Ford Motor Company is facing one of the automotive industry’s toughest challenges: rare earth mineral supply chain disruptions. These crucial materials — used in electric vehicle (EV) motors and other components — have become increasingly scarce due to geopolitical tensions, rising tariffs, and overreliance on specific countries like China. As the global EV race accelerates, Ford’s proactive strategy to counter these disruptions offers key insights into how legacy automakers are reshaping operations to remain competitive and sustainable.
Rare earth elements (REEs) are a group of 17 metallic elements essential to modern technologies. In the automotive world, they’re used in the production of magnets for EV motors, batteries, infotainment systems, and various sensors. Magnets made from neodymium, praseodymium, and dysprosium are crucial for Ford’s electric and hybrid powertrains. Unfortunately, over 80% of these minerals are processed in China, making the entire global supply chain extremely vulnerable to economic or political shifts.
Learn more about rare earth mineral use in EVs
Ford, like many automakers, is heavily impacted by pandemic-era delays, shipping constraints, and increasing nationalism in mineral-exporting countries. In 2024 and early 2025, the situation worsened as trade disputes between the U.S. and China led to further restrictions on REE exports. Additionally, environmental regulations and mine shutdowns in key regions such as Myanmar and South America have reduced global output. Prices for rare earths like neodymium have surged over 40% in just six months, forcing carmakers to reevaluate procurement strategies.
In 2025, the U.S. government implemented new tariffs on a range of Chinese imports, including critical minerals. This move, part of a broader national security and trade policy, has created more strain on automakers who already depend on Chinese raw materials. Ford now faces not only material shortages but also higher costs, making it more expensive to manufacture electric vehicles like the Mustang Mach-E and the F-150 Lightning. According to market analysts, tariffs could increase EV production costs by up to 15% unless mitigated by strategic sourcing or subsidies.
Read about U.S.-China tariff impact on auto industry
To protect itself from ongoing instability, Ford has launched a multi-pronged approach that includes reshoring, diversification, partnerships, and innovation.
Ford is actively reducing its reliance on Chinese processors. In 2024, it inked agreements with rare earth suppliers from Australia, Canada, and Sweden. These countries offer more stable trade relations and are boosting their own rare earth extraction efforts.
Ford partners with Australian mining company Lynas
Ford is also backing U.S.-based rare earth processing facilities. One such investment includes a Michigan-based facility designed to produce neodymium magnets domestically. With federal support and private capital, this plant is expected to reduce Ford’s dependence on imported rare earths by nearly 20% by 2027.
A lesser-known but promising solution Ford is exploring is the recycling of rare earths from end-of-life vehicles. By recovering magnets and other components, the company aims to build a circular supply loop that not only saves costs but also supports sustainability goals.
More on Ford’s rare earth recycling initiative
Ford is investing in research on magnet-free electric motors, which use alternative materials or technologies to achieve the same performance without neodymium or dysprosium. Although still in experimental stages, this innovation could be a long-term game-changer if successful.
Ford is actively working with the U.S. Department of Energy and Department of Defense to secure rare earth supply chains. Through public-private partnerships, the company is helping to fund rare earth mining exploration and refining technologies. Grants and incentives under the Inflation Reduction Act and CHIPS Act are also making it easier for Ford and other automakers to localize production and reduce foreign dependency.
U.S. government support for domestic rare earth production
With Tesla, General Motors, and new players in the EV space all fighting for the same finite resources, Ford’s long-term success depends on its ability to stay agile. Its early moves to diversify and invest could pay dividends, especially as governments push for EV mandates and greener supply chains. Ford’s recent quarterly reports have acknowledged the pressures, but executives remain confident. CEO Jim Farley emphasized that the company’s strategy is not just about reacting but leading the way toward a stable, scalable electric future.
Ford’s response to rare earth mineral disruptions shows how legacy automakers can adapt to modern supply chain realities. With a combination of diversified sourcing, domestic investment, innovation, and policy alignment, Ford is building resilience where it matters most. As other automakers follow suit, Ford’s efforts could become the blueprint for a more secure and sustainable EV industry.
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