Impact of China’s Rare Earth Export Restrictions on Nissan's Leaf EV Production Plans

Analysis: Nissan's EV Production Cutback Due to China's Rare Earth Export Restrictions

Key Points:

• Nissan's Production Cutback: Due to China’s rare earth export restrictions, Nissan is scaling back production of its new Leaf EV, marking a significant hurdle in its ongoing restructuring efforts.

• Restructuring Complications: This decision complicates Nissan's plans to close seven factories and reduce its workforce by 15%, as part of its broader restructuring initiatives.

• Industry-wide Impact: The move reflects broader challenges within the global EV industry, heavily reliant on rare earth elements for manufacturing, exacerbated by geopolitical issues.

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Nissan Scales Back EV Production Due to China’s Rare Earth Export Curbs

On July 8, 2025, Kyodo News reported that Nissan Motor Co. has decided to scale back production plans for its upcoming Leaf EV due to China's rare earth export restrictions. These restrictions, which have led to critical parts shortages, are particularly disruptive for the electric vehicle (EV) industry, as rare earth elements are essential for producing high-performance magnets in EV motors and batteries.

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Background and Industry Context

The decision to reduce production of the new Leaf model comes amid ongoing global supply chain issues, which have been intensified by China's recent export curbs on rare earth elements such as dysprosium and neodymium. These elements are vital for EV battery production, and China's dominance in the global supply chain makes automakers like Nissan highly vulnerable to disruptions in their availability. In fact, Suzuki has similarly been forced to halt production of its Swift model, also attributed to rare earth shortages, further underlining the scope of the problem.

Nissan’s Leaf EV was set to be a key model in the company’s push towards greater EV production, yet this recent setback could affect its broader production timeline, especially in an environment where EV competition is increasingly fierce.

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Details of Nissan’s Decision and Its Impact

According to a Reuters article published on July 8, 2025, the company's decision to scale back production is directly tied to supply chain disruptions, particularly in securing the necessary components due to the rare earth export restrictions imposed by China. This decision could have ripple effects, especially in light of Nissan's ongoing restructuring plan, which includes:

• Factory Closures: Seven factories are scheduled for closure, part of a broader effort to reduce operational costs.

• Workforce Reduction: A planned 15% workforce reduction, which aims to streamline operations and improve efficiency.

The rare earth shortage presents a significant challenge to these plans, potentially leading to delays in product launches and affecting revenue forecasts, as Nissan's restructuring strategy already faces considerable pressure from market conditions and the ongoing supply chain crisis.

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Broader Impact on Nissan's Restructuring Plans

In addition to the production delays, Nissan’s broader restructuring plan, including the closure of factories and workforce cuts, may be further complicated by the rare earth shortage. As Automotive News pointed out, this restructuring aims to save ¥250 billion ($1.67 billion) but is now being challenged by unforeseen obstacles, such as this latest disruption in EV production. The delay in the Leaf EV launch could reduce Nissan's market share in the competitive EV sector, particularly in North America and Europe, where demand for electric vehicles is rising.

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Global Industry Implications

The situation is not isolated to Nissan. Other automakers, including Suzuki, have faced similar supply chain disruptions, highlighting how dependent the entire EV industry is on rare earth elements. This reinforces the vulnerability of global supply chains to geopolitical tensions, especially considering China’s stranglehold over the rare earth market. **Nissan’s ongoing collaboration with Foxconn to navigate production issues further underscores the industry's broader efforts to mitigate such disruptions.

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Conclusion

Nissan’s scaling back of Leaf EV production due to China’s rare earth export restrictions reflects a growing issue within the global EV market. The company’s restructuring efforts, which include closing factories and reducing its workforce, are now further complicated by this critical supply chain disruption. This development highlights the interconnectedness of geopolitical risks and the global EV market, emphasizing the challenges automakers face in securing essential materials for the production of electric vehicles.

For further insights into this developing story, please refer to detailed articles from Reuters, Yahoo Finance, and other reliable sources reporting on this issue.

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