China’s dominance challenged as electric vehicle and critical minerals sectors evolve

In the evolving landscape of electric vehicle (EV) production and critical minerals extraction, numerous developments have been reported that underline significant trends and shifts within the industry, particularly with China’s continued dominance in both sectors and emerging competition from other nations.

China’s leading electric-vehicle manufacturer, BYD Company Limited, achieved a remarkable sales milestone in 2024, with 4.3 million electric vehicles and hybrids sold globally, including 1.76 million pure EVs. However, it still trails behind Tesla, which sold 1.79 million cars in the same period. Other Chinese competitors such as Li Auto, Leapmotor, and Xiaomi also reported strong sales figures, contributing to the overall growth of the EV sector, which has been significantly supported by local government subsidies and a trade-in scheme. The Chinese market is projected to overtake internal combustion engine vehicle sales by 2025, signalling a pivotal shift in consumer preferences. President Xi Jinping acknowledged this shift as a noteworthy achievement for China’s automotive industry.

Simultaneously, China’s commerce ministry has proposed new export restrictions on technologies vital for battery component production and the processing of critical minerals such as lithium and gallium. This initiative aims to safeguard the nation’s substantial market share—approximately 70%—in lithium processing needed for EV batteries. If implemented, these restrictions could pose substantial challenges for Western lithium producers who depend on Chinese technology and may hinder the international growth prospects of several prominent Chinese battery manufacturers, including CATL, Gotion, and EVE Energy. These proposals remain open for public feedback until February 1, further emphasising China’s commitment to maintaining control over critical mineral resources amid rising global trade tensions.

In response to China’s dominance in the rare earth sector, Brazil’s Serra Verde Group is enhancing its rare earth production capabilities, aiming to output 5,000 tons of rare earth oxide annually by 2026. This move is part of a broader strategy to diversify the global supply chain and reduce dependence on Chinese supply by attracting substantial investments from firms like Denham Capital and Vision Blue Resources. Their initiative highlights a significant effort to meet increasing global demand for critical minerals essential in technology and renewable energy sectors.

In addition to the rapidly evolving dynamics in EVs and critical minerals, significant corporate developments have also ensued. Constellation Energy Corporation has secured a $1 billion federal contract to supply nuclear power, marking a significant commitment towards climate-focused energy solutions through established nuclear infrastructure. This contract is expected to deliver over 10 million megawatt-hours of electricity across various federal agencies for a decade.

Moreover, AustralianSuper, Australia’s largest superannuation fund, has faced substantial losses following the bankruptcy of cobalt miner Jervois Global, resulting in a loss of over $100 million. This development reflects the volatility within the critical mineral sectors and highlights the financial risks associated with investments in such industries.

The rare earth landscape is changing further with investments in U.S.-based startups like Phoenix Tailings, which focuses on developing cleaner production methods for rare earths essential in various technologies, including EVs. Such developments are taken to counteract China’s control over rare earth supply chains.

As the year progresses, a pivotal event—the upcoming International Critical Minerals Expo & CMI Summit IV, scheduled for May 14-15, 2025, in Pasadena, California—will gather industry experts to discuss critical issues facing the mineral markets. This gathering aims to foster collaboration amidst the challenges presented by shifting geopolitical landscapes and intensifying competition for essential resources.

These developments collectively denote a significant transformation within the sectors of electric vehicles and critical minerals, with implications not only for corporate strategies but also for national economic policies and international trade relations. The ongoing competition, notably between China and emerging markets, will likely shape the future dynamics of these industries for years to come.

Source: Noah Wire Services