Rare Earth Crisis Hits Automakers: Why Ford and Suzuki Are Feeling the Heat

By Team Dailyrevs  

Rare Earth Crisis Hits Automakers: Why Ford and Suzuki Are Feeling the Heat

  • China's rare earth export restrictions are directly hitting car manufacturing globally.

  • Major models such as the Ford Explorer and Suzuki Swift have already had manufacturing halted or suspended.

  • Car manufacturers are now revisiting their reliance on China for key EV and motor parts.

Rare Earth, Real Problem: What's Behind the Disruption

If you've been scratching your head trying to figure out why your new car delivery is held up or the EV roll-out seems to be losing momentum, you can thank the newest geopolitical monkey wrench thrown into the process—rare earths. China, which dominates more than 80% of global rare earth resources, has throttled exports of the most important materials, and the world's auto industry is already beginning to buckle.

This isn’t some distant policy debate. It’s on the factory floor, in the shipping crates, and in the delay emails you’re getting from your dealer.

Ford Explorer on Pause: A Wake-Up Call from Chicago

The Ford Explorer, which is one of the automaker's top-selling SUVs, was among the first and most publicized victims. Ford had to suspend production at its Chicago Assembly Plant, blaming supply chain interruptions related to China's export restrictions on rare earth materials—namely, elements such as neodymium and dysprosium that are vital to magnets used in electric motors.

That's not only an EV issue. Most contemporary internal combustion cars increasingly depend upon equivalent systems for features such as power steering, brake support, and in-car entertainment interfaces.

Suzuki Swift Suspended: A Compact Crisis in the Making

Across the world, Suzuki has halted production of its popular Swift model, so warmly embraced in markets ranging from India to Europe. The manufacturer attributed the hiatus to component shortages caused by rare earth restrictions, highlighting just how susceptible even low-emission small cars are to material dependencies.

Although Suzuki hasn't confirmed when production would restart, sources indicate that unless stopgap measures are implemented temporarily, the setbacks might last for weeks or more.

Automakers Sound the Alarm—but Quietly

The automakers are trying their best not to create a panic, but worry is increasing behind the scenes. BMW and Mercedes-Benz have not closed factories, but they've acknowledged that suppliers were hit. In classic fashion, the German titans are hoarding parts and pressuring suppliers discreetly to source more widely.

At the same time, General Motors, Stellantis, and Ford have been granted temporary permits to import rare earths, but that's only a temporary reprieve. The bigger picture—reliance on one supply country—is still looming over them.

EV Ambitions vs. Mineral Realities

The irony is biting: at a point when international automakers are driving more aggressively than ever toward electrification, their efforts are being undermined by an absence of the very resources that make EV motors go. Rare earth magnets are central to the efficiency and effectiveness of electric drivetrains, and there are no alternatives available in quantity.

This backlog may delay timelines for anything from upscale EV sedans to commercial fleet conversions, particularly for those brands that lack vertically integrated supply chains.

Supply Chains Under Review

The discussion is changing. Not only from "How do we make more EVs?" but also "How do we make them without China?" Nations such as the U.S., Australia, and India are ramping up local rare earth mining programs. But the fruits of these programs are years off.

Short-term, some suppliers are turning to Vietnam and Malaysia for processed materials, though the volume and quality still are spotty.

A Trade War by Another Name?

If that sounds like a chess move in a bigger economic game, that is because it is. China's rare earth curbs are being seen by analysts as a lever in current trade tensions, notably with the U.S., which has slapped tariffs and export controls on semiconductors and other strategic tech areas.

Whether or not one refers to it as a trade war, the fight has officially moved from tariffs and tweets to mine shafts and magnets.

The Road Ahead: Diversify or Stall

The auto industry is heading into a time of rebalancing. Temporary fixes such as temporary licenses and inventory cushions will temporarily ease the pain, but they will not address the underlying problem: overreliance on a vulnerable supply chain dominated by a geopolitical competitor.

Unless the auto companies go all out to diversify sourcing and invest in allied or domestic rare earth production, we won't be seeing this for the first time.

Final Gear Change

We hear so much about chips in conversations about automotive supply shortages, but magnets and minerals are mission-critical these days as well. If you're shopping for a car this year—particularly a hybrid or electric—you might want to double-check before assuming supply.

Because right now, your next shipment delay might not be from a lack of microchips. It might simply be absent a magnet.