The global transition to electric mobility has run directly into a geopolitical choke point. While western carmakers rush to roll out new electric models, their production lines remain tethered to an extraction and refining network dominated by a single superpower, making the clean energy transition an arena of intense resource nationalism.
China still controls 90% of the global supply chain for the permanent magnets powering electric vehicles (EVs) produced by Tesla, Ford and General Motors, Autonocion reports. To help counter this, the US Department of War headed by Pete Hegseth signed a $96mn deal with Australian mining company Lynas Rare Earths to secure rare-earth oxides outside Chinese borders, the company announced from Sydney on March 16. The agreement establishes a coordinated allied price floor of $110 per kilogram for neodymium-praseodymium (NdPr) oxide to insulate non-Chinese processors from predatory state-backed pricing tactics used by Beijing.
This supply network makes up a significant geopolitical bottleneck for much of Western industrial EV and other sector strategy. The deal builds on previous efforts to establish a non-Chinese critical mineral pipeline for Western defense and automotive sectors. To this end, Washington executed a similar contract with California-based MP Materials on July 4, 2025, taking a 15% preferred equity stake via a $400mn investment, extending a $150mn loan and locking in an identical $110 per kilogram NdPr oxide price floor for 10 years.
The $110 minimum benchmark is now a Transpacific allied standard. Japan Australia Rare Earths, the procurement vehicle for Japanese industrial buyers, signed an updated contract with Lynas on March 16. The deal guarantees a minimum of 5,000 tonnes of annual NdPr oxide deliveries through 2038 at the same $110 level.
A typical motor under the hood of a 2026 Mustang Mach-E or Tesla Model Y carries one to three kilograms of neodymium-praseodymium-iron-boron permanent magnet. Preventing demagnetisation under hard acceleration requires 50 to 200 grams of heavy rare earths, specifically dysprosium and terbium. Yet no commercial-scale isolation of these materials happens inside US borders.
The Western pipeline
Physical chemical processing instead occurs at the Lynas Advanced Materials Plant in Gebeng, Malaysia, according to Autonocion. The 100-hectare facility houses three integrated processing areas: cracking and leaching, solvent extraction and product finishing. Samarium oxide production began at the plant in March, making Lynas the only commercial-scale producer of separated heavy rare earths outside China - and one much more culturally in tune with Beijing than Washington. The company reported quarterly revenue of AUD265mn ($190.4mn) for the period ending March 31, more than doubling its prior-year performance, with total rare-earth oxide production hitting 3,233 tonnes.
However, the Malaysian processing hub faces intense local and diplomatic friction. A coalition of 57 Malaysian civil society organisations sent an open letter to Prime Minister Anwar Ibrahim on April 13, opposing the deal because it directly links Malaysian soil to foreign military supply chains. The plant has generated low-level radioactive thorium-bearing residue since 2012, totalling 451,564 tonnes by 2018, according to the Malaysian Ministry of Environment, Science, Technology and Climate Change. The issue will be raised in the Malaysian Parliament in June, reported member of parliament Wong Chen.
Concurrently, Western carmakers face severe commercial pressure that pushes them toward cheaper Chinese components, Pulse Korea reports. Global trade disputes and supply chain risks drove component costs higher, forcing volume producers to review their sourcing. Hyundai Motor Group purchased KRW84 trillion ($55.4bn) worth of parts for its global production facilities last year, up 45% from 2021, while domestic plant purchases rose 31% to KRW42.8 trillion.
Chinese automotive components are routinely estimated to be over 30% cheaper than South Korean or Western equivalents due to automated manufacturing and massive economies of scale, according to Pulse Korea. To remain price-competitive, Hyundai installs battery packs from Contemporary Amperex Technology Co., Limited (CATL) in the Kona EV, while Kia uses CATL batteries in its Ray EV, Niro EV, EV5 and PV5 models.
This reliance persists despite regulatory blockades. The US Department of War designated CATL as a "Chinese military company" on January 7, 2025. This triggered Foreign Entity of Concern regulations, disqualifying any vehicle using battery components processed by enterprises with 25% or more Chinese state control from receiving federal clean energy subsidies. Consequently, CATL pivoted to asset-light technical licensing agreements, such as its intellectual property partnership with Ford in Michigan, while redirecting direct capital expenditures toward Europe and Southeast Asia, according to Fitch Ratings.
Commercial gravity VS geopolitical barriers
Where trade barriers are lower, Chinese-made vehicles dominate mass-market segments, Pulse Korea adds.
Tesla sold 25,409 units of its Model Y in South Korea between January and April, with most units manufactured at its Shanghai factory, according to data from the Korea Automobile Importers & Distributors Association. This single Chinese-built model outsold Kia’s EV5 at 10,192 units, the Hyundai Ioniq 5 at 7,625 units and even Hyundai’s bestselling Grandeur petrol sedan at 23,145 units.
The result is clear - competing effectively without Chinese suppliers is becoming impossible for traditional carmakers. Chinese automakers benefit from lower labour costs and integrated supply chains, allowing them to manufacture vehicles at costs roughly 30% to 40% below global competitors, said Kia Chief Executive Song Ho-sung, Pulse Korea reports.
The non-Chinese EV mineral map therefore remains a fragmented network of four incomplete nodes: the Mt Weld mine in Australia, the contested refinery in Malaysia, the Mountain Pass facility in California and a planned joint venture refining facility in Saudi Arabia with the Saudi Arabian Mining Company. The Pentagon's $96mn intervention moved the Malaysian node forward, but alternative supply chains are not yet operating at the scale required to break Beijing's market dominance, Nikkei Asia, indicates.
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