GM ends VAC magnet deal for EV motors

General Motors cancelled a long term supply deal with rare earth magnet maker Vacuumschmelze, known as VAC, and the two sides are now in arbitration, according to Reuters. The GM VAC deal was meant to supply permanent magnets for General Motors electric vehicles from a new plant in South Carolina. GM was the biggest customer of that plant, and the end of the GM VAC deal raises questions about how Western carmakers build a domestic supply of magnets without relying on China, which produces about 90 percent of global permanent magnets. Reuters reported the cancellation on October 22, based on regulatory documents and a person with knowledge of the situation. None of the companies involved has issued a press release about the dispute, and GM and Energy Fuels declined to comment on the arbitration because it is confidential.

Germany's VAC signed a long term deal in 2023 with GM to supply permanent magnets from a new plant in South Carolina. Energy Fuels, which agreed in June to pay 1.9 billion dollars to acquire VAC, said in United States Securities and Exchange Commission documents filed last week that a customer of the plant ended its supply agreement on July 1, and VAC launched arbitration proceedings against that customer several days later. Energy Fuels did not name the customer in that filing. GM this week reported in an SEC filing that a supplier of a component for EV traction motors started arbitration against GM seeking damages after GM ended a strategic sourcing agreement, without saying why it cancelled the deal. A person familiar with the matter confirmed to Reuters that GM was the customer that cancelled the contract with VAC's United States unit, e-VAC Magnetics.

What the GM VAC deal covered

The GM VAC deal began with plans announced in December 2021 to work together on magnets made in the United States. VAC later announced plans to build a new factory in South Carolina, which was meant to support GM electric vehicle work for at least 10 years. The plant, in Sumter, South Carolina, cost about 500 million dollars and opened in late 2025, according to GM Authority, which cited the Reuters report. Annual production capacity was set at about 2,000 metric tons of permanent magnets. About 90 percent of the plant output was originally set aside for GM, while the rest was meant for the United States government. That split shows why the end of the GM VAC deal matters beyond the two companies: the plant was built in large part for one customer, and losing that customer leaves a large share of its planned output without its intended buyer.

GM VAC deal ends in arbitration

Arbitration is the route the two sides are now taking, and it is confidential. VAC launched the proceedings several days after the July 1 termination, seeking payments it claims are owed under the agreement, according to GM Authority. GM acknowledged the dispute in a third quarter 2026 SEC filing, but it did not name the supplier or explain its reasons for ending the contract. That lack of a stated reason leaves the public record with a gap: the filings show that a deal ended and that arbitration followed, but they do not show whether the dispute is about price, volume, timing, quality, or a change in GM electric vehicle plans. Reuters noted that the dispute shows how the United States auto industry has changed since Donald Trump returned to the White House in 2025 and cut federal support for electric vehicles. That context is part of the background, but the filings themselves do not link the cancellation to any single policy change, and GM has not said that it did.

GM VAC deal and domestic magnet supply

The GM VAC deal remains the subject of confidential arbitration. Further filings may add detail to the GM VAC deal, but no company has issued a press release so far.