GM’s Rare-Earth Bet Pays Off: How Early U.S. Magnet Deals Became a 2025 Advantage

General Motors spent the past four years doing something that, at the time, looked expensive and unfashionable: prepaying for a U.S. supply of rare-earth permanent magnets and backing domestic factories that didn’t yet exist. With China tightening export controls on rare earths and magnets this fall, those decisions have turned into a tangible competitive edge for GM—and a case study in supply-chain foresight.

What GM Did—Early and Often

The pivot started in 2021, when GM struck a long-term deal with MP Materials to build an integrated, mine-to-magnet chain in the U.S. The plan called for ore from Mountain Pass (CA) to feed alloy and magnet production at a new Fort Worth, Texas facility, supplying more than a dozen Ultium-based models as volume ramps, including Hummer EV, Lyriq, and Silverado EV.

GM then layered in redundancy. In August 2025 it signed a multi-year supply agreement with Texas-based Noveon Magnetics for neodymium-iron-boron (NdFeB) magnets destined for full-size trucks and SUVs—high-margin nameplates that can’t afford line stoppages. Meanwhile, Germany’s Vacuumschmelze (VAC) is opening a South Carolina magnet plant with capacity near 2,000 metric tons per year; industry reports indicate up to 90% of output is earmarked for GM.

GM also hedged technologically. In 2023, GM Ventures invested in Niron Magnetics, which develops rare-earth-free iron-nitride magnets, a potential future path away from dysprosium/terbium-dependent chemistries. It won’t move 2025 production, but it signals a Plan B if geopolitical risks persist.

Why It Matters Now

This month, Beijing expanded export controls, adding five rare-earth metals to earlier restrictions and tightening license scrutiny on magnets—amplifying uncertainty for automakers reliant on Chinese material. Analysts and policy shops warn the rules could explicitly bar exports for foreign military end uses, feeding broader U.S. supply-chain anxiety. Reuters data also shows that September magnet exports to the U.S. fell sharply, underscoring volatility just as North American EV output scales.

Against that backdrop, GM’s domestic web—Mountain Pass ore, Fort Worth magnets, Noveon’s Texas production, and VAC’s South Carolina ramp—creates a multi-node U.S. supply that competitors largely lack. The Defense Department’s 2025 public-private package with MP Materials to expand U.S. magnet capacity only deepens the bench for both defense and commercial demand.

The Payoff: Resilience, Pricing Power, and Planning Certainty

Near-term, GM’s advantage is continuity: less exposure to export licensing surprises, port delays, or quota squeezes that can ripple through assembly lines. That lowers the risk of costly downtime on big-ticket trucks and SUVs, where magnet-driven motors and dozens of smaller actuators (power steering, pumps, wipers, lighting) are non-negotiable. Medium-term, diversified sourcing can translate into better cost predictability, supporting steadier MSRP and lease math even as rivals scramble for allocations. Markets have noticed; investor coverage has increasingly framed GM’s position as structurally stronger than peers on magnet security.

What Could Still Go Wrong

Domestic magnet capacity is ramping, not fully mature. Fort Worth and South Carolina must hit yield, scale, and cost targets; any slippage could tighten margins. Chinese controls also evolve—today’s metal list could expand to alloys, powders, or finished parts, changing where bottlenecks appear. And while rare-earth-free magnets are promising, iron-nitride remains a development bet rather than a drop-in for 2026 model years.

The Industry Scramble

GM is ahead, but not alone in hedging. Automakers and Tier 1s are racing to lock non-Chinese supply; global press coverage describes a broader “catch-up” to rebuild magnet chains in the U.S., Europe, Australia, and Japan. Policy tailwinds—from Pentagon funds to state incentives—are accelerating siting decisions and second-source contracts. Meanwhile, some OEMs are revisiting motor designs (e.g., induction or wound-rotor) or blending lower dysprosium grades to reduce exposure without sacrificing efficiency.

What to Watch (Market Snapshot)

• VAC South Carolina start-up timing and initial volumes to GM.

• MP Materials’ magnet output in Fort Worth and the pace of its DoD-backed capacity expansion.

• Additional U.S. offtakes (beyond GM) that could tighten domestic spot supply or firm long-term prices.

• Policy changes—any widening of Chinese controls to magnet powders/alloys, or new U.S. incentives for downstream processing.

Bottom Line

By treating magnets as strategic—years before a crisis—GM bought itself insulation from 2025’s supply-shock theater. With multiple U.S. sources coming online and a technology hedge in rare-earth-free designs, the company has quietly converted a costlier 2021 gamble into a 2025 moat. Competitors can replicate it, but they’ll be doing so under tighter timelines—and tighter export controls.