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(Bloomberg) — Tesla Inc.’s production of Optimus, a robot that promises to take over household chores, has been disrupted by China’s curbs on rare earth exports, introduced by Beijing earlier this month in an escalating trade war with Washington.
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Speaking on the company’s earnings call on Tuesday, Chief Executive Officer Elon Musk said production was impacted by the “magnet issue”. While weeks of delays are expected as exporters grapple with tighter permit requirements for the key ingredients, Tesla is one of the highest-profile buyers so far to flag the direct consequence of the change.
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“We’re working through that with China. Hopefully, we’ll get a license to use the rare-earth magnets,” said Musk, who is also an adviser to the White House. “China wants some assurances that these are not used for military purposes, which obviously they’re not. They’re just going into a humanoid robot.”
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Beijing added seven rare-earth minerals to its export control list in response to the increasingly punitive tariffs imposed by US President Donald Trump. It said restrictions were required given rare earths are considered dual-use items — materials with civilian but also military applications.
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The minerals, while niche, have vital uses across optical laser technology, radar devices, magnets for wind turbines, jet engine coatings and other advanced technologies.
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Chinese robot-related stocks climbed following Tesla’s earning call, with UBTech Robotics Corp., Horizon Robotics Inc., Zhejiang Changsheng Sliding Bearings Co. and Jiangsu Pacific Precision Forging Co. jumping more than 10%. Rare earth materials maker JL Mag Rare-Earth Co.’s shares also surged more than 10%.
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Musk also weighed in on the impact of tariffs, saying Tesla’s energy business is the most impacted.
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“The impact of tariffs on the energy business will be outsized since we source LFP (lithium iron phosphate) battery cells from China,” he said in the earnings call. “We’re in the process of commissioning equipment for the local manufacturing of LFP battery cells in the US”, he said, adding that Tesla has been working to secure supply from non-China-based suppliers, but the process will take time.
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—With assistance from Shelly Banjo and Kelly Li.
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(Updates with Musk comment on tariffs, share moves in last three paragraphs)
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English (US)