Rare earth metals were long a low-demand resource. While relatively scarce, they were only used in small quantities in electronics and other applications. However, with the surge in interest in vehicle electrification the demand for rare earth metals has soared. The average electrified vehicle (e.g. a hybrid or battery electric vehicle) uses over twice the rare earth metals of a standard vehicle due its needs for chemically complex magnets, electronics, and other battery systems. That demand has put China in a fortunate position. The nation controls an estimated 95 percent of the world's rare earth production. And now it’s choking that supply. For the last few months China has been cutting off rare earth shipments to Japan, threatening hybrid makers Nissan, Honda, and Toyota. Now China has followed in suit with the U.S. according to three industry sources quoted by The New York Times. With China severing or greatly scaling back shipments of rare earth metals to the U.S., makers of electrified vehicles like Ford and GM may be unable to continue to hybrids, BEVs, and plug-in hybrid electric vehicles en masse. The decision leaves U.S. manufacturers with only four options. The first is to cut back on their use of rare earth metals. Much research has already one into this, but the reason rare earths are still used is that they're simply much more efficient at their roles (e.g. motor magnets) than chemical alternatives. The second option is similarly problematic. U.S. manufacturers can try to weather the embargo in hopes of it being lifted, relying on stockpiled rare earths. Exact estimates of how much rare earth metals are stockpiled in the U.S. is sketchy at best, but it's clear that past perhaps a year or two, these stockpiles would likely be exhausted. A third option is to try to expand domestic rare earth mining and refining. Japan and the U.S. are already working at this approach, which is the most promising in the long term, but insufficient in the short term. Mines can be created/opened with anywhere from a year for existing mines to several years for new ones. However, refineries can take five or more years to full install and bring online. According to The Wall Street Journal, the Japanese government and corporate interests are working to open new mines in Kazakhstan and Mongolia. Meanwhile, the United States' Glencore International AG, the world’s biggest commodities trader, and Wings Enterprises Inc. of Missouri announced plans to reopen a rare earth mine in Pea Ridge Missouri. Minerals firm Molycorp Inc. announced similar to reopen a rare-earth mine in Mountain Pass, California that has been shuttered since 2002. The least attractive final option is to transition production of electric vehicles to China, circumventing foreign trade barriers. The problem here is that China has pending legislation that would force any foreign company that manufacturers electrified vehicle components in China to surrender their intellectual company to Chinese automakers. Will China's embargo of rare earth's "kill" the vehicle electrification movement? In the long term the answer is probably no, but in the short term that remains a very real possibility as American and Japanese automakers have only a handful of options -- most of which are either largely unviable or quite unattractive. As a result the public may see production of electrified vehicles drop and prices raise -- things which may ultimately kill the mass market appeal that they're trying to gain.
quote: there is of course a 5th option, we could simply stop importing stuff from china.
quote: Thanks to everyone wanting the cheapest possible product, the most powerful economy (they call the shots now) in the world is a communist state.
quote: We have the beginnings of a trade war, and its a war China knows its certain to win.
quote: No internal markets are self sustaining. I'm glad you like your country, but welcome to the rest of the world.
quote: Why do you think China has been able to keep up growing at 10+% its GDP while the rest of the world has been in recession?
quote: what we really need to be doing is to be re-investing in our own ability to produce a product here
quote: Which industry is the one of the most regulated in the USA?
quote: The US Banking system since it creates credit out of thin air.
quote: chinese nationals have told me that their education system is not better, and that an american education is prized.
quote: I have the sad feeling that our short sighted companies will give in, transfer the tech over to china
quote: ...while it would never really happen in reality, the mere threat, if perceived as genuine...
quote: what we really need to be doing is to be re-investing in our own ability to produce a product here in the US, not just "services".
quote: I don't see US workers willing to work for anything near Chinese wages so this would mean pretty much anything from electronics to furniture costing way more. Not something which would be welcomed by the consumers that are addicted to buying new stuff all the time.
quote: They WANT us to give up our designs and patents
quote: did you bother to take a few steps outside the coastal cities and look at the inland regions
quote: Minerals firm Molycorp Inc. announced similar to reopen a rare-earth mine in Mountain Pass, California that has been shuttered since 2002.
quote: China Quietly Looks to Strangle U.S., Japanese EV Production