Why a Magnet Shortage Could Stall U.S. Auto Production

U.S. automakers are facing an unexpected and surprisingly critical shortage: magnets.

Specifically, rare earth magnets. These tiny but powerful components are indispensable, powering everything from electric motors to critical sensors, and essential for both EVs and traditional gas-powered vehicles. Without them, assembly lines can come to a halt.

The root of the shortage? Escalating trade disputes between the U.S. and China. Industry sources told Kelley Blue Book that recent Chinese restrictions on rare earth magnet exports are squeezing supplies. The impact is already being felt: Ford paused production of its Explorer SUV for a week in April, citing a magnet shortage. Volvo also temporarily shut down its South Carolina plant that builds the EX90 and Polestar 3, though it was less specific about the cause.

With just-in-time manufacturing, factories rely on components arriving exactly when needed. One missing part, like a magnet, can ripple through the system and shut down entire production lines. It looks like factories are already feeling the pinch of this dispute.

Two major trade groups, the Alliance for Automotive Innovation and MEMA, have raised alarms in a letter to the White House. They warned that if magnet supplies keep drying up, U.S. car factories could start going dark within weeks.

The timing couldn’t be worse. The auto industry is already navigating a shift in consumer demand and intense global competition. While EVs lean more heavily on rare earth magnets, even gas-powered vehicles need them in power steering, alternators, safety sensors, and other systems.

Without these tiny magnets, even the most advanced vehicles can’t function properly. The following list explains the ways in which magnets are used in vehicles.

• Electric Motors: Essential for EV propulsion, delivering smooth and efficient power.
• Power Steering: Magnets help generate the torque that makes steering easier.
• Alternators: Used in both EVs and gas-powered cars to keep batteries charged.
• Safety Systems: Power sensors in airbags, seatbelts, and collision detection.
• Speakers & Electronics: Deliver clear audio and responsive infotainment.

For now, automakers are caught in the middle of a high-stakes trade standoff, with no quick resolution in sight. If the shortage continues, the industry could face a summer of shutdowns, eerily reminiscent of the supply chain chaos during the pandemic.

The magnets may be small, but their absence poses a big problem for the American auto industry.