Challenges to the European automotive industry in securing critical raw materials for electric mobility: the case of rare earths

Abstract

Critical raw materials (CRMs) are crucial for the transformation towards low carbon mobility. However, their production is often highly concentrated in a few countries, which leads to supply risks. Exemplified by the case of rare earth elements (REEs) and based on in-depth interviews with corporate executives from companies along the automotive supply chain, this contribution provides insights into the strategies of the European automotive industry to cope with these supply risks. Results show a lack of awareness of REE criticality studies and their outcomes in the past, the decisive role of price competitiveness when pursuing mitigation strategies and a lack of willingness or ability to engage in rare earth (RE) projects to get access to production output and secure supply. Overall, affected companies struggle to pursue long-term oriented strategies to secure their need for REEs. These findings are discussed with regard to the new demand for CRMs due to the shift to electric mobility and the specific challenges that the automotive industry faces.

The Revised German Raw Materials Strategy in the Light of Global Political and Market Developments

“…At the same time, corporate measures are difficult to pursue when faced with political influence and state‐controlled organizations that hinder regular market competition and actively influence the global raw material markets (Schmid, 2020a). The revised German raw materials strategy identifies this key challenge in the raw material market and many of the individual measures aim to reduce supply dependency and respective price and supply risks for the German economy.…”

“…The in‐depth analysis is based on the GABEK® method, which was established by Josef Zelger (Zelger, 2000; Zelger & Oberprantacher, 2002). The GABEK® method enables a “holistic management of complexity.” 1 It is particularly well‐suited for a structured examination of textual data (Raich, Müller, & Abfalter, 2014) and is well‐established as a method to analyze assessments of facts and circumstances (Rhein & Schmid, 2020), to reflect justification models and to reconstruct decision making and strategizing (Schmid, 2020a, 2020b). The data processing followed the GABEK® procedures as it is implemented by the software application WinRELAN® to maintain methodical rigor.…”

Critical metal mineralogy and ore genesis revisited: thematic set arising from the Third International Critical Metals Meeting, Edinburgh

“…Through a series of interviews, the author highlights how the industry was initially caught off-guard during the 2011 REE crisis, where REE prices spiked substantially. The European automotive industry is now aware of the issues of supply security for critical raw materials, but Schmid (2020) show that REE prices remain the most important criterion when considering alterative supplies.…”

“…Setting the scene in the first paper of this thematic set, Schmid (2020) use REE as a case study to examine the challenges that insecure supply presents to the European automotive industry. Through a series of interviews, the author highlights how the industry was initially caught off-guard during the 2011 REE crisis, where REE prices spiked substantially.…”

“…Through a series of interviews, the author highlights how the industry was initially caught off-guard during the 2011 REE crisis, where REE prices spiked substantially. The European automotive industry is now aware of the issues of supply security for critical raw materials, but Schmid (2020) show that REE prices remain the most important criterion when considering alterative supplies. Few of the interviewed manufacturers are involved in earlier aspects of the supply chain, and instead are focussed on removing supply risk through substitution with non- REE -bearing technology.…”