Nissan Reduces Electric Vehicle Production Due to China's Rare Earth Export Restrictions

Nissan is reducing production plans for its new electric vehicle, Leaf, due to China's restrictions on rare earth exports, causing a shortage of parts. This may complicate Nissan's restructuring plans, which include closing seven factories and cutting staff by 15%. Another Japanese automaker, Suzuki, has temporarily halted production of its Swift subcompact due to the same issue.

Nissan Motor (OTC: NSANY) is scaling back production plans for its upcoming Leaf electric vehicle (EV) model due to a shortage of parts caused by China’s rare earth export restrictions. According to a Kyodo News report [1], the production cutback for the new model, scheduled to launch later this year, may complicate the Japanese automaker’s restructuring efforts. These efforts include plans to close seven factories and reduce its workforce by 15%.

The impact of China’s rare earth export limitations has extended beyond Nissan. Suzuki Motor, another Japanese automaker, has temporarily halted production of its flagship Swift subcompact due to the same issue [2].

China’s export restrictions on rare earths have caused significant disruptions in the global auto supply chain. The restrictions, implemented in retaliation against U.S. tariffs, have led to a 75% drop in magnet exports in the two months following their imposition [3]. The restrictions have forced several global automakers to pause production, including Nissan and Suzuki.

The rare earth export curbs have created a challenging environment for magnet makers in China. The restrictions have squeezed their sales from both domestic and international markets. While China produces 90% of the rare earth magnets used worldwide, exports accounted for a significant portion of their revenue [3]. The export curbs have led to a decline in magnet makers' offshore sales, coinciding with a weak domestic economy and pressure from the electric vehicle market.

Nissan’s production cutback and Suzuki’s temporary halt in production highlight the broader impact of China’s rare earth export restrictions on the automotive industry. The disruptions underscore the importance of these materials in the production of electric vehicles and other technologies. As the global demand for EVs continues to grow, the supply chain disruptions caused by these restrictions could have lasting implications for automakers and other industries that rely on rare earths.

References:
[1] https://ca.investing.com/news/stock-market-news/nissan-cuts-new-leaf-ev-output-due-to-chinas-rare-earth-curbs-93CH-4093487
[2] https://finance.yahoo.com/news/nissan-scale-back-production-plan-123628580.html
[3] https://finance.yahoo.com/news/analysis-chinas-rare-earth-export-080621444.html