China: A silent monopolist
According to available data, mediated by the U.S. Geological Survey, for 2024, China controlled 69% of the world's rare earth mining and almost half of the world's reserves. The International Energy Agency added to this statistic, emphasizing in a statement that 90% of the refining of the four key magnetic elements is also under the control of China. In direct proportion to these numbers, China's bargaining power is understandably growing. In April and December last year, the dominant country imposed new export restrictions on seven rare earth metals, including terbium and cerium, which are mainly used in electric cars and military equipment.
New permits
However, the latest information reveals a certain relaxation of the situation, which came just a few days after the trade truce between China and the US. On May 5, 2025, the Chinese news portal Caixin reported on licensing permits for three leading companies to export rare-earth magnets.
Car manufacturers in the shadow of imbalance
In addition to the geopolitical game, electric car manufacturers unfortunately also face unchanging design and technical values. A conventional single-motor battery electric vehicle (BEV), containing 1.7 kg of components, requires approximately 550 grams of rare earth metals, while a hybrid vehicle, based on a NiMH battery, can contain up to 4.5 kg of rare earth metals, especially lanthanum.
To better understand the issue, it is necessary to compare these values with combustion cars. In this category, the occurrence of rare earths is only 140 grams, which clearly shows that the transition to electromobility deepens the West's dependence on China.
In addition, the problem with rare earth does not only concern passenger cars. Each F-35 fighter needs more than 400 kg of rare earth metals, which also makes these raw materials a strategic matter in the arms sector.
Recycling as hope
The United States is aware of these risks, and the first steps to balance the forces were taken in September last year, when it invested USD 4.2 million in a startup called Rare Earth Salts. It tries to extract rare earth metals from discarded products, such as fluorescent lamps. Toyota, on the other hand, is developing alternative technologies with a lower content of rare elements.
Slow process
The second, partly positive factor is that the first generation of BEVs will soon start recycling, which could potentially create a new flow of raw materials. Problem? Recycling is energy-intensive, expensive and slow, which means that complete independence in terms of the availability of raw materials is still a long way off. Of course, the European Union has also dealt with battery recycling, which has set that by the end of 2025, recycling efficiency should reach 65%, while by the end of 2030 this level should rise to 70%. [1] The values may seem high at first glance, but the good news is that companies such as Hydrovolt, whose remaining shares were bought by Nork Hydro, already achieve a recycling efficiency of 95%, according to company representatives.
For investors
While investors' attention is currently focused primarily on the development of trade tariffs, another risk, and at the same time an opportunity, is the dependence of Western countries on China. Companies that can provide stable alternative sources of rare earth metals, invest in recycling or develop new battery compositions definitely have a competitive advantage on their side. For investors, this means watching not only EV designers and manufacturers, but also companies in the background. Mining companies or startups involved in recycling technology.
[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which is subject to change. Such statements are not a guarantee of future performance. They involve risks and other uncertainties that are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.
