shenzhen-based EV manufacturer, whose investors include Warren Buffett, over the weekend announced discounts on 22 of its models in China until the end of June as it battles a slowdown in the local market and higher tariffs in the EU and US. While BYD's Seagull hatchback is smaller in size than Tesla's Model 3, it demonstrates the strides that Chinese manufacturers have made in lowering the cost of EVs. China has become the world's biggest market for battery-powered cars and domestic giants have invested heavily in producing affordable vehicles. The sweeping price cuts also highlight the intense competition in the market. A record 3.5m EVs were left sitting unsold in dealerships across the country in April. It marks the highest stock level since December 2023, according to figures from the China Passenger Car Association. Slowing economic growth in the country has hit sales. The slump is a blow to Tesla, which counts China as its second biggest market. Sales of Chinese-made Teslas, which cover both the local market and exports to Europe, fell 6pc in April compared to a year earlier and have now been falling for seven straight months. Shares in BYD fell 5.9pc in Hong Kong on Monday following the price cut announcement as investors fretted about profit margins being eroded away. Rivals Li Auto and Great Wall Motor declined 3.2pc and 2.7pc respectively. Rico Luman, a senior economist at ING, said the price war was 'clearly a signal of intensified competition in China and also a maturing of the EV market'. 'There's over 100 manufacturers active in China itself in domestic markets for EVs,' he said. 'If you look at the margins they are not at a decent level at the moment so it really will hurt. It may be the start of a shake out in the Chinese market because we do expect that a lot of these brands will disappear eventually.' While the cuts won't take effect beyond China, Tesla and other Western manufacturers have long struggled to compete on price with Chinese rivals and have seen their market share eaten away. BYD outsold Elon Musk's Tesla in Europe last month for the first time ever and overtook Tesla in Britain in January. The symbolic shift has been helped by a driver boycott of Tesla over Mr Musk's support for Donald Trump. British interest in cars built by Chinese manufacturers has soared, according to Auto Trader, the UK's largest online automotive marketplace. More than 1.4m car adverts viewed in the first four months of this year on its website were for Chinese brands. That represented a market share of 5.3pc, compared with 1.3pc during the same period in 2024. BYD accounts for around half of advert views and stock on Auto Trader, while other Chinese manufacturers to have recently debuted in Britain include Jaecoo, Leapmotor, Skywell, Omoda and Xpeng. Ian Plummer, commercial director at Auto Trader, said: 'Our research shows a breakthrough for Chinese manufacturers in the UK market over the last 12 months. 'Several brands are now motoring from a standing start and bigger names like BYD have embedded themselves in the public consciousness.' Lower prices in China come as BYD seeks to boost sales in its home market and pivot away from focusing on international expansion. Mass adoption of EVs in Europe has been slower than expected and the EU has also imposed tariffs on cars made in China. As a result, BYD pays a 27pc import tax on battery electric vehicles it sells in the EU. In the US, cars have been caught up in Mr Trump's ongoing trade spat with Beijing. While tariffs on Chinese goods have now been lowered from their peak of 145pc, they still stand at 30pc. Mr Plummer said: 'Trade turbulence with the US and EU tariffs is also making the UK relatively more attractive as a market. 'There will be much more to come from Chinese carmakers.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Yahoo
26-05-2025
- Automotive
- Yahoo
BYD launches attempt to crush Tesla in China
BYD has slashed the price of its electric vehicles (EVs) in China as it steps up its war with Tesla. The Chinese EV maker is now selling its entry-level car for 75pc less than the cheapest Tesla after cutting the price of the Seagull hatchback by 20pc to 55,800 yuan (£5,712). That is around a quarter of the cost of Tesla's cheapest car, the Model 3, which sells for 231,900 yuan. The Shenzhen-based EV manufacturer, whose investors include Warren Buffett, over the weekend announced discounts on 22 of its models in China until the end of June as it battles a slowdown in the local market and higher tariffs in the EU and US. While BYD's Seagull hatchback is smaller in size than Tesla's Model 3, it demonstrates the strides that Chinese manufacturers have made in lowering the cost of EVs. China has become the world's biggest market for battery-powered cars and domestic giants have invested heavily in producing affordable vehicles. The sweeping price cuts also highlight the intense competition in the market. A record 3.5m EVs were left sitting unsold in dealerships across the country in April. It marks the highest stock level since December 2023, according to figures from the China Passenger Car Association. Slowing economic growth in the country has hit sales. The slump is a blow to Tesla, which counts China as its second biggest market. Sales of Chinese-made Teslas, which cover both the local market and exports to Europe, fell 6pc in April compared to a year earlier and have now been falling for seven straight months. Shares in BYD fell 5.9pc in Hong Kong on Monday following the price cut announcement as investors fretted about profit margins being eroded away. Rivals Li Auto and Great Wall Motor declined 3.2pc and 2.7pc respectively. Rico Luman, a senior economist at ING, said the price war was 'clearly a signal of intensified competition in China and also a maturing of the EV market'. 'There's over 100 manufacturers active in China itself in domestic markets for EVs,' he said. 