Rare earth curbs to affect ICE vehicles as well: Automobile industry

Raising concerns over China’s export curbs on rare-earth elements, the automobile industry is learnt to have told the Ministry of Commerce and Industry earlier this month that the issue threatens to disrupt production of not just electric vehicles (EVs) but also internal combustion engine (ICE) automobiles.

 

To raise these issues, a delegation of senior executives from leading automakers and component manufacturers was scheduled to visit China this month. However, Chinese authorities are yet to respond positively to India’s request to allow the delegation, people familiar with the matter said.

 

“The industry has been checking the status repeatedly, but the matter is just hanging in the air,” said a government official.

 

Rare-earth magnets — now under China’s export licensing regime — are critical not just for EV drivetrains but for components such as crankshaft position sensors, motor control units, ignition coils, speedometers, tweeters, electric water pumps, and wheel speed sensors in ICE vehicles, industry executives told the officials of Ministry of Commerce and Industry during a meeting earlier this month, Business Standard has learnt.

 

Crankshaft position sensors are critical for monitoring engine rotation, enabling precise fuel injection, and ignition timing. Motor control units manage and coordinate various electronic systems in the vehicle, including engine cooling fans and fuel pumps. 

 

Ignition coils amplify the battery’s voltage to generate the high-voltage spark required for combustion. Speedometers rely on magnetic or electronic sensors to deliver accurate speed readings. Meanwhile, electric water pumps ensure efficient engine cooling, and tweeters -- high-frequency speakers -- enhance the car’s audio system. Wheel speed sensors play a vital role in anti-lock braking systems (ABS), enhancing safety in the event of sudden braking.

 

A senior executive of a major carmaker said: “Even though rare earth magnets make up a tiny portion of the overall material in a vehicle, the danger is very real -- a car can’t be assembled if even one component that relies on these magnets is missing.”

 

According to senior government officials, the purpose of the aforementioned automakers’ visit to China is threefold: to request Chinese authorities to expedite the issuance of export licences for rare earth magnets based on end-user certificates already submitted by Indian companies; to meet Chinese suppliers and officials at the Indian embassy; and to engage with the officials concerned in China’s ministry of commerce.

 

On April 4, China’s Ministry of Commerce and the General Administration of Customs imposed export controls on key rare earth elements including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium, along with associated alloys, magnets, and related products. These items now require special export licences, citing national security grounds.

 

“This is not just about EVs. The entire auto industry is affected. We are staring at serious supply-side disruption unless some solution is found,” said a senior executive at a top component manufacturer.

 

China accounts for about 70 per cent of global rare earth mining and nearly 90 per cent of rare earth magnet production, giving it overwhelming leverage in this segment.

 

The spokespersons of the India’s Ministry of Commerce and Industry and the Ministry of External Affairs did not respond to queries sent by Business Standard.

 

Industry executives hope that the delegation of automakers and component manufacturers to China would help get some clarity or flexibility in China’s new rules. But with no word yet on when, or whether, the visit would be allowed, uncertainty may mount. Officials in both the commerce ministry and the ministry of external affairs are said to be in touch with their Chinese counterparts.