The chairman of French vehicle maker Renault has expressed concerns that carmakers in Europe are confronted by an onslaught of electric vehicle exports from China, a country which also currently has a stranglehold on supplies of the key raw materials needed during the manufacture of EVs. Jean-Dominique Senard expressed these concerns as he was being interviewed by Reuters.
Describing this pressure as a “Chinese storm,” Senard explained that European companies were capable of producing sufficient numbers of electric vehicles but were currently hampered with the preoccupation of ensuring that they secure the needed raw materials, especially those used to make EV batteries.
It should be noted that both the United States and Europe have been scrambling to break their reliance on China-sourced supplies of battery minerals. This move was prompted by the ongoing geopolitical tensions that have exposed the vulnerability of the West should China choose to halt critical exports to the U.S. and Europe if tensions rise higher.
This fear isn’t without a basis. The recent energy crisis in Europe was precipitated when Russia decided to cut its natural gas exports to Europe as a result of the sanctions that the West had imposed on the Kremlin in the aftermath of its invasion of Ukraine. One doesn’t need to stretch imagination a great deal to imagine what would happen to the transition to green energy and electric vehicles if China decides to flex its muscles by halting rare earth metal and other critical mineral exports to the U.S. and Europe.
Senard says China has had a head start by investing massively in establishing its supply chains for the minerals needed in the manufacture of EVs. If Europe is to reach the same level of self-sufficiency, the region would have to spend billions to establish its own supply chains, and this wouldn’t be achieved overnight.
China is already firing warning shots in its trade war with the West. Last week, the country announced that it would be imposing controls on the export of germanium and gallium starting in August this year. These two rare earth elements are vital for the production of microchips. A former senior Chinese official described this announcement as only the beginning of a tech war China plans to wage against the U.S.
The storm from China that Renault’s chairman talks about could very well take a turn for the worse if carmakers in Europe can’t quickly access the needed rare earths yet they must compete with a deluge of Chinese models on the European market.
Manufacturers such as Cenntro Electric Group Ltd. (NASDAQ: CENN) may be keeping tabs on these developments and planning how to ensure they can have the materials they need to make and deliver their models to the motoring public.
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