'If you look at the margins they are not at a decent level at the moment so it really will hurt. It may be the start of a shake out in the Chinese market because we do expect that a lot of these brands will disappear eventually.' While the cuts won't take effect beyond China, Tesla and other Western manufacturers have long struggled to compete on price with Chinese rivals and have seen their market share eaten away. BYD outsold Elon Musk's Tesla in Europe last month for the first time ever and overtook Tesla in Britain in January. The symbolic shift has been helped by a driver boycott of Tesla over Mr Musk's support for Donald Trump. British interest in cars built by Chinese manufacturers has soared, according to Auto Trader, the UK's largest online automotive marketplace. More than 1.4m car adverts viewed in the first four months of this year on its website were for Chinese brands. That represented a market share of 5.3pc, compared with 1.3pc during the same period in 2024. BYD accounts for around half of advert views and stock on Auto Trader, while other Chinese manufacturers to have recently debuted in Britain include Jaecoo, Leapmotor, Skywell, Omoda and Xpeng. Ian Plummer, commercial director at Auto Trader, said: 'Our research shows a breakthrough for Chinese manufacturers in the UK market over the last 12 months. 'Several brands are now motoring from a standing start and bigger names like BYD have embedded themselves in the public consciousness.' Lower prices in China come as BYD seeks to boost sales in its home market and pivot away from focusing on international expansion. Mass adoption of EVs in Europe has been slower than expected and the EU has also imposed tariffs on cars made in China. As a result, BYD pays a 27pc import tax on battery electric vehicles it sells in the EU. In the US, cars have been caught up in Mr Trump's ongoing trade spat with Beijing. While tariffs on Chinese goods have now been lowered from their peak of 145pc, they still stand at 30pc. Mr Plummer said: 'Trade turbulence with the US and EU tariffs is also making the UK relatively more attractive as a market. 'There will be much more to come from Chinese carmakers.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Sign in to access your portfolio
Yahoo
26-05-2025
- Automotive
- Yahoo
Chinese electric car maker undercuts Tesla prices by 80pc
BYD is now selling an electric vehicle (EVs) for 80pc less than the cheapest Tesla after ramping up a price war in China. The Shenzhen-based EV manufacturer over the weekend announced discounts on 22 of its models in China until the end of June as it battles a slowdown in the local market and higher tariffs in the EU and US. BYD, whose investors include Warren Buffett, reduced the price tag of its cheapest car, the Seagull hatchback, by 20pc to 55,800 yuan (£5,712), less than a fifth of the cost of Tesla's cheapest car, the Model 3, which sells for £39,990 in the UK. While BYD's Seagull hatchback is smaller in size than Tesla's Model 3, it demonstrates the strides that Chinese manufacturers have made in lowering the cost of EVs. China has become the world's biggest market for battery-powered cars and domestic giants have invested heavily in producing affordable vehicles. The sweeping price cuts also highlight the intense competition in the market. A record 3.5m EVs were left sitting unsold in dealerships across the country in April. It marks the highest stock level since December 2023, according to figures from the China Passenger Car Association. Slowing economic growth in the country has hit sales. Shares in BYD fell 5.9pc in Hong Kong on Monday following the price cut announcement as investors fretted about profit margins being eroded away. Rivals Li Auto and Great Wall Motor declined 3.2pc and 2.7pc respectively. Rico Luman, a senior economist at ING, said the price war was 'clearly a signal of intensified competition in China and also a maturing of the EV market'. 'There's over 100 manufacturers active in China itself in domestic markets for EVs,' he said. 'If you look at the margins they are not at a decent level at the moment so it really will hurt. It may be the start of a shake out in the Chinese market because we do expect that a lot of these brands will disappear eventually.' While the cuts won't take effect beyond China, Tesla and other Western manufacturers have long struggled to compete on price with Chinese rivals and have seen their market share eaten away. BYD outsold Elon Musk's Tesla in Europe last month for the first time ever and overtook Tesla in Britain in January. The symbolic shift has been helped by a driver boycott of Tesla over Mr Musk's support for Donald Trump. British interest in cars built by Chinese manufacturers has soared, according to Auto Trader, the UK's largest online automotive marketplace. More than 1.4m car adverts viewed in the first four months of this year on its website were for Chinese brands. That represented a market share of 5.3pc, compared with 1.3pc during the same period in 2024. BYD accounts for around half of advert views and stock on Auto Trader, while other Chinese manufacturers to have recently debuted in Britain include Jaecoo, Leapmotor, Skywell, Omoda and Xpeng. Ian Plummer, commercial director at Auto Trader, said: 'Our research shows a breakthrough for Chinese manufacturers in the UK market over the last 12 months. 'Several brands are now motoring from a standing start and bigger names like BYD have embedded themselves in the public consciousness.' Lower prices in China come as BYD seeks to boost sales in its home market and pivot away from focusing on international expansion. Mass adoption of EVs in Europe has been slower than expected and the EU has also imposed tariffs on cars made in China. As a result, BYD pays a 27pc import tax on battery electric vehicles it sells in the EU. In the US, cars have been caught up in Mr Trump's ongoing trade spat with Beijing. While tariffs on Chinese goods have now been lowered from their peak of 145pc, they still stand at 30pc. Mr Plummer said: 'Trade turbulence with the US and EU tariffs is also making the UK relatively more attractive as a market. 'There will be much more to come from Chinese carmakers.' Sign in to access your portfolio
