U.S. Auto Giants Tesla, GM, Rivian, and Ford Hit Hard by China’s Critical Minerals Crackdown
China's rare earth export ban sends shockwaves through the American EV industry, placing Tesla, GM, and Rivian directly in the crosshairs of a critical minerals crisis.
Editorial Team (ET)May 9, 2025
The electric vehicle revolution in the United States just hit a roadblock—one paved with rare earth minerals. On April 4, 2025, Beijing slammed the brakes on exports of six critical rare earth elements to the United States, targeting the very heart of EV production. The fallout? A supply chain crisis that threatens to rattle America’s automotive future, especially for leading EV makers Tesla, General Motors, and Rivian.
While political headlines buzz with tariff battles and trade retaliations, the real damage is happening quietly—at ports, in factories, and on assembly lines. Containers filled with strategic metals like dysprosium and yttrium are sitting idle in China, paralyzed by red tape and a complete absence of new export permit guidance. These metals aren’t just obscure ingredients; they are fundamental to everything from EV motors and batteries to speakers and LED systems. And with China producing 99% of the world’s rare earth minerals and 90% of the magnets derived from them, the power it wields is unmatched.
The situation is a direct retaliation to President Trump’s latest volley in the trade war. His new wave of tariffs, announced on April 2, set off a chain reaction in Beijing. Just two days later, China moved to restrict exports of six rare earth elements that can only be refined domestically, hitting the U.S. where it hurts most—in its drive toward electrification.
Tesla, GM, and Rivian now find themselves in a vulnerable spot. Unlike their European and Japanese counterparts, which source many EV parts from global suppliers with access to China, these American automakers build most of their electric motors on U.S. soil. That means they are deeply exposed to any disruption in rare earth supply.
Tesla has been trying to future-proof its business. It claims to have reduced its use of rare earth elements in its motors by 25%, and it has teased next-gen vehicles that are rare-earth free. But those models are still on the horizon. Today, Tesla's production lines depend on these minerals, and any shortage means delays, rising costs, and possible redesigns. GM, meanwhile, is still in the exploratory phase of reducing rare earth dependence. While the company acknowledges the risk, there’s no clear timeline for when its vehicles will be free from these materials.
Rivian, the EV upstart with big ambitions, is arguably the most at risk. It lacks the scale, supplier flexibility, and geopolitical leverage of its more established rivals. As a result, Rivian may face production slowdowns, cost overruns, and margin compression just as it attempts to expand its footprint in a competitive market.
The Alliance for Automotive Innovation, which lobbies on behalf of major automakers, has remained silent in the wake of the ban. But behind the scenes, alarm bells are ringing. Sam Fiorani, vice president at AutoForecast Solutions, laid it out clearly: without access to yttrium, dysprosium, and other essential elements, electric vehicle manufacturing in the U.S. could grind to a halt. And this isn’t just about motors. Speakers, camera lenses, LEDs, and dozens of small but essential vehicle components rely on these minerals.
For now, American automakers have few good options. Alternative suppliers exist—in countries like Australia, Canada, and Vietnam—but these producers can’t match China’s output, cost-efficiency, or processing speed. Worse, rare earth mining and refining outside of China is fraught with environmental and regulatory hurdles, making ramp-up timelines uncertain and expensive.
What’s more, many Chinese rare earth sellers have already declared force majeure on existing contracts, meaning they can’t fulfill their obligations due to government intervention. This legal maneuver effectively halts current shipments, freezing deals in their tracks and leaving U.S. manufacturers scrambling.
In the meantime, prices are expected to soar. With China out of the picture, global demand for rare earths will be funneled through a much narrower supply chain, one that simply isn’t equipped to handle a sudden spike in volume. The result? A brutal cost crunch for EV manufacturers who are already operating on tight margins.
The geopolitical implications are equally staggering. China’s move is more than a trade tactic—it’s a strategic play in the global race for green tech dominance. By controlling the rare earth spigot, Beijing can exert massive influence over which nations accelerate toward an electric future and which are left idling. For the U.S., the timing couldn’t be worse. Domestic EV demand is rising, federal incentives are in place, and the market is hungry for growth. But without access to the foundational materials needed to build the cars of tomorrow, progress may stall.
Of course, some companies are better insulated. Ford, while also exposed, has diversified its supply chain to some extent. European and Japanese automakers benefit from long-standing trade relationships and diversified sourcing strategies. Chinese EV makers, meanwhile, are untouched and may even benefit from a crippled American market. If U.S. automakers falter, it opens the door for global competitors to grab market share both at home and abroad.
The export ban also throws into sharp relief America’s long-standing dependence on foreign critical minerals. Despite years of warnings and policy proposals, little progress has been made in developing a robust domestic supply chain. The U.S. does possess rare earth deposits—particularly in states like California and Alaska—but the permitting process is slow, investment has been tepid, and refining capacity is minimal.
This crisis could serve as a turning point. The U.S. government and private sector now face a choice: either accelerate efforts to onshore rare earth production or continue to risk national vulnerability in a future defined by clean energy and electric mobility. As Daniel Pickard, chairman of the critical minerals advisory committee for the Office of the U.S. Trade Representative, put it: “Does the export control or ban potentially have severe effects in the U.S.? Yes.”
What comes next remains uncertain. Will the U.S. fast-track rare earth mining projects? Can automakers find workarounds fast enough? Will political pressure on Beijing ease tensions, or will this be the first salvo in a prolonged resource war?
What is certain is this: Tesla, GM, and Rivian—icons of American innovation—are now in the crosshairs of a supply chain showdown. If they can’t adapt quickly, the future of U.S. EV leadership may slip from their grasp, one rare earth magnet at a time.
Conclusion
The Chinese rare earth export ban isn’t just another trade dispute—it’s a structural threat to the backbone of U.S. electric vehicle manufacturing. With Tesla, GM, and Rivian at the epicenter, the pressure to innovate, diversify, and localize is greater than ever. The road ahead will be marked by higher costs, tighter timelines, and a scramble for resources. Whether this crisis becomes a catalyst for transformation or a drag on progress depends entirely on the actions taken today.
