Chinese friction is driving electric manufacturers away from rare earth magnets

As tensions between China and the United States escalate, Western automakers are trying to reduce confidence in a key driver of the Revolution electric vehicle – durable magnets, sometimes smaller than card packs that power electric motors.

Most of them are rare earth metals in China.

Magnet metals are plentiful, but they can be dirty and difficult to produce. China has grown to dominate production, and the demand for magnets is growing for all types of renewable energy. Analysts say there may be a real shortage.

Some car companies have been trying to replace rare earths for years. Reuters studies have found that manufacturers with nearly half of global sales say they limit use.

Western automakers say they are concerned about securing supply as well as huge price increases and environmental damage to the supply chain.

This means managing the risk that throwing metals can shorten the distance a vehicle can travel between loads. Without a solution to this, the range of anxiety that has long hindered the industry would increase, so access to metals could become a competitive advantage.

Rare earth magnets, mostly made of neodymium, are seen as the most efficient way to power electric vehicles (EVs). China controls 90% of supply.

In a nine-month rally last year, neodymium oxide prices doubled and are still up 90%; The U.S. Department of Commerce said in June that it is investigating the impact of imports of neodymium magnets on national security.

Among the companies trying to cut usage is Nissan Motor Co. It is the third-largest automaker in Japan and has told Reuters that it is dumping rare earths into the engine of the new Ariya model.

The German BMW AG did the same this year with its iX3 electric SUV, and the Japanese Toyota Motor Corp. and Germany’s two largest automakers in the world, Volkswagen AG, told Reuters that minerals are also declining.

Rare earths are critical in the electronics, defense and renewable energy industries. Since some can generate a constant magnetic force, the Magnets they make are permanent Magnets.

Electric cars with these require less battery than ordinary magnets, so vehicles can travel longer distances before charging. They were the best option for EV Motors until 2010 when China threatened to cut off the supply of rare earths in its conflict with Japan. Prices went up.

Now, supply concerns are opening the gap between Chinese EV producers and Western rivals.

While automakers are shrinking in the West, the Chinese are pulling out vehicles using permanent magnets. A Chinese rare earth industry official told Reuters that if geopolitical risks are ignored, China’s capabilities could “meet the needs of the world’s automotive industry.”

Overall, based on JATO Dynamics sales data, manufacturers, which accounted for 46% of light vehicle sales in 2020, say they have disbanded, plan to eliminate or reduce rare earths in electric vehicles.

And new Ventures are emerging to develop metal-free Electric Motors or to encourage the recycling of Magnets used in existing vehicles.

“Companies that spend tens or hundreds of millions developing a product family … don’t want to put all their eggs in one basket – that’s the Chinese basket,” said Murray Edington, director of the Electrified Powertrain department at British Consultancy. Drive System Design. “They want to develop alternatives.”

BMW has said it has redesigned its EV technology to fill the shortage of rare earths; Renault SA has positioned the Zoe model without rare earths by turning it into a pit for small urban cars that don’t need to extend their driving areas.

Tesla Inc., the US EV Giant, has a market value of $ 621 billion below that of the top five automakers. He is opting for both types of engines.

“You’re pulling your hair out to decide whether supplies will be viable in the future and what prices you’re thinking about,” said Adamas Intelligence Canadian consulting firm Ryan Castilloux.

His Consultancy expects Iman’s global consumption of rare earths to be $ 15.7 billion by 2030, nearly four times as much this year.

EVs and wind turbines

Neodymium is a strong metal. EV usually neodymium magnets weigh 3 kg (6 lb), but even at 1/12 of that weight, a neodymium magnet supports steel as much as the Tyson Fury Prizefighter and will have 18 times more magnetic energy. standard variety, the British magnet company Bunting told Reuters.

Although the pandemic has hampered car sales, last year the demand for these magnets in electric vehicles rose 35% to 6,600 tons, according to Adamas Intelligence.

Analysts say that hybrid and EV-type permanent magnets cost more than $ 300 per vehicle or up to half the cost of the engine.

Analysts at investment bank UBS expect that electric models will account for half of new car sales by 2030, up from just 4% last year. Magnets are also demanding demand for wind turbines, and their global facilities rose 53% last year, according to the industry trade group.

Over the past two decades, western countries have largely stopped producing rare earth metals, which has led to complex processing and often harmful by-products. Today, China’s dominance runs throughout the entire production chain.

“The upstream rare earth supply chain, including mining and processing, is certainly a major concern, but when it comes to the production of RE magnets, China is even tighter,” said David Merriman of Roskill, a London-based critical materials consultancy.

Not enough

For many EV drivers, anxiety may not be an issue.

“Now people do less than 100 kilometers a day, so you can have a less efficient engine,” said researcher Jürgen Gassmann at the German Fraunhofer IWKS.

However, Western motorists have adopted a number of strategies. Some, like Toyota, use durable magnets but have reduced the use of rare earths by developing a magnet that requires 20% to 50% less neodymium.

Others, such as BMW, have undergone major redesigns: the German automaker has told Reuters that it has overhauled the driver’s unit to combine engine, electronics and transmission in a single home, reducing space and weight.

“Our goal for the future is to avoid rare earths as much as possible and to make them independent of the risks of cost, usability and, of course, sustainability,” said Patrick Hudde, BMW’s vice president of raw material management.

Tesla began combining engine types in 2019. Models S and X have two motors: one with rare earth magnets, the other without. The induction motor offers more power, but while the one with permanent magnets is more efficient, Tesla said: The introduction of the rare earth motor increased the driving level of the models by 10%. Volkswagen also uses two types of the new ID.4 crossover, he said.

The use of non-rare earth electric motors will jump by almost eight times by 2030, according to Claudio Vittori, a senior electronic mobility analyst at the IHS Markit data analytics company. Motors that achieved a permanent magnet will still dominate, mainly because of their power and efficiency.

If the forecasts are correct, it is not certain that these adjustments could also cool the market.

“I think we need these innovations to help balance the really strong demand growth we’re looking at,” Castilloux says. “There’s almost no scenario where there will be enough supply.”

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