Focus: Automakers' drive to avoid China's EV rare earth dominance gathers speed

Vitesco Technologies AG

14/11/2023 06:00

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      Auto industry expanding efforts to cut rare earth EV use
    

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      Rare earth alternatives now commercially viable
    

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      Automakers have options ready, watching for China moves
    

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      Rare earth magnets will still dominate via Chinese EV
makers
    

  
    By Nick Carey and Christina Amann
       LONDON/BERLIN, Nov 14 (Reuters) - The auto industry's
drive to make electric vehicle motors with little to no rare
earth content has hit high gear, with European, U.S. and
Japanese automakers and suppliers racing for alternatives in an
area dominated by China.
    Automakers have mostly relied on motors with rare
earth-based permanent magnets, which have been the most
efficient at providing the torque to power EVs. 
    But different types of motors without permanent magnets that
were previously too big and too inefficient, or those with
greatly-reduced rare earth content have become commercially
viable, prompting the rush for alternatives.
    Market leader Tesla  TSLA.O  garnered headlines earlier this
year saying it would cut rare earths from its next-generation
EVs. 
    But automakers from General Motors  GM.N  to Jaguar Land
Rover (JLR) and major suppliers like BorgWarner  BWA.N  are
researching, or have developed, motors with low- to zero-rare
earth content such as magnet-free externally excited synchronous
machines (EESMs), which generate a magnetic field using electric
current. 
    Others like Nissan  7201.T  are going further than
previously reported, with a dual strategy to develop both newer
EESM motors and also to develop permanent magnet motors where
the rare earth content will be gradually eliminated altogether. 
 
    China dominates the mining and processing of a group of 17
metals known as rare earths, though companies elsewhere are
trying to loosen China's grip. 
    Recent Chinese restrictions on exports of gallium and
graphite - which is critical for EV production - highlighted the
risk of over-reliance on China.
    German supplier ZF  ZFF.UL  has developed an EESM motor that
Chief Technology Officer Otmar Scharrer said matches the size
and performance of permanent magnet motors.
    "This is an important contribution to making us a little
more independent of China," he said.     
    ZF is in talks with U.S., European and Chinese automakers to
supply the motor and could be in production model EVs within two
years, Scharrer said.
    Aside from over-reliance on China, refining rare earths,
such as neodymium and dysprosium, involves solvents and toxic
waste that conflict with sustainability goals.
    "If you get it right, you've got a much more sustainable
product," Ben Chiswick, director of engineering business
development at Detroit-based Drive System Design, which is
developing rare earth-free motors with three automakers.
    Some automakers, like BMW  BMWG.DE  say they are already
there after years of research. 
    "It was not a home run... but it works very well without
rare earths" said Uwe Deuke, the engineer in charge of
developing BMW's EESM motor for its next-generation EVs.
    
    'WAITING IN THE WINGS'
    The average EV permanent magnet motor uses around 600 grams
(1.32 lb) of heavy rare earth neodymium. Prices have fluctuated
greatly for neodymium - at around $125/kg now, it is down from a
peak of around $223 last year, but well above $65 in 2020.
    Vitesco  VTSCn.DE  designed an EESM motor for Renault
 RENA.PA  and has a new version coming in 2026. Gerd Roesel,
innovation head at the German supplier's electrification
division, said rare earth-free alternatives avoid those wild
price swings.
    Others like U.S. startup Niron Magnetics are developing
permanent magnets without rare earths. 
    Tesla's announcement on dropping rare earths "opened up
buyers' eyes to the fact that you don't really need rare earths
to make EV magnets," Niron CEO Jonathan Rowntree said.
    Niron's latest funding round included investments from GM
and Stellantis  STLAM.MI .
    Nissan uses an EESM motor in its Ariya crossover. Shunji
Oki, expert leader at the automaker's powertrain and EV
engineering division, said Nissan is developing both better EESM
motors and permanent magnets where rare earths will be phased
out.
    James Edmondson, an analyst at consultancy IDTechEx, said
automakers rushed to find alternatives as rare earth prices
rose, but now prices have fallen they are watching China closely
and waiting to see if governments take action that would curb
the use of Chinese rare earths, as the U.S. Inflation Reduction
Act did.
    "This is why they (automakers) have other technologies
waiting in the wings," he said.
    IDTechEx forecasts that as of now rare-earth permanent
magnet motors will lose some global market share over the next
decade but still make up more than 70% as Chinese EV makers face
no pressure to curtail their use - though their share will be
much closer to 50% in Europe, Edmondson said. 
    And where western automakers are sticking with rare-earth
permanent magnets, they are working to dramatically reduce their
content, he added.
    Mercedes-Benz's  MBGn.DE  next-generation EV platform, for
instance, has almost no heavy rare earth content.
    The challenge also goes beyond motors. 
    In some EVs, around a third of the rare earths used are in
the sound system's speakers. UK firm Warwick Acoustics has
developed rare earth-free speakers that are 90% lighter and more
energy efficient than conventional ones. It has signed up its
first luxury automaker customer and is talking to others, CEO
Mike Grant said.
    "We're fighting off people right now," he said. 

 (Reporting by Nick Carey in London and Christina Amann in
Berlin, additional reporting by Paul Lienert in Detroit, Ernest
Scheyder in Houston, Gilles Guillaume in Paris and Giulio
Piovaccari in Milan, editing by Ben Klayman and Sharon
Singleton)
 ((nick.carey@thomsonreuters.com; +44 7385 414 954;))