Global electric-vehicle makers are finding that breaking free from Chinese rare earths is easier said than done.
EV makers outside China are accelerating investments in motor technologies that reduce or eliminate rare-earth elements, hoping to shield themselves from Beijing’s tightening grip. Over the past six months, Stellantis, General Motors, and Honda have each announced new funding rounds or partnerships aimed at developing alternatives to the rare earth-based permanent magnets that power most EV motors today.
“It’s about resiliency and having backup options,” Jonathan Rost, chief customer engineer at Valeo, a French supplier of powertrain and electrical systems to automakers including Mercedes-Benz and Hyundai, told Rest of World. “If you build a product where 90% of a key component is controlled by one country, you’re not very comfortable.”
China accounts for roughly 60% of global rare earth mining and 91% of processing capacity, according to the International Energy Agency.
The risk of relying on China became clear last year when Beijing tightened export controls on rare earths, forcing several European parts plants to shutter and Suzuki to halt production. For automakers already struggling to compete with Chinese EV rivals, dependence on a single country for critical minerals is a vulnerability they can no longer afford.
Automakers have pursued two main paths: developing permanent magnets made from more abundant materials such as iron and nitrogen, and building motors that avoid permanent magnets entirely.
BMW began developing rare earth-free motors in 2011 after a spike in the prices of neodymium, the most widely used rare earth in EV magnets. The German automaker now claims its designs can match or exceed the efficiency of conventional motors at everyday driving speeds.
Stellantis, whose brands include Fiat, Jeep, Maserati, Opel, and Peugeot, and General Motors recently renewed their backing of Niron Magnetics, a Minnesota startup developing iron-nitrogen magnets. Neither company has disclosed when the technology might appear in production vehicles. Valeo explored alternatives more than a decade ago but did not commission a project until 2022.
Turning prototypes into products has been slow. Valeo’s motor is not expected to reach the market until at least 2028, and the company says pricing will take production volumes into account.
If … 90% of a key component is controlled by one country, you’re not very comfortable.”
Renault, Valeo’s original partner on developing the rare earth-free motor, has since sought new collaborators, including Chinese suppliers. China’s cost advantage across the EV supply chain remains difficult to replicate even as Western automakers search for alternatives.
About 94.7% of light EVs currently use motors that rely on rare earth elements, according to a report from S&P Mobility. The research firm projects average annual growth of 15% for rare earth-free motors through 2037, but from a tiny base.
IDTechEx, a Cambridge-based research firm that tracks emerging technologies, expects more than 75% of passenger EVs will still use rare earth-based motors by 2030, falling to about 70% by 2035.
“If carmakers don’t have a plan B, manufacturing can come to a halt,” John Li, a technology analyst at IDTechEx, told Rest of World. “We’ve already seen how supply disruptions can financially cripple companies — especially when making a profit on EVs is already difficult.”
Chinese automakers have little trouble sourcing rare earths at home. They are chasing the technology anyway, looking for cheaper components to sharpen their edge overseas. BYD, Nio, and Huawei have each developed rare earth-free motor designs, though none have put them into mass production.
Hengchun Mao, founder of Quanten Technologies, a Chengdu-based startup producing rare earth-free motors, has sold about 2,000 motor sets — some completely free of rare earths and others with reduced content — since his factory opened last August. Mao’s first customers were Chinese EV makers, not because they lacked access to rare earths but because they were always hunting for ways to cut costs.
“They don’t have a shortage problem,” Mao told Rest of World. “They’re interested because they want to compete better, inside and outside China.”
Mao said he received his first European orders this year and expects overseas customers will eventually outnumber Chinese ones by 2030. Chinese carmakers, he said, are not in a rush to adopt rare earth-free technology.
“The most advanced motor technology may not necessarily come from China,” Mao told Rest of World. “But when it comes to cost efficiency, China still has an edge over any other region.”
Tesla, which switched to rare earth-based motors in 2017, has said its next-generation motors expected in 2026 will again be rare earth-free. The back-and-forth underscores how experimental the transition remains.
Developing rare earth-free motors is one way out. Building an alternative supply chain for rare earths outside China is another. Western efforts to establish independent supply chains could take 15 years and cost dearly, but would offer insurance against Chinese export controls, said Marina Zhang, an associate professor at the University of Technology Sydney, who studies critical minerals and geopolitics.
“It may be very costly, but it could be safe,” she told Rest of World.
The greater risk lies with smaller countries that lack the resources to build their own supply chains or fund alternatives, Zhang said. And even those investments could be wiped out if Beijing floods the market with cheaper, better rare earths.
“If Chinese rare earth products become available at lower prices and higher quality, the game could change immediately,” she said.
