EV Diversification: Reducing Reliance on Chinese Rare Earths

The electric vehicle (EV) industry relies heavily on rare earth materials which are predominantly produced by China.

Recent trade restrictions implemented by China has now meant that EV manufacturers are looking elsewhere for technology.

IDTechEx explores the pros and cons of alternative materials to rare earth elements.

Supply chain barriers

Rare earth elements are 17 metallic elements vital for modern manufacturing, important in the high-powered magnets used in electric vehicles. China currently oversees 61% of global rare earth production and 90% of processing, making it a main contributor to the production of EVs. 

China has now introduced trade restrictions, which makes rare earths less accessible to the rest of the world. The new licensing system for these exports means that securing these items are more complex due to the requirement of specific licenses. This will significantly impact EV production, as IDTechEx found that 87% of the global EV market used motors containing rare earths in 2024. Each of these motors would contain 1-3kg of rare earth magnets.

Most EV motors use neodymium magnets, which contain the rare earths dysprosium and terbium - both of which fall under the restriction. In 2025, major companies, including Ford and Suzuki Motor, had to delay or reduce production as a result of difficulty securing materials. This has shown the disruption possible as a result of over-reliance on a single country.

“We all got a wake-up call this year,” Barbara Humpton, CEO of USA Rare Earth commented.

“There has been globalisation which has driven so much manufacturing overseas. And when China decided that they would not be providing rare earth for the magnets to the US and our trading partners, that sent a shockwave through the system.”

Other regions are investing in the mining and production of rare earth materials, but this will rely on a significant amount of time and investment to be operational. Instead, the motor industry is looking into rare earth reduction. IDTechEx explores a range of alternatives in its latest research report.

Alternative materials

The reduction and elimination of rare earths are vital for electric motor manufacturers and EV OEMs. By improving motor power density and efficiency, rare earth reliance can be reduced. Overall material consumption can be reduced through using higher speed motors - these will be smaller but meet the same power output. 

Toyota, Nissan and Honda have already made reductions to their dependence on the materials through material engineering. This includes the tight controlling of impurities and refining grain structure. Moreover, if manufacturers can produce a more effective thermal management system, they will reduce the need for heavy rare earths. This is because heavy rare earths are mostly responsible for preventing the demagnetisation while at high temperatures.

The externally excited synchronous motor (EESM) is commercially viable alternative, which has already been adopted by Renault, BMW and Nissan in a range of EV models. Rather than using rare earth permanent magnets, it uses copper electromagnets on the rotor. It is a more complex design, as the rotor windings need to be powered, and it is not as efficient, but it is a much more cost efficient and viable option when rare earth elements are less accessible.

Ferrite magnets can also be used in placement of rare earths. While they are not as magnetic as rare earths, and therefore a larger amount is needed, they are widely available. Due to the volume needed, manufacturers face issues when constructing the rotor and the motor needs to be significantly larger to meet demand. However, it remains a viable option for some vehicle segments.

At the same time, companies are exploring other magnetic materials to see if they can find something which can be used at a low cost, with high availability and can be effectively applied to several applications. In doing so, EV supply chain concerns can be diminished, as manufacturers can diversify their sourcing and limit the reliance on rare earth elements.