Detroit, MI – Ford Motor Co. is facing a persistent supply shortage of rare-earth magnets—critical components for EV motors and various automotive systems—despite a recent U.S.–China agreement intended to ease export restrictions. The situation remains dire, forcing Ford into a “hand-to-mouth” rhythm to keep its production lines running.
Last May, Ford halted production of its Explorer SUV at the Chicago Assembly plant for several days after its magnet supplier ran dry. These powerful rare-earth magnets—made from metals like neodymium, dysprosium, and terbium—are essential not only for EV motors but also for braking, steering, and seating systems.
Lisa Drake, Ford’s VP of Industrial Planning for EVs, remarked that the company “still needs to move things around” to avert fresh shutdowns, admitting the operation remains “hand to mouth”. CEO Jim Farley echoed the concern in a recent Bloomberg interview: “It’s day-to-day… We have had to shut down factories. It’s hand-to-mouth right now.”
Since April, China—which dominates 90% of global rare-earth magnet refinement—has enforced stricter export licensing rules on these metals, requiring detailed disclosures and slowing approval processes, WSJ reported.
Although a temporary six-month agreement was struck in June to accelerate exports, affected automakers—including Ford—report little meaningful relief. Many export licenses continue to dribble in, primarily favoring larger, state-affiliated firms.
Ford’s stock slipped nearly 1% on news of the supply disruptions—though year-to-date gains remain near 7%. At the same time, domestic mining and processing firms like MP Materials (NYSE: MP) and Freeport-McMoRan (NYSE: FCX) enjoyed surging stock prices as investors bet on a long-term shift toward U.S. production of critical minerals.
Ford’s CFO recently disclosed that design improvements could cut annual rare-earth usage by up to 500,000 pounds, and the new hybrid systems already consume 50% less neodymium per vehicle. While the automaker is mapping raw-material sourcing directly back to mines, those efforts will take years to offset immediate shortages.
Analyst Michelle Krebs of AutoForecast Solutions warns, “Every OEM assumed they could scale battery production linearly. The rare-earth situation proves how quickly geopolitical factors can disrupt those plans”.
Continued supply volatility; potential further single-shift delays or plant pauses if authorization backlogs persist. Push for non-Chinese magnet sources (Canada, Australia, U.S.) and increased recycling, but industrial-scale capacity remains 2–3 years off. Deep investment in domestic mining and refining will diminish supply chain chokepoints—but remains a strategic and political challenge.
Ford remains committed to its 2 million EVs-per-year goal by 2026, but acknowledges that resolving this bottleneck is crucial for meeting that target.
The magnet logjam is more than an automotive hiccup—it’s a flashpoint in global industrial policy. “China’s dominance in rare earths is a geopolitical weapon,” says an analyst at the Center for Strategic and International Studies. “There’s no quick fix—this is a wake-up call”.
Even with diplomatic progress and asset-light design pivots, Ford remains locked in a daily scramble for magnets that may define its EV production trajectory—and automobile manufacturing’s broader global supply resilience.
