Ford CEO Jim Farley revealed that the company faced a “hand-to-mouth” struggle for rare-earth magnets—crucial for electric and hybrid vehicles—that forced at least a week-long shutdown of its Chicago Explorer production line in May.
At a Glance
- Jim Farley told Bloomberg the rare-earth magnet supply remains “day to day” and has disrupted factory operations
- Export licensing from China—responsible for over 90% of global processing—is tightening supplies to Western automakers
- Ford temporarily paused Explorer SUV production in May at its Chicago plant due to the shortage
- U.S. and European auto-industry groups warn of escalating risks, including shutdowns in parts lines and vehicle assembly
- Automakers are scrambling to diversify sources, shift production, or redesign components with fewer rare-earth materials
What’s Driving the Shortage
China imposed export license requirements on rare-earth magnets in April amid escalating trade tensions. Although temporary approvals were issued to some manufacturers, Ford’s CEO admitted to Bloomberg that “it’s day to day,” and confirmed the company had shut down Explorer production for a full week in May.
Industry-Wide Ripples
Industry groups like MEMA and the Alliance for Automotive Innovation have issued warnings that these shortages could disrupt production across various vehicle systems. European suppliers are also feeling the pressure, as parts lines have halted and executives call for relief. The European Union has urged Beijing to ease restrictions to avoid a full-blown crisis among global automakers.
Watch a report: Ford CEO Warns of Rare-Earth Supply Crisis.
Seeking Solutions & Long-Term Fixes
Manufacturers are now exploring alternate supply chains in Australia, Canada, and the U.S., and considering design modifications to reduce reliance on rare-earth materials. However, these measures take time to scale, and the current supply crunch is already affecting deliveries and production timelines.
What This Means for Consumers and Policy
Expect potential price hikes or delivery delays for electric vehicles like the Ford Explorer. Longer term, the crisis could accelerate investment in rare-earth processing infrastructure in Western nations. Legislative efforts may focus on building strategic reserves, funding domestic mining operations, and reducing dependence on a single foreign supplier to protect clean-tech manufacturing and national security interests.
