The European Automotive Suppliers Association (CLEPA) announced the closure of several European parts factories and production lines due to a rare earth shortage caused by China’s export restrictions, with the situation likely to worsen.
The association added that of the hundreds of export license applications submitted by suppliers since early April, only a quarter have been granted so far, with some applications rejected for reasons the association described as “highly procedural.”
The association explained: “Procedures appear to vary from province to province, and in several cases, sensitive intellectual property information has been requested.” It added that if the process is not streamlined soon, more factories are likely to be affected over the next three to four weeks as stocks run out. The association did not specify which companies have halted production.
The shortage threatens to disrupt the supply chains of automakers, including Volkswagen Group, Mercedes-Benz, and BMW, as well as other suppliers, such as Robert Bosch, who rely on rare earths in applications such as electric vehicle engines.
The German Automotive Industry Association (VDA) has confirmed that export restrictions pose a serious risk to the industry. VDA President Hildegard Müller explained that the slow pace of issuing export licenses, coupled with delays in customs clearance for exports with valid licenses, is causing significant problems for automakers.
Source: German Press, Reuters
