Ford Motor Company (NYSE: F) is facing mounting challenges in securing supplies of rare earth magnets, a critical component in electric vehicles and other advanced technologies, Chief Executive Jim Farley said in an interview on Friday. The automaker’s difficulties come amid new export licensing rules imposed by China in April, which have tightened the flow of rare earth materials to Western manufacturers.
China processes more than 90 percent of the world’s rare earth elements, making its export policies highly influential for global industries. The new licensing regime, which targets seven of the seventeen rare earth elements, has disrupted supply chains for automakers, defense contractors, and electronics manufacturers worldwide. While China granted temporary export licenses to suppliers for the top three United States automakers earlier this month, Farley said the relief has been insufficient.
“It’s day to day,” Farley told Bloomberg News. “We have had to shut down factories. It’s hand-to-mouth right now.” Ford previously halted production of its Explorer sport utility vehicle at its Chicago plant for a week in May due to a shortage of rare earth materials.
READ: Trump Eyes Defense Production Act to Break China’s Rare Earth Grip
Shares of Ford fell nearly one percent in morning trading, though the stock remains up more than eight percent since the start of the year. The ongoing supply issues underscore the vulnerability of Western manufacturers to disruptions in Chinese exports, a situation reminiscent of previous episodes when Beijing restricted rare earth shipments, causing prices to soar and production lines to stall.
In response, Western countries have accelerated efforts to diversify supply chains by investing in mining and refining capacity in Australia, Canada, and the United States. However, experts warn that developing alternative sources will take time, leaving companies like Ford exposed to ongoing uncertainty in the near term.
Information for this briefing was found via Bloomberg and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
