Rare Earth Embargo: The Bitcoin of the Auto Industry Gets Locked Up

Rare Earth Embargo: The Bitcoin of the Auto Industry Gets Locked Up

Calling rare earth elements the vitamins of industry is almost an understatement! A single hybrid car requires 5kg of rare earth magnets—equivalent to cramming the hearts of 100 iPhones into four wheels. China controls 90% of the worlds rare earth processing capacity, and in April this year, it suddenly unleashed a one-two punch of export permits + end-use tracking, sending European and American automakers into collective supply chain panic mode.

But the real game-changer is Chinas Rare Earth GPS system, which can precisely intercept any transshipment attempts to the U.S. Japanese automakers tried a detour through Southeast Asia for a circuitous solution, only to find that magnets from Indonesia either had weak magnetic strength or came at double the price. German scientists experimented with synthetic alternatives, but the costs were so high they could buy a Tesla Model S as a lab specimen. The worst-hit were Indian automakers, who faced production halts even for windshield wiper motors starting in June. Internet users joked: Soon well have to manually operate wipers, taking retro fashion to the max!