Tensions between China and the United States have caused Western car manufacturers to seek to reduce dependence on an important driver of the electric car revolution – permanent magnets. These, although often smaller than a deck of cards, are powered by electric motors. However, most of them are made from rare earth metals mined in China, and demand for them is growing rapidly. They are also used in the renewable energy sector. And with the transition from internal combustion to electric motors, there is a risk that there will be a shortage, according to analysts.
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Rare earth magnets are mainly made of neodymium and are considered to be the most efficient way to drive electric cars. Without them, the distance that the vehicle is able to travel between charges can be shortened. And it is concerns about the range that have long been holding back the development of electric cars. Access to these metals can thus represent a competitive advantage. China controls up to 90 percent of these supplies worldwide.
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Some carmakers have been trying to replace rare earths with something for several years. In addition to insufficient supply, carmakers are also concerned about large price fluctuations and environmental damage in the supply chain. Over the last 20 years, Western countries have largely withdrawn from the production of rare earth metals, as this production is often complex and accompanied by harmful emissions. Today, China dominates the entire production chain. Neodymium oxide prices doubled last year with a rise that lasted nine months.
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Precious metals are important for electronics, the defense industry and renewable energy sources. Because some of them can generate a constant magnetic force, the magnets that are made from them are referred to as permanent magnets. Electric cars with these magnets need less battery power than electric cars with conventional magnets. These vehicles can therefore travel a longer distance until the next charge. They were the only choice for electric cars until 2010, when China threatened to cut supplies of precious metals in a dispute with Japan. Prices then rose sharply.
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Now supply concerns are making a big difference between Chinese electric car manufacturers and their Western competitors. While carmakers such as Nissan, Toyota, BMW, Volkswagen and Renault are eliminating rare earths from their engines, the Chinese are still producing cars with permanent magnets.
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Manufacturers, who accounted for 46 percent of global sales of light motor vehicles last year, say JATO Dynamics said they are limiting the use of rare earths in electric cars, or have phased out or are about to do so. And new businesses are emerging that develop electric motors without these metals or seek to increase the recycling of magnets used in existing vehicles.
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Neodymium magnets in a conventional electric car weigh about three kilograms, but even at a twelfth of that weight they are able to hold as much steel as a heavyweight wrestler, and will have about 18 times more magnetic energy than standard magnets, said British magnet maker Bunging.
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Despite the pandemic reducing car sales, demand for these magnets for electric cars rose 35 percent to 6,600 tonnes last year, according to consulting firm Adamas Intelligence. It also expects that the global consumption of precious metals for magnets will increase almost fourfold by 2030 compared to this year to 15.7 billion USD (more than 342 billion crowns).
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The price of permanent magnets for hybrid and electric car engines is more than $ 300 per car, which is up to half the cost of the engine, analysts say. Switzerland’s largest bank, UBS, expects electric models to account for up to half of cars sold worldwide by 2030, while they now account for four percent of total sales.
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However, many drivers do not solve the range problem. “Most people travel less than 100 miles (161 km) a day, so a less efficient engine is enough,” said Jürgen Gassmann, a researcher at the Fraunhofer IWKS German Institute. Even so, automakers have adopted a number of strategies.
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Some companies, such as Toyota, still use permanent magnets, but have reduced their consumption of rare earths. Toyota has also developed a magnet that needs 20 to 50 percent less neodymium. Other companies, such as BMW, have made design changes to reduce the consumption of rare earths as much as possible.
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The American electric car manufacturer Tesla began combining motor types in 2019. Its S and X models have two motors, one with rare earth magnets and one without them. The induction motor provides higher power, while the one with permanent magnets is more efficient. Tesla says that rare earth engine models have a ten percent higher range. Both types of engines are also used by Volkswagen in the new ID.4 model.
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IHS e-mobility analyst Markit Claudio Vittori estimates that the use of rare earth metal-free engines for electric vehicles will increase almost fivefold by 2030. However, according to him, motors with permanent magnets will still have a dominant position, mainly due to performance and efficiency.
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However, even if all these predictions are correct and the number of vehicles with a motor without permanent magnets increases, it will probably not help calm the market situation. “There is almost no scenario in which the offer is sufficient,” said Ryan Castilloux, an analyst at Adamas Intelligence.
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