European car manufacturers are struggling due to a crisis in the supply of critical materials

A Netherlands-based chip manufacturer, Nexperia, has announced that the dispute between its Chinese owners and the Dutch government could impact production and supply chains. Earlier this month, the Dutch government seized control of Chinese Wingtech Technology’s majority stake in Nexperia, which Wingtech had acquired in 2019. Efforts to resolve the dispute between the two countries have so far yielded no results.

In addition, newly released data from Beijing indicates that exports of critical raw materials in September dropped by 31% compared to August. This points to a significant tightening in the supply of rare earth elements, which are essential for electric vehicle motors.

At a time when profits are shrinking and layoffs are taking place, a fundamental dilemma is emerging for Europe’s automotive sector: domestic suppliers tied to internal combustion engine production are struggling, while critical component supply for electric vehicles remains heavily concentrated in China and other regions.

Germany, Europe’s largest car manufacturer, is particularly exposed to risks from production lines to the wider national economy due to this imbalance.