Schaeffler is a company in charge of providing mechanical components to manufacturers of electric cars, in general, one of its specialties is the electric motors themselves. In the last few hours it has become known that this company has formalized a rare earth supply agreement with Europe to feed the manufacture of its factory of mechanical elements for the automotive industry.
From the European Union they are immersed in promoting a manufacturing plan for products and different components within their own territory, mainly with a view to starting their independence from other markets such as China. Especially, said EU plan opts for elements of electric cars, as well as other machinery. This agreement with Schaeffler will be the first signed with a European car supplier to obtain raw materials within the region itself.
The German company Schaeffler has reached an agreement for a period of five years with REEtec so that it will be in charge of separating valuable elements from all the material collected, which Schaeffler will later transform into its own components for vehicles electrical. One such crucial element will be the extraction of raw materials for the manufacture of magnets. This agreement will start operating in 2024 and from neither of the two companies have they given details about the economic value that this association has entailed.
A representative of the German company assured Reuters during a recent interview that currently its capacity to produce electric motors is in a remarkable increase. Precisely for this reason they needed to find competent partners to supply raw materials, for which they have wanted to do without China and have focused on obtaining it through the local European market itself.
Currently, China has almost the total monopoly of supply of rare earths worldwide, since 98% of the transactions that are carried out on the different industries come from the Asian country. Europe, the United Kingdom and the United States are currently reinforcing their entire production operations in order to get a good piece of the cake, especially for companies based in their own territories.
Schaeffler, by revenue, is currently positioned as the fifth largest supplier of car components in Germany. This company supplies different elements to well-known firms such as Volkswagen, Honda or General Motors, which allocate most of their acquisitions to their own electric models that they already market.
During the aforementioned interview with Reuters, the company’s representative was asked if they were willing to cover a higher cost of acquisition of these raw materials extracted in a sustainable and transparent manner, to which the delegate replied that they know that this will be a significant challenge. However, their focus on the commitment to sustainability has led them to take this step, although again they did not give details about the economic cost that this will entail.
According to analysts from the automotive industry, this higher cost in the transaction of components for electric cars can be borne because the European manufacturers themselves have a greater margin of action as long as these more expensive elements come directly from the local market. An extra cost that can be directly transferred to the final buyer by justifying greater manufacturing sustainability and the value that being a vehicle manufactured entirely in Europe represents.