General Motors of the United States Terminates German VAC Rare Earth Permanent Magnet Purchase Agreement

en.Wedoany.com Reported - On October 22, General Motors of the United States terminated its long-term rare earth permanent magnet purchase agreement with e-VAC Magnetics, the U.S. subsidiary of Germany's Vacuumschmelze (VAC), and the two parties have now entered arbitration proceedings. The contract termination notice was issued on July 1, 2026, and involves a $500 million rare earth permanent magnet manufacturing plant in South Carolina, United States. The plant commenced operations at the end of 2025, with a designed annual capacity of nearly 2,000 tons, and approximately 90% of its output was originally planned to be supplied to General Motors.

The two parties signed a long-term supply agreement in 2023, stipulating that the VAC U.S. plant would supply rare earth permanent magnets for General Motors' electric vehicle drive motors, with an original supply term of at least 10 years. According to U.S. Securities and Exchange Commission disclosure documents, the contract dispute emerged in April 2026. On July 7, e-VAC Magnetics initiated arbitration proceedings, asserting that the contract termination violated the agreement's terms and demanding payment of amounts due for the remaining term of the contract.

This contract dispute also involves VAC's ongoing equity transaction. U.S.-based Energy Fuels reached an agreement in June 2026 to acquire VAC for approximately $1.9 billion, and subsequently amended the merger agreement on October 13 to incorporate the customer contract dispute, potential settlement, and related acquisition price adjustments into the transaction terms. Energy Fuels stated that the arbitration outcome may affect the final acquisition price.

In its third-quarter regulatory filing submitted on October 20, General Motors confirmed that a supplier of electric vehicle drive motor components had initiated arbitration over its termination of a strategic purchase agreement. The company had previously confirmed approximately $6 billion in electric vehicle investment adjustment charges in January 2026, involving the scaling back of certain electric vehicle investment projects.