The Crisis Automakers shortage exposed the fragility of just-in-time manufacturing, but it was a temporary shock to the system. The looming crisis in critical minerals is permanent until new supply chains are built, because it is driven by finite resources with highly concentrated processing capacity.
Why Critical Minerals are the Crisis Automakers
A modern car, particularly an EV, requires thousands of components, but its most strategically vulnerable parts are the ones that facilitate the energy transition:
The Lithium-ion Battery: Requires vast quantities of lithium, cobalt, nickel, and graphite.
The EV Traction Motor: Often requires powerful permanent magnets made from Rare Earth Elements, primarily Neodymium and Dysprosium.
The automotive industry’s pivot to electric mobility means its Crisis Automakers has shifted from the chip fabrication facilities of Taiwan and South Korea to the refining and processing hubs of a handful of countries, predominantly one: China.
The Magnet Mayhem: Rare Earth Elements (REEs)
While lithium and cobalt grab the headlines, the most immediate and volatile threat in 2025 comes from the Rare Earth permanent magnets essential for efficient EV motors. Without these magnets, electric motors lose efficiency, power, and range, making them commercially unviable for many EV models.
The Neodymium-Iron-Boron (NdFeB) Vulnerability
The most potent permanent magnets are made from Neodymium, often enhanced with Dysprosium and Terbium (known as heavy rare earths) for better heat Crisis Automakers. These are non-substitutable for high-performance motors.
China’s Unrivaled Control: China controls an estimated 60% of global rare earth element mining and an overwhelming 90% of the world’s refining and magnet manufacturing capacity. This is the key structural vulnerability. Western automakers may source components globally, but almost all high-performance magnets and the refined material they are made from pass through a Chinese-controlled supply chain.
Geopolitical Weaponisation: The fear is not one of insufficient geological supply, but of geopolitical leverage. China’s implementation of export controls on specific rare earth elements and advanced magnets in 2025 has been interpreted as a clear signal. Automakers, dependent on these magnets for their most profitable EV lines, now realize an escalation of trade tensions could “shut down the entire auto industry,” as warned by some purchasing executives.
The Time Lag Problem: Building new rare earth processing and magnet manufacturing facilities outside of China is immensely challenging, environmentally complex, and takes five to ten years. Automakers cannot simply switch suppliers in the short to medium term, leaving them exposed until the next decade.
The Battery Bottleneck: Nickel and Cobalt
Beyond the magnets, the core materials of the Crisis Automakers itself present massive supply chain risks that are fundamentally different from the microchip issue. These minerals require large-scale mining projects and complex, capital-intensive chemical processing that cannot be scaled up overnight.
Nickel: The High-Energy Density Dilemma
High-range EVs require nickel-rich cathodes (like NMC 811) to maximize energy density.
The Battery-Grade Premium: The challenge isn’t nickel availability overall (which is ample, largely thanks to Indonesia’s massive expansion), but the availability of battery-grade nickel sulfate. This specialized product demands high purity and consistency, and the supply of new refining capacity has struggled to keep pace with EV demand growth.
Geopolitical Pressure: The surge of Indonesian nickel, largely driven by Chinese investment and technology, while easing price pressure in the short term, creates another centralized dependency. Automotive manufacturers seeking to qualify for Western Crisis Automakers programs, such as those in the U.S. that demand non-Chinese sourcing, face a shrinking pool of compliant battery metal suppliers.
Cobalt: The Ethical and Supply Concentration Risk
Cobalt improves battery safety and extends lifespan. Despite efforts to reduce cobalt content, it remains critical for high-end NMC batteries.
DRC’s Dominance: Over 70% of the world’s cobalt is mined in the Democratic Republic of Congo (DRC). This single geographic point of extraction, coupled with significant ethical and governance risks, creates extreme vulnerability.
The Refining Link: Similar to lithium, the raw cobalt mined in the DRC is overwhelmingly refined into battery chemicals by Chinese-owned entities. This dual concentration—in extraction and processing—makes cobalt one of the highest supply chain risk minerals in the automotive sector for 2025.
Aluminium and Structural Materials: The Unseen Risk
The focus on high-tech EV components sometimes overshadows the risk in more conventional materials, which are now being exposed by concentrated supply chains optimized for cost rather than resilience.
Aluminium Sheet: A Single Point of Failure
Modern vehicle design, especially in large trucks and SUVs, increasingly relies on lightweight aluminum for body panels (Body-in-White).
The Oswego Fire Incident: A major fire at a single aluminum rolling mill in North America in late 2025, which supplied a substantial portion of the entire continent’s automotive-grade aluminum sheet, demonstrated how a localized industrial accident can instantly threaten production across multiple major automotive brands.
Resilience Failure: This incident, separate from geopolitical tensions, highlights the extreme fragility created by decades of consolidating production into highly efficient, single-source mega-facilities. Automakers realized they had insufficient backup suppliers for a material that is considered basic but structurally essential.
Casting and Machining Capacity
As EVs simplify drivetrains but complicate battery enclosures and motor casings, demand for specialized high-pressure die casting and advanced machining services has soared. The capacity to manufacture these large, complex metal components, particularly for the skateboard platform of an EV, is struggling to keep up, creating unexpected component bottlenecks that limit final assembly volume.
Strategy for Survival: Resilience Over Efficiency
The recurring component crises have permanently changed the way automakers view their supply chain management. The mantra has shifted from Just-In-Time (JIT) to Just-In-Case (JIC).
Building the ‘Moat’ in 2025
Automakers and governments are executing strategic, high-cost maneuvers to build resilience:
Vertical Integration and Direct Sourcing: Automakers are increasingly bypassing Tier 1 suppliers to secure direct contracts with miners and processors of critical minerals, locking in long-term supply volumes and mitigating price volatility.
Regionalisation and Localization: Driven by government incentives like the IRA in the U.S. and the Critical Raw Materials Act in Europe, companies are investing in local or regional mining, processing, and recycling facilities for battery components. The goal is to create secure, traceable closed-loop supply chains insulated from global geopolitical shocks.
Next-Generation Battery Technology: Aggressive investment in alternative chemistries like Sodium-ion (Na-ion) and greater adoption of LFP batteries (Lithium Iron Phosphate, which do not use nickel or cobalt) is a long-term hedge against REE, nickel, and cobalt scarcity.
The Circular Economy Mandate: Large-scale battery recycling capacity is being built rapidly. While recycling is not a dominant source in 2025, it represents the single most important long-term strategy to gain material independence and insulate the industry from future mining and processing crises.
