Transcription
Germany's auto industry is caught in a raw materials trap. Rare earths are costly, dirty, and politically risky. China dominates, and supply risks loom, but new technologies could change that. Magnet-free motors, innovative lighting, and advanced recycling could enable a future less dependent on critical raw materials. But how realistic are these solutions? Why is reliance on rare earths a risk? After all, the metals are found worldwide.
As this map shows, some 100 known deposits are spread across the globe, but one country dominates production: China. China invested early and strategically. Environmental standards and labor costs are lower, and expert quotas and tariffs offer leverage over the global market.
There are three key stages. Mining: China extracts roughly 70% of the world's rare earths. Processing: Separating rare earth elements is a complex process. Over 80% of global processing takes place in China. Refining: It's the production of ultra-pure materials. China's share here is about 90%. A large portion of these metals goes into magnets, essential for electric vehicle motors.
In spring 2025, China tightened export controls on key rare earths, alarming German industry. So, meaning that no imports or no exports were taking place to Germany. Having stabilized supply chains in the past, companies were confronted with not receiving the necessary materials for production.
Anne Lauenroth is a raw materials expert with the Federation of German Industries, which represents German business interests. The export controls were maintained for a longer time, and the new licensing process was not yet in place. That meant that there was crisis also with regard to certain production lines.
The automotive industry is putting on a brave face. Production is stable, and there are no major bottlenecks thus far. But experts warn reserves won't last. Some production stoppages have already occurred, and more could follow.
Electric vehicles, or EVs, rely on magnets. They're mostly made from rare earths, 94% of which come from China. The remaining supply doesn't come directly from China, but often from countries linked to Chinese supply chains. That's a risk. The industry has to pay the asking price and has been slow to build independent supply networks. There's also the environmental toll. Rare earth mining contaminates soil and water with acids, heavy metals, and radioactive waste.
So, how can automakers eliminate the use of rare earths? At the Institute for Electrical Energy Conversion in Stuttgart, researchers are developing an electric motor that doesn't rely on permanent magnets made from rare earths. Here's a graphic. A conventional electric motor contains permanent magnets with fixed north and south poles. The motor's outer poles attract and repel the inner ones. That push-pull interaction keeps it spinning. The Stuttgart motor uses no magnets at all. Instead, it uses coils, wires that carry electric current. The current generates a magnetic field. That field drives the motor. The key difference is that the field is created electrically, not by permanent magnets. The team is optimizing the motor and preparing it for mass production.
At our institute at the University of Stuttgart, we are working on this type of machine now for more than 10 years. An electric motor without rare earth magnets performing like magnet-based drives. Low maintenance, minimal wear. It could reduce the auto industry's dependence on critical raw materials. What makes it unique? Compared to a standard electrically excited synchronous machine, with the slip rings, our machine has less wear because we get rid of the slip rings. We use the wireless power transfer system to replace the slip rings, and therefore we don't have any contacts.
The patent has already been sold to a major German automotive supplier. The institute's director hopes the fully developed motor will reach the market within two to three years. Lower costs could speed up mass production. Yes, it is cheaper because at the moment if you observe the cost of the permanent magnets, they are changing a lot. And almost 40% of the cost share in a motor is because of the permanent magnets. So we eliminate these magnets, but we replace them by windings and copper and so on. One motor without magnets is 10% cheaper than a motor with magnets.
Electric motors that don't need rare earths could sharply reduce imports from China. But rare earths aren't just in motors. High-performance lighting like LED headlights depends on metals with unique optical properties sourced from China. Even interior LEDs usually contain critical metals, though in much smaller amounts.
Here in Düsseldorf, a university team is trying to replace these rare earths. Europium and cerium are key for strong light output. How can they be replaced? Different materials vary widely in light output efficiency. These metals are often used in powder form. Some perform better in terms of brightness and light quality. Our final aim should be to substitute rare earth elements as far as possible. Manganese is more sustainable in the production process, and it's cheaper and more available because there are not some big players in the world who produce it, but many smaller players.
Lukas Träger is optimistic he'll reach his goal by the end of the project and hopes the auto industry takes notice. Initial tests show that manganese-based phosphors don't quite match rare earths in light output, but they come close. Unlike rare earths, manganese is abundant and widely available. I'm really sure that manganese-based phosphors should be much cheaper, because manganese as an element is way cheaper. It can be mined everywhere in the world, and it is much easier in its purification.
Experiments show it works, especially for lighting that doesn't need vivid brightness. In those cases, rare earths could be phased out fast. For example, for indoor lighting, you don't need a super high power LED. But for headlights, for cars, for example, you need high intensity, and this is difficult to achieve with manganese. Rare earth elements are the first choice here.
Not ready for mass production, but demand drives the Düsseldorf team. Recycling is key. Yet today, only around 1% of magnets are reused. Most valuable materials are lost. Researchers at the Karlsruhe Institute of Technology are working to change that.
Inside a conventional electric motor, the shaft turns the wheels. Magnets are built into circular lamination stacks, often firmly glued in place. There's a very strong bond between the magnets and the lamination stack. So there are large forces necessary to disassemble them. And these large forces often cause the magnets to break, which destroys them. Once broken, a magnet is almost unusable.
Here they take a different approach: detaching the magnets in a controlled process without breaking them. That's the crucial step for reuse. The process removes the magnet intact, ideal for a second life. The higher the prices, the more viable it is to disassemble them, because then there's just more money that can be made with it.
The process can be scaled up, but it's often still more expensive than buying new magnets from China. We are able to do the process, but further industrialization is needed. But therefore, we would need more electric motors coming back from used cars, which will take some time in the future because there are not so many electric cars yet.
Anyone aiming to reduce import dependence needs solutions like this. KIT's research shows that electric motor recycling can recover valuable materials, not just scrap. Automakers are interested in the research. For now, though, recycling remains more expensive than sourcing fresh materials and magnets.
The search for rare-earth alternatives has moved beyond the lab. Some products are already close to mass production. The new motor developed in Stuttgart shows that powerful drives are possible without critical raw materials. And there already are production models. BMW's iX3 uses a rare earth-free motor. Tesla and Toyota are also reducing their reliance on hard-to-source metals. Recycling is feasible and gaining importance. It can be scaled up. And as rare earths enter the recovery loop, costs should fall. The potential is enormous, but recovery remains a technical and economic challenge.
The EU and the German government have announced plans to reduce dependence on China. But experts say much more urgency and clearer commitments are needed. The most important thing is diversification. So, really investing as EU, as Germany, in own capacities as a whole value chain, you need to invest into alternatives because otherwise there is always kind of the challenge for the companies to single source and only have one supplier.
From an industry perspective, progress looks slow. By 2040, dependence on China's rare earth processing is projected to drop only slightly, from 91% to 85%. Faster change will require larger industrial investment and stronger political action, including international agreements. Germany is expanding cooperation with Canada on raw materials extraction, another step to reduce dependence on China. Solutions exist, but they must be pursued and implemented. The question is not if, but how fast. How independent can Europe really become from China's rare earths? What do you think? Thank you.