China Dependence Starts to Unravel—Why Is the “Japan-China Battle” Over EV Components Intensifying? “Stable Procurement” Shaken as Import Volumes Fall 80%

The tightening of China’s rare-earth export controls is spreading from the upstream resource stage to downstream component processing and assembly, creating uncertainty over lead times and complicating automakers’ production planning for neodymium magnets, a core component of EVs. Japan began building up inventories and developing alternative technologies after the 2010 restrictions, but physical constraints, including equipment and costs, remain.

As an example, Ford was forced to halt SUV production at its Chicago plant in the United States for 1 week in May 2025. In Europe, only about 25% of approvals for shipments to the region had actually been granted, and the impact also extended to Japanese companies including Nissan and Suzuki. Neodymium magnets and heavy rare earths are used across a wide range of applications, including not only motors but also ABS sensors and in-vehicle cameras.

The essence of China’s dominance lies in the high concentration of intermediate processes, such as separation and refining after mining and magnet processing. China is said to account for around 80% of global magnet production. Japan accounts for only about 10% of automotive neodymium magnet production, while China controls approximately 70% of mining and around 90% of intermediate processing.

Some believe there are limits to the long-term use of domestic inventories and expansion of alternative production. Technology development aimed at eliminating rare-earth use includes MITSUBA’s adoption of iron-based magnets, Nissan’s reduction of rare-earth use, Astemo’s iron-based magnets and Valeo’s prototype that does not use heavy rare earths. Efforts to bring these technologies into practical use around 2030 are gathering pace.