Rare Earths Plan B for E-Motors – Without China

Related Vendors

FAULHABER Drive Systems

Wuxi InfiMotion Technology Co., Ltd.

BMW is already production-ready, with Borg Warner and Mahle following suit: More and more manufacturers are developing electric drives without rare earths. The breakthrough could be closer than expected.

Electric motors without rare earths are likely to have become more popular again. China has begun to implement real retaliation in the trade war with the USA. In response to boycotts of AI chips, software, and equipment for semiconductor manufacturing, as well as the recent threats from US President Donald Trump to increase tariffs by 100 percent against China, Beijing is now threatening its own export restrictions.

On October 9, China tightened the export approval process for five more rare earth elements (REE). Permits must now be applied for and approved for Holmium, Erbium, Thulium, Europium, and Ytterbium. This bureaucratic requirement now applies to a total of twelve out of the seventeen materials in the REE category. Additionally, alloys with these elements and technologies for processing REEs are affected.

Retaliation with a System: China Strikes Back

China has also banned the export of auto chips from Nexperia after the Dutch government took the bold step of placing the Chinese company's Dutch headquarters under state control. Whether in the realm of rare earths, chips, or several other sectors, China has begun to push back against Cold War tactics.

While applications for the export of rare earths are possible and are likely to be granted except in cases of military end use, the availability of REEs for the automotive industry will decrease. This will also impact the electronics, aerospace, defense, and several other industries, as REEs are required everywhere.

Bureaucracy as a Weapon: When Applications Become a Trap

This is due to the fact that even China, where paper was invented, does not have enough officials to process all the necessary applications quickly. The shelves in the warehouses of many automakers and suppliers are likely to empty relatively quickly wherever REEs are involved, especially in traction motors, which will heavily affect the production of electric vehicles. China dominates the processing of REEs to such an extent that alternatives cannot be found quickly.

Additionally, many so-called auxiliary components such as coolant or water pumps, power steering, even window lifts and windshield wipers no longer operate without REEs and could become scarce. Therefore, not only is the production of electric and hybrid vehicles at risk, but so is that of cars with internal combustion engines.

NdFeB: The Material of Choice for Electric Vehicles

A particularly critical factor in the construction of motors for electric vehicles and hybrids is the fact that NdFeB (neodymium-iron-boron) is included on the new approval list in Beijing. This material is used for specialized, high-performance magnets, which in turn are used to construct permanent magnet synchronous motors, commonly referred to as "PSM" in the industry, based on their English name. About 95 percent of all electric motors produced today are some form of PSM.

PSMs, especially their magnets, contain large quantities of the three rare earth elements Neodymium, Praseodymium, and Dysprosium. In the e-drive of a passenger car, up to five kilograms of these materials may be required (less than the several hundred kilograms needed for wind turbines).

Their extraction and refinement are highly environmentally damaging, which is why the USA and Europe have voluntarily and happily delegated this task to China for decades. However, PSMs are proving to be a kind of Achilles' heel for the automotive industry when politicians like US President Donald Trump or Danish Minister of Trade Vincent Karremans want to play "hardball" with China, without considering the potential for retaliation from Beijing.

All NdFeB magnets alloyed with Dysprosium and Terbium are now on the Beijing list. Starting November 8, approximately half of all exports of rare earth permanent magnets from China must be individually checked for potential dual-use risks to ensure they do not fall into the hands of the US military.

"Given that US imports of NdFeB magnets were approximately 325 million units in 2024, this is a challenging undertaking," says Thomas Krümmer, a leading German expert on international trade in rare earths.

BMW Celebrates: Advantage Through Abstention

The few electric vehicle manufacturers that belong to the remaining five percent, whose drivetrains do not operate based on the PSM principle, are currently celebrating. BMW has been working since 2018 on the development of electric motors that are entirely free of rare earths. The Munich-based company uses externally excited synchronous machines (EESM) on the rear axle and asynchronous machines (ASM) on the front axle. Neither type requires rare earths, not even permanent magnets.

In the new sixth generation of BMW's electric drives, up to four of these motors can be employed instead of just two. This allows for increases in vehicle performance depending on the model, without incurring additional development costs for even more powerful motors.

The Great Exodus: Who is Still Working on Alternatives

Worldwide, several other automakers are working on various types of electric motors without rare earths. Some of them have already deployed them in limited instances, including Renault (EESM) and Nissan (EESM), while others are still in development, such as General Motors and Stellantis.

Some of these electric motors operate with permanent magnets but without rare earths. The challenge is that many of these developments will not be ready for mass production for several years. Other manufacturers are not as far along as BMW.

Inspired by the automakers, several major suppliers have also begun developing different types of electric motors without rare earths, including Borg Warner, Mahle, Valeo, Vitesco (now Schaeffler), and ZF. Some are operational, while others are still in the development phase.

The Tinkerer Challenge: Performance Without Luxurious Raw Materials

For engineers, this search for alternatives is an enticing task, as electric motors without rare earths typically experience performance losses compared to those with rare earths, or they vibrate more and are too expensive.

It hasn't been long since all motors had to operate without rare earths, which then marked a modernization that everyone followed. However, all the current development attempts for rare earth-poor or rare earth-free motors are likely to gain significant momentum.

Progress has been relatively slow, primarily due to insufficient investment. The Japanese company Proterial (formerly Hitachi Metals) has completed the pilot of a neodymium-free magnet motor and could have it ready for mass production by 2025, according to Japanese reports.

Chinese Suppliers are Also Seeking Alternatives

Chinese companies are also researching the development of electric motors without rare earths. The incentive here is less about the risk in the supply chain and more about avoiding the relatively high costs of rare earths. There is hope to find a more cost-effective alternative that is at least equally powerful as the PSM. BYD, Huawei, Quanten Technologies, InfiMotion, and Santroll Motors are all working on EESM technology.

According to the latest E-Drive market research report by Asia Waypoint, none of these companies have reached mass production yet. Some aim only to reduce the proportion of rare earths, not to eliminate their use entirely.

Only Zhejiang Zhiyuan Motor appears to be further along, claiming to have begun mass production of a “highly efficient electric motor without rare earths.” However, not much is currently known about the size of the production series.

The team is proud of a series of technical breakthroughs it has achieved to offset the disadvantages of forgoing rare earths. They have developed new materials and components, such as ferrite composite materials, highly flexible magnets, and highly permeable insulating materials, said CEO Li Yongbing in a recent interview with Chinese reporters.

India’s Response: Technology Transfer Instead of Imports from China

India is making particularly ambitious strides in the development of rare earth-free drives, as the political relations between New Delhi and Beijing are strained. The approval process for the rare earth licenses introduced in April of this year is moving particularly slowly once an Indian name appears on the form.

The company "Sterling Gtake E-Mobility," a major automotive supplier in India, has built a large facility in Faridabad in the northern part of the country. Utilizing British technology for which licenses have been obtained, it is working on the development of a rare earth-free electric motor. The Indian firm Sona Comstar also has plans to produce magnets without relying on Chinese imports.

The Great Race: Who Will Build the First Perfect Rare Earth-Free Motor?

The list of companies worldwide involved in the pursuit of a rare earth-free electric motor continues to grow. The British start-up AEM is opting to forgo magnets and copper. However, all agree that they must not only overcome technical hurdles but also ensure that their motors are cost-effective for commercialization. “The Chinese can always undercut them,” said Andy Leyland from SC Insights to Reuters.

According to Leyland, investing in the development of electric motors without rare earths is commercially very risky. As long as cheap PSMs from China are on the market, it remains difficult for automakers who cannot set prices like BMW to rely on rare earth-free solutions.