Ce que vous devez retenir
- Listed on the Shenzhen stock exchange since 2018 and on the Hong Kong stock exchange in mid-May 2025, it holds 35% of the global market.
- The Franco-Italian-American company reached an agreement late last year to create a joint venture that will build a giga-factory with capacity of up to 50 GWh of batteries using cheaper LFP technology (lithium-iron-phosphate) in Zaragoza, Spain.
- Western governments pushed hard for electric vehicle adoption to reduce dependence on oil-producing nations, only to create an even more concentrated dependency on a single country that controls….
Beijing’s decision to suspend exports of rare earth elements and magnets has sent shockwaves through global automotive supply chains. What started as export restrictions in April has now become a strategic weapon that’s forcing automakers worldwide to confront an uncomfortable reality: they’re completely dependent on China for electric vehicle production.
The Chinese government now requires domestic companies to apply for licenses before exporting these materials to any country. Out of hundreds of export license applications submitted to Chinese authorities, only about 25% appear to have been approved. The process seems deliberately opaque and inconsistent (surprise, surprise), serving as a strategic tool in China’s global standoff with the US and European Union.
Supply chains grinding to a halt
Several European auto suppliers have already been forced to suspend production lines due to depleted inventories. Industry associations warn that further disruptions are expected in the coming weeks as stockpiles run dry. If the situation doesn’t improve quickly, production delays or even complete shutdowns can no longer be ruled out.
This isn’t happening by accident. Beijing wasn’t pleased when Brussels imposed strict tariffs on Chinese car imports in July 2024. These tariffs on vehicles imported from China reach up to 45.3%. Meanwhile, the US and Canada have implemented 100% tariffs on Chinese electric vehicles, essentially blocking them from North American markets entirely.
But here’s the kicker – China’s production capacity stands at three million electric vehicles annually, double the size of the entire European market. With American borders essentially closed, guess where all those cars are headed?
The rare earth stranglehold
Thanks to state subsidies and remarkably loose environmental regulations, China dominates more than 60% of the extraction of metals known as rare earth elements and processes 92% of them. These aren’t just nice-to-have materials – they’re absolutely vital components in electric vehicles.
In 2020, Beijing enacted an export control law, extending it to all products affecting national security, whether basic goods and materials or technologies and data. What looks like bureaucracy is actually economic warfare.
China influences the entire electric chain beyond just basic rare earths. The country controls 75% of the global battery production chain. Batteries represent 35% to 40% of the added value of a so-called zero-emission vehicle. Two-thirds of major battery factories will still be located in China by 2030.
CATL’s battery empire
The world’s top battery manufacturer is undoubtedly Chinese company CATL. Listed on the Shenzhen stock exchange since 2018 and on the Hong Kong stock exchange in mid-May 2025, it holds 35% of the global market. Its compatriot BYD follows with a 15% global market share.
CATL announced a one-third increase in profits in the first quarter of 2025. While the few European battery manufacturers are struggling after a timid production start, this company founded in 2011 has recorded net profits of approximately $1.9 billion.
Even Stellantis was forced to form an industrial alliance with CATL. The Franco-Italian-American company reached an agreement late last year to create a joint venture that will build a giga-factory with capacity of up to 50 GWh of batteries using cheaper LFP technology (lithium-iron-phosphate) in Zaragoza, Spain. The $4.3 billion investment is split 50-50 with production starting in late 2026.
The LFP compromise
CATL specializes in this type of battery, which manufacturers are increasingly turning to. Sure, LFP batteries further limit the range of electric vehicles compared to traditional alternatives. However, because they’re more durable and capable of charging faster, they have the advantage of being 20% cheaper than traditional NMC batteries (nickel-manganese-cobalt).
But China doesn’t just dominate the battery industry. The country also produces 80% of the magnets used in electric motors. In simple terms, without China, not a single electric vehicle would be produced outside of that country.
American automakers find themselves in the same predicament as their European counterparts. The transition to electric vehicles has created an unexpected dependency that goes far beyond simple trade relationships. Every electric motor, every battery pack, every charging system relies on materials and components that flow through Chinese-controlled supply chains.
The irony is thick here. Western governments pushed hard for electric vehicle adoption to reduce dependence on oil-producing nations, only to create an even more concentrated dependency on a single country that controls the entire upstream supply chain.
What happens next? Automakers are scrambling to diversify their supply sources, but building alternative rare earth processing facilities takes years, not months. The current crisis reveals just how vulnerable the global automotive industry has become to geopolitical tensions. For now, China holds all the cards in the electric vehicle game.