Tesla to launch EV without rare earths in bid to circumvent China strangehold

Elon Musk, CEO, Tesla

SHARES in rare earth mining companies have taken a hit following comments by electric vehicle manufacturer Tesla that its next drivetrains will use technology that don’t include the minerals.

Bloomberg News cited Tesla vice president of powertrain engineering, Colin Campbell as saying earlier this month that the next drive unit includes a permanent magnet motor that is rare earth-free.

Shares of producers including JL Mag Rare-Earth Co. and Jiangsu Huahong Technology Stock Co. immediately sold off after Campbell’s comments, while Lynas Rare Earths Ltd. — the biggest producer of the materials outside China — is down about a quarter this month, said the newswire.

Rare earths, while not geologically rare, are tough to process economically in an industry where primary supply is 85% controlled by China. This leaves western economies vulnerable to political power plays such as in 2020 when there were concerns shipments could be limited following trade tensions with the US.

According to William Roberts, a senior research analyst at London-based consultancy Rho Motion, rare earths could be replaced by ferrite magnets. These are made of iron and mixed with materials like barium and strontium, which are more widely available and cheaper, said Bloomberg News.

Other alternatives were also in the pipeline.

Minneapolis-based Niron Magnetics Inc., which has partnered with Volvo Car AB, last year won a $17.5m US Energy Department grant to help scale up work on rare-earth free magnets that use iron nitride-based technology, said Bloomberg News.

A team from the University of Cambridge and colleagues from Austria announced a new method to make tetrataenite, a possible replacement for rare-earth magnets, in a research paper published last year.