With sustainability taking centre stage, the sourcing of materials and components are increasingly being discussed across multiple industries and one significant growth sector is the electric vehicle (EV) market.
IDTechEx, an independent research organisation on emerging technologies, predicts a four-fold growth in electric car sales over the next ten years. While much of the conversation focuses on battery materials, rare earths used in the magnets of electric motors are also a key concern. These materials are almost entirely produced in China and have experienced significant price volatility. Despite these concerns, IDTechEx's research has found that rare earth permanent magnet motors have maintained over 77% of the electric car market over the last nine years. Why is that the case?
Market Forecast, Material Concerns
The IDTechEx report 'Electric Motors for Electric Vehicles 2024-2034' predicts that over 140 million electric motors will be required for EV markets. While it anticipates a decline in the market share of rare earth motors, it projects that the majority of the market in 2034 will still be using permanent magnet motors.
Concerns
China's control over rare earth supplies has led to significant price volatility. In 2011, after the country restricted its exports of rare earths, the prices of neodymium and dysprosium spiked by approximately 750% and 2,000%, respectively. Similar price increases were observed in 2021 and 2022, peaking at around four times their average over the previous eight years. Although prices stabilised in 2023 and early 2024, future volatility remains a concern.
Local sourcing of materials and improving domestic supply chains have become a focus for many industries and Governments. The US, for example, has allocated resources to enhance its domestic supply of rare earths, though it will take time for these ventures to come online. Additionally, rare earths present environmental concerns related to mining, processing, and waste generation.
Permanent magnet motors continue to dominate the EV market. Despite concerns, there has been progress in developing rare earth-free alternatives. Renault has used externally excited synchronous motors (EESM) in EVs since the Zoe model, with other manufacturers like BMW following suit. These motors reduce material costs but are more complex and expensive to manufacture due to the need for rotor excitement and copper windings.
Companies like Proterial and Niron Magnetics are developing rare earth-free magnets. Proterial claims its magnets 'deliver the world's highest levels among ferrite magnets,' while Niron Magnetics is working on iron nitride magnets aiming to rival neodymium performance. The European project PASSENGER is also exploring alternatives like strontium ferrite and manganese aluminium carbon alloys. While these materials may not yet be direct replacements for rare-earth magnets, their lower costs and stable supply could shift market dynamics, with IDTechEx predicting a 12% market share for rare earth-free magnets by 2034.
Why Permanent Magnet Motors Stay Dominant
Two main factors drive the choice of motor technology: performance and cost. Rare earth permanent magnet motors offer high power and torque density, efficiency, and low manufacturing costs. Despite their high material costs, these motors have become cost-competitive again due to stabilised rare earth prices. Most Tier-1 suppliers offer both permanent magnet motors and EESMs, but it is up to the OEMs to decide. IDTechEx's interviews with OEMs reveal that while EESM options are available, they are reserved for situations where magnet prices rise significantly or geopolitical pressures necessitate localized material supply.
Broader Considerations
Unless significant advancements are made in rare earth-free magnets or strong regulatory interventions occur, rare earth permanent magnet motors are likely to retain the majority of market share. This is particularly true given China's position as the largest EV market, which reduces the incentive to move away from rare earths.
An important consideration is whether the high power levels in vehicles, particularly dual motor variants, are necessary. Dual motor variants are typically less efficient and use more materials. However, these higher power models appeal to certain consumer demographics and offer higher profit margins for OEMs. If these models help increase EV market share and reduce reliance on combustion engines, they might be considered a necessary trade-off, the report added.
NB: Photo is representational.
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