EU Launches RESourceEU Plan To Break China’s Stranglehold On EV Motor Magnets

The European Union announced a comprehensive strategy to slash its dangerous dependence on Chinese rare earth materials just 16 days after Beijing imposed sweeping export restrictions that threaten to choke European electric vehicle production. European Commission President Ursula von der Leyen unveiled RESourceEU on Saturday at a conference in Berlin, calling China’s October 9 export controls a “significant risk” to Europe’s automotive, defense, and aerospace industries.

The plan couldn’t come at a more critical moment for European EV manufacturers. Over 90% of the rare earth magnets powering European electric vehicles come from China, and the October 9 restrictions target precisely these materials—along with battery components, mining equipment, and processing technologies essential for EV production.

China’s October Export Restrictions Target EV Supply Chain

China’s Ministry of Commerce announced on October 9 that export licenses would be required for rare earth materials, technologies, and products containing Chinese-origin materials. The restrictions went into effect immediately for Chinese-origin rare earths, with additional controls on foreign-made products taking effect December 1, 2025.

The scope extends far beyond simple export bans. China implemented extraterritorial provisions requiring licenses for products made outside China if they contain as little as 0.1% Chinese rare earth materials by value, or if they’re manufactured using Chinese rare earth technologies. Western governments view the restrictions as retaliation for U.S. tariffs, but the impact falls heavily on Europe’s industrial base.

China added five rare earth elements to export controls: holmium, erbium, thulium, europium, and ytterbium. Combined with seven elements restricted in April 2025 (samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium), the controls now cover most rare earths critical for high-performance EV motors.

Why Rare Earth Magnets Matter For Electric Vehicles

Rare earth permanent magnets—primarily neodymium-iron-boron (NdFeB) magnets—sit at the heart of 80-90% of electric vehicle motors worldwide. These magnets, enhanced with dysprosium and terbium for high-temperature performance, enable the compact, efficient motors that give EVs their range and power.

The average EV uses approximately 3.3 pounds (1.5 kg) of rare earth magnetic material, roughly 7 grams per kilowatt of drivetrain power. Without these magnets, EV motors would need to be significantly larger, heavier, and less efficient—directly impacting vehicle range, performance, and cost.

China doesn’t just mine rare earths. The country processes nearly 90% of global rare earth elements and manufactures 90% of rare earth magnets, with Japan producing the remaining 10% using Chinese raw materials. This stranglehold gives Beijing unprecedented leverage over the global EV transition.

RESourceEU: Europe’s Multi-Pronged Response Strategy

Von der Leyen’s RESourceEU initiative mirrors the structure of REPowerEU, the plan that helped Europe reduce dependence on Russian energy after Moscow’s 2022 invasion of Ukraine. “The aim is to secure access to alternative sources of critical raw materials in the short, medium and long term for our European industries,” von der Leyen told the Berlin Global Dialogue conference.

The strategy focuses on four key pillars. First, the EU will accelerate critical raw materials partnerships with Australia, Canada, Chile, Greenland, Kazakhstan, Uzbekistan, and Ukraine—countries with rare earth deposits but limited processing capacity.

Second, Europe will boost domestic recycling of rare earth materials already embedded in products sold within the EU. Von der Leyen emphasized this approach starts with circular economy principles, exploiting materials already in circulation rather than relying solely on new mining.

Third, the plan includes coordinated joint purchasing and strategic stockpiling of critical materials—similar to emergency oil reserves but for industrial raw materials essential to manufacturing. Finally, Brussels will finance strategic projects to expand European production and processing capacity for rare earths.

Impact On European Automakers And EV Production

The restrictions pose immediate threats to European automotive companies already struggling with Chinese competition and slowing EV demand. “If you consider that over 90% of our consumption of rare earth magnets comes from imports from China, you see the risks here for Europe and its most strategic industrial sectors,” von der Leyen said.

European automakers face a strategic dilemma. Alternatives to rare earth magnets exist—induction motors and electrically-excited synchronous motors can operate without permanent magnets—but they sacrifice 2-7 percentage points of efficiency compared to permanent magnet motors. In an industry where range anxiety remains a key barrier to EV adoption, that efficiency loss translates directly to reduced driving range and competitiveness.

Von der Leyen warned that Brussels remains open to dialogue with Beijing but made clear “we will use all instruments in our toolbox to respond if needed.” The statement suggests potential European countermeasures if China’s restrictions prove overly disruptive.

Timeline And Implementation Challenges

The EU’s diversification strategy faces significant time constraints. Mining projects typically require 7-10 years from discovery to production, and building processing facilities adds another 2-3 years. China’s restrictions, by contrast, took effect within weeks of announcement.

Stéphane Séjourné, European Commission Executive Vice-President for Prosperity and Industrial Strategy, emphasized the urgency. “China’s announcements on 9 October have highlighted a critical dependence on raw materials such as rare earths. This is unacceptable,” he said while outlining RESourceEU details.

The EU Critical Raw Materials Act sets targets for member states to source no more than 60% of any critical material from a single country, with 40% of processed materials originating domestically and 15% from recycled sources. Meeting these benchmarks by 2030 will require aggressive investment and regulatory support.

EVXL’s Take

Europe’s scramble to diversify rare earth supplies reveals how completely the West ignored warning signs for over a decade. EVXL has been tracking China’s incremental tightening of rare earth export controls throughout 2025, and von der Leyen’s emergency response proves the situation has reached crisis levels.

Back in April, we covered China’s rare earth magnet ban that disrupted Tesla’s Optimus robot production—showing how quickly supply disruptions cascade through technology sectors. By June, factories across Europe faced potential shutdowns as Chinese export permits stalled, with CLEPA warning that outages would hit vehicle production lines.

The pattern has been crystal clear: China isn’t just restricting exports, they’re weaponizing the most critical component in EV motors. While everyone focuses on battery supply chains and lithium mining, rare earth magnets pose a far more immediate existential threat to European EV manufacturing. You can stockpile battery cells, as Rivian cleverly did ahead of tariffs, but you can’t manufacture EV motors without rare earth magnets—and 90% of those magnets come from one country.

RESourceEU sounds ambitious, but let’s be realistic about timelines. Von der Leyen’s partnerships with Australia, Canada, and Kazakhstan will take years to yield meaningful production volumes. Meanwhile, China can turn off the tap tomorrow. The EU’s 60% sourcing limit from any single country is a good target, but enforcement mechanisms remain vague and the deadline is 2030—five years away while October’s restrictions hit immediately.

The real question European automakers should be asking: why did it take until October 2025 to launch an emergency response to a vulnerability that’s been obvious since China’s 2010 rare earth export restrictions sent prices soaring 750%? The answer reveals uncomfortable truths about short-term thinking and dependence on an increasingly assertive strategic rival.

What do you think? Share your thoughts in the comments below.