GM Quietly Pulls the Plug on Its Vacuumschmelze Magnet Deal — and Now It's Headed to Arbitration

General Motors has walked away from a decade-long magnet supply agreement with German rare-earth specialist Vacuumschmelze (VAC), and the two sides are now locked in arbitration. Reuters broke the news, citing official filings and a person familiar with the matter, and GM has since confirmed in a stock exchange notice that it “terminated a strategic sourcing agreement.”

The original contract, signed in early 2023, was a substantial bet on domestic magnet production. VAC pledged to build a North American plant to churn out permanent magnets for electric motors, with a guaranteed minimum ten-year supply for GM’s operations across the continent.

Back then, the rollout looked straightforward. GM named the Chevrolet Silverado EV, Blazer EV and Equinox EV, the Cadillac Lyriq, plus the GMC Sierra EV and Hummer EV as the models that would lean on those magnets from 2025 onwards.

What Actually Went Wrong

The EV market in the United States simply hasn’t grown at the pace Detroit was banking on — and the second Trump administration’s policy shift hasn’t helped. GM has been rethinking its electrification roadmap, and a long-term magnet commitment looks increasingly like dead weight.

The timing is awkward for VAC. The company’s US subsidiary, eVAC Magnetics, runs a plant in Sumter, South Carolina, that has been producing since late 2025. The facility reportedly cost $500 million and can turn out close to 2,000 tonnes of magnets a year.

By the numbers: ~2,000 t annual magnet capacity · $500 million plant in Sumter, South Carolina · 90% of output previously earmarked for GM

That last figure is the sting. Around 90 per cent of the plant’s output was destined for GM, leaving only a slice for the broader US market.

Energy Fuels Is Watching Closely

There’s another layer to this. VAC is in the middle of being acquired by Energy Fuels, which in June agreed to pay $1.9 billion for the business — a deal that includes the South Carolina site.

Energy Fuels has told Reuters the arbitration outcome could force “potential adjustments to our purchase price of VAC.” Filings suggest the dispute first flared up in April 2026, and Energy Fuels has confirmed it knew about the conflict while negotiating the takeover.

• Signed: early 2023, ten-year minimum magnet supply
• Built: Sumter, South Carolina plant, live since late 2025
• Broke down: dispute surfaced April 2026, contract now terminated
• Pending: arbitration, with the Energy Fuels deal price potentially in play

For GM, the move is another sign that its EV plans are being reined in rather than accelerated. For VAC, it’s a far more uncomfortable position: a brand-new factory built largely around one customer that has just stepped away.