General Motors has terminated a long-term supply agreement with eVAC Magnetics, the US subsidiary of German magnet specialist Vacuumschmelze (VAC), with the two companies now involved in arbitration proceedings, according to Reuters. The dispute raises uncertainty around a major North American production facility for rare-earth permanent magnets used in electric vehicle motors.
GM disclosed in a stock exchange filing that it had “terminated a strategic sourcing agreement” and was involved in arbitration. Reuters cited company documents and a source familiar with the matter in reporting the termination.
Ten-Year Magnet Supply Agreement
Signed in early 2023, the agreement required VAC to supply rare-earth permanent magnets to GM’s North American operations for at least 10 years. VAC committed to establishing a North American manufacturing facility to produce magnets for electric motors, with deliveries initially planned from 2025.
The components were intended for several GM electric vehicles, including the Chevrolet Silverado EV, Blazer EV and Equinox EV, as well as the Cadillac Lyriq, GMC Sierra EV and Hummer EV.
The agreement was established as GM pursued its electrification plans. However, slower-than-expected growth in the US electric vehicle market has prompted changes across the automaker’s strategy.
South Carolina Plant at the Center of the Deal
VAC’s US subsidiary operates a magnet manufacturing facility in Sumter, South Carolina, which reportedly began operations in late 2025. According to Reuters, the plant cost approximately $500 million and has annual production capacity of nearly 2,000 tonnes.
Around 90% of the facility’s output was reportedly intended for GM, leaving the company heavily exposed to the outcome of the supply dispute.
Energy Fuels Acquisition Faces Uncertainty
The arbitration also introduces uncertainty into Energy Fuels’ planned acquisition of VAC. In June, the US-based company announced a deal valued at approximately $1.9 billion to acquire the German magnet specialist, including its US manufacturing operations.
Energy Fuels told Reuters that the acquisition price could be adjusted depending on the arbitration outcome. Company filings indicate that the dispute between GM and VAC emerged in April 2026, and Energy Fuels was aware of the conflict during acquisition negotiations.
The arbitration’s outcome could therefore affect both the commercial relationship between GM and VAC and the terms of Energy Fuels’ proposed acquisition.