The electric vehicle industry has a new priority: finding a way to make batteries without lithium, cobalt and other rare earths. Not only are these minerals expensive, and getting more so every day, they’re also locked up in monopolised value chains that give China outsized influence in the energy sector. With the world still reeling from the disastrous consequences of over-reliance on Russian energy exports in a turbulent geopolitical climate, many countries and industries have a new and frightening perspective on the current fragile state of clean energy supply chains in general and rare earth markets in particular.
Tesla has led the way in developing next-generation EV batteries that don’t rely on permanent magnets made from key rare earth minerals. Back in 2020, the company announced that it was actively working to remove cobalt from its batteries in order to create a better and cheaper model. Money was the main concern, as lower EV prices are essential to secure greater market share, and the components needed to make EVs are getting more and more expensive. And while cobalt isn’t one of the rare earths sourced primarily from China, it is overwhelmingly produced in the Democratic Republic of Congo, where instability and the risk of supply chain disruptions are high, as are the chances of child labour and other forms of worker exploitation.
Now Tesla is leading the way away from rare earth minerals and towards greener, more diversified pastures. The company announced earlier this year that it plans to eliminate rare earths from its next generation of EVs, and the rest of the EV market has followed suit. Carmakers such as General Motors, Jaguar Land Rover and Nissan are currently researching or have already developed engines with little or no rare earth content. Most of these models are based on a technology called EESMs – magnet-free externally excited synchronous machines – which are able to generate a magnetic field using electric current.
Already, start-ups producing EESMs are springing up in response to what they see as a coming boom in demand as the sector moves away from rare earths and away from China. Tesla’s public decision to move away from traditional lithium-ion and lithium-iron battery production “opened buyers’ eyes to the fact that you don’t really need rare earths to make EV magnets,” says Jonathan Rowntree, CEO of Niron Magnetics, one of the new crop of EESM startups.
EVs are just one of many sectors that are currently worryingly dependent on Chinese rare earth markets. Many industries, including solar cell and wind turbine manufacturing, require significant amounts of these materials and have little choice but to turn to China for them. China is home to 34% of the world’s rare earths (with reserves of 44 million tonnes of rare earth oxide (ROE) equivalent), accounts for 70% of global rare earth mining in 2022, and has (at least) 85% of the world’s capacity to process rare earth ores into manufacturing materials. This has given China an outsized role in global energy markets and a great deal of leverage over a regime that many world powers don’t entirely trust.
In addition to bolstering global energy security and easing geopolitical concerns, phasing out rare earths in EV production would also be an environmental win. While rare earths are key to renewable energy infrastructure, they’re actually pretty terrible for the environment in other ways. “Refining rare earths, such as neodymium and dysprosium, requires solvents and toxic waste that are at odds with sustainability goals,” Reuters reported earlier this month. Moreover, any amount of mining comes with serious environmental externalities that must be considered in a life-cycle analysis of the sustainability of these ‘clean’ and ‘green’ technologies.
