Business · Trade · 3 hrs ago
GM cancels long-term deal with US magnet factory
General Motors has cancelled a 10-year supply deal with a rare-earth magnet factory in South Carolina.
The factory is owned by a US subsidiary of German materials company VAC and was built in part to supply magnets for GM electric vehicles.
GM accounted for 90% of the factory's orders, while the rest of its production was largely intended for the US government.
After the US government ended federal incentives for electric vehicles, GM cut back its EV plans and reduced its expected vehicle production.
The lost order puts the factory's value and future at risk, and Energy Fuels, which had planned to buy VAC, said the purchase price could change.
The US has also lost expertise in rare-earth processing and magnet production, and domestic magnets cost more than Chinese-made ones.
A US rule is due to bar certain imports from 2027, but the factory's lost customer highlights the challenge of building a domestic supply chain that can compete on cost and keep delivering.
General Motors has cancelled a long-term supply agreement with a US magnet factory owned by a US subsidiary of Germany’s VAC Group.
The South Carolina factory relied on GM for 90% of its orders.
GM had signed the agreement with VAC in 2023, after announcing plans to build the factory together in 2021.
The article says GM’s electric-vehicle business was losing money and that the US government’s 2025 removal of EV incentives led to reduced production.
The factory has received US government support, but the article says US-made magnets face higher costs than Chinese-made ones.
- Who
- General Motors and VAC’s US subsidiary, which owns the South Carolina factory.
- What
- GM cancelled a long-term magnet supply agreement with the factory.
- When
- The cancellation was reported recently, according to the article published on October 29, 2026. The agreement was signed in 2023.
- Where
- A rare-earth permanent magnet factory in Sumter, South Carolina.
- Why
- The article says GM reduced EV production after federal incentives were removed, shrinking its need for magnets.
This story does not have two clearly opposing sides.
GM and VAC announced plans to build a factory in the United States.
GM and VAC signed a long-term supply agreement.
The Trump administration took office and removed federal incentives and tax breaks for electric vehicles.
GM spent $6 billion to divest some of its electric-vehicle investments.
The article reported that GM had cancelled the long-term supply agreement.
- Factory location
- Sumter, South Carolina
- Factory investment
- About $500 million
- Annual capacity
- Nearly 2,000 tonnes
- GM share of factory orders
- 90%
- US tax credit
- $111.9 million
- Chinese-made medium-grade neodymium-iron-boron magnets
- About $26 per kilogram
1 source
What people are saying
This is the first magnet made in the United States in 25 years — we are ending China’s stranglehold on our supply chain.
It takes at least ten years of practical experience to train a fully qualified rare-earth engineer.
The United States not only needs to rebuild its operating processes, but also the knowledge needed to make the machines and equipment for those processes.