Due to recurring shortages of basic Chinese-sourced materials, automakers in the United States and Europe are quietly trying to reduce this dependence. Today, many of these raw materials are locked up amid great power competition.
Companies are exploring exotic technologies and materials that could replace magnets made from rare earth metals used in dozens of parts in cars and trucks of all types. They include components such as windshield wiper motors and mechanisms that allow the seat to be adjusted.
Magnets made from the rare earth elements neodymium, dysprosium and terbium are particularly important for the motors that power electric and hybrid vehicles, which are becoming more popular.
China dominates the extraction and processing of most rare earths and has used its near-monopoly as a diplomatic weapon. This year, controls were imposed on exports of some of these materials in response to the heavy tariffs imposed by President Donald Trump on Chinese goods.
The recent instability in the supply of rare earth elements poses a much greater threat to automakers than in the past. This has given new urgency to the search for engines that do not require rare earths or materials to replace them.
BMW electric cars already use engines that operate without rare earths. Researchers at Northeastern University and other institutions are working to manufacture materials with promising magnetic properties that are found only in meteorites.
Startups began developing new types of engines and other technologies. The Department of Energy continues to encourage this work, despite the Trump administration’s rollback of other forms of support for electric vehicles.
Many of these efforts will not bear fruit for years. Technological alternatives such as those used by BMW may be more expensive or have other drawbacks. Currently, the industry remains highly vulnerable to shortages that could bring assembly lines to a standstill.
“This is not a challenge you can overcome in one year,” said Gracelyn Bhaskaran, director of the Critical Minerals Security Program at the Center for Strategic and International Studies in Washington.
This month, Beijing lifted some of its export controls on rare earth elements as part of a deal with the Trump administration. But the controls still pose a threat as tensions continue between the United States and China.
“There is now some easing of diplomatic tensions,” said Tom Mornhout, who leads the Biomaterials Initiative at Columbia University’s Center for Global Energy Policy. “But the question is not if there will be a next event in which rare earth elements are used as a weapon, but when.”
The automotive industry has faced rare earth shortages before. Starting in 2010, China reduced supplies. At the time, this culminated in a dispute with the Obama administration.
The coronavirus pandemic, which has caused severe shortages of semiconductors and other components, has heightened the risks of relying too much on too few suppliers or vendors in one country. As a result, many car manufacturers began looking for alternatives.
Automakers can use two strategies to keep their assembly lines running. They may find rare earths outside of China, or they may turn to components that do not require these minerals.
General Motors is pursuing the first strategy with MP Materials, an American company working in the field of rare earth extraction in California. MP is also building a facility in Texas to optimize materials and use them to make magnets. Under a deal announced in 2021, GM promised to buy most of the Texas plant’s production for use in Cadillac and Chevrolet vehicles. MP also has agreements with Apple and the Department of Defense.
Such deals provide companies like MP with guaranteed revenues, something that was not available to rare earth companies and processors that went bankrupt after previous crises when prices fell so low that they could not compete with Chinese suppliers. MP acquired its California location from one of these bankrupt companies.
But there is also a risk for automakers like General Motors. They could end up paying more than other manufacturers if the shortage eases and prices fall again.
GM is also looking for components that don’t require rare earths. “There’s nothing better than not having to use rare earth stuff, whether it’s magnets or batteries or whatever,” GM President Mark Reuss said at a recent company event in New York. “How can we eliminate this dependency through engineering?”
A GM spokesman declined to provide specific details.
In the 1980s, a unit of General Motors developed magnets made of neodymium, iron and boron, which are now widely used in electric car engines. But GM sold the technology to Chinese companies.
BMW uses engines that are free of neodymium or other rare earth elements in models like the iX SUV. An electric current generates the magnetic field inside the motor that converts the electrons into motion.
The increase in the price of neodymium in 2011 prompted BMW to begin developing this technology. The luxury automaker says it has largely resolved the drawbacks of these engines, which tend to be heavier, bulkier and less energy efficient than rare earth ones. The company manufactures engines in factories near its headquarters in Munich and Austria.
Stefan Ortmann, an engineer at BMW, said that engines are more efficient than those that use rare earth elements at the speeds necessary for daily driving. There are other advantages, he said. The magnetic field in BMW engines can be increased or decreased, and it is easier to keep the engines cool.
“We think this is the right place for us,” Ortman said.
The new version of the engine is more efficient than previous machines and will be installed in the iX3 SUV that BMW will sell in the United States next summer. The company says this model will be able to travel 400 miles between charges.
The Trump administration is offering grants of up to $3 million to help researchers develop alternatives to rare earth elements. To qualify, applicants must strive to create magnets twice as powerful as the best rare earth magnets, a goal some experts consider unrealistic.
In a document describing the program, the Department of Energy expressed confidence that the goal could be achieved using artificial intelligence.
“Recent technological advances have the potential to dramatically accelerate the discovery of new magnets,” the department’s Advanced Energy Research Projects Agency said in August. The ministry did not respond to a request for comment.