"No Rare Earth, No Car"?

In recent years, the booming new energy vehicle (NEV) market has driven the entire industry chain to flourish, bringing unprecedented development opportunities for related new energy materials, new applications, and new markets. As an important class of strategic mineral resources, rare earth elements hold a significant position in the NEV industry.

Rare earths refer to a series of elements, including yttrium, scandium, and the 17 lanthanide elements. These elements play a vital role in modern industry and are hailed as "industrial MSG," capable of enhancing material quality or performance in sectors like electronics and information technology, petrochemicals, metallurgy, and energy.

In NEV applications, rare earths are primarily used in drive motors, speakers, and hard disk drives of electric vehicles. Under carbon neutrality goals, China's demand for rare earths is rapidly increasing alongside the swift development of the NEV industry. Data shows that NEVs and the electronics industry account for the highest share of global rare earth consumption, reaching 35%. Rare earth materials are indispensable in NEV applications.

Looking at rare earth consumption within the NEV sector, it mainly involves rare earth permanent magnet materials and rare earth hydrogen storage materials, accounting for 64% and 36%, respectively. In the NEV industry, whether for hybrid, pure electric, or the nascent fuel cell vehicles, permanent magnet motors are essential core components. Rare earth permanent magnets constitute approximately 60% of the rare earth applications in the NEV sector.

"Permanent magnet" literally means maintaining a long-lasting and stable magnetic field. Sustaining this phenomenon requires the rare earth element "neodymium." Adding "iron" and "boron" to "neodymium" creates a powerful and always-on magnetic field—neodymium iron boron (NdFeB).

NdFeB magnets provide strong magnetic force, enabling motors to deliver greater torque and power output in a smaller volume. This means EVs can accelerate to the same speed faster while also improving overall vehicle energy efficiency, significantly enhancing driving performance.

Secondly, highly efficient motors made with NdFeB magnets allow EVs to achieve higher energy utilization from the same battery capacity. This means vehicles can more effectively use the energy stored in batteries, thereby extending driving range. For consumers, this reduces range anxiety, facilitating the wider adoption of NEVs.

Furthermore, compared to traditional internal combustion engine vehicles, EVs place greater emphasis on vehicle lightweighting. NdFeB magnets possess strong magnetic properties, enabling them to deliver the same output power with smaller volume and weight.

Simultaneously, within permanent magnet motors, NdFeB is one of the most commonly used permanent magnet materials. Typically, small amounts of gallium and heavy rare earth elements like dysprosium, praseodymium, and terbium are also mixed in to ensure the heat resistance of the permanent magnet motor. However, heavy rare earth elements are scarcer in ore reserves and more costly. Currently, some companies are shifting towards using more light rare earths and reducