SUMMARY
- China's decision to limit exports of essential metals highlights Europe's excessive dependency on China.
- Europe's electric vehicle manufacturing capabilities are overshadowed by the challenge of securing their supply chains.
- In the face of a potential global supply chain disruption, Europe is being forced to consider alternative sources.
Europe's burgeoning electric vehicle (EV) industry is potentially under threat from what Renault Chairman, Jean-Dominique Senard, is calling a "Chinese storm", he relayed to Reuters this past weekend. This storm is forming amidst China's overwhelming control over critical raw materials that power the battery industry.
China's recent announcement to limit the exportation of two essential metals, gallium and germanium, that are vital for semiconductors and EVs, has sent shockwaves throughout Europe. It highlights Europe's alarming dependence on China and illustrates the necessity to establish a robust, yet expensive supply chain, stated Senard.
The "Chinese storm" Senard refers to is the mounting pressure stemming from a surge in Chinese electric vehicle imports to Europe. "We certainly have the capabilities to manufacture electric vehicles, however, our current challenge lies in securing our supply chains," he explained.
The dominance of China's EV industry and its stronghold over the supply chain for raw materials is the result of years of strategic investment. An endeavor of this magnitude, should Europe wish to replicate, would come with a hefty price tag running into the billions of euros.
China's tightening grip on exports is heightening tensions in an ongoing technology tussle with the US, causing ripples of disruption across the global supply chains. This leaves Europe straddled in the middle, necessitating the exploration of alternative sources in a worst-case scenario.
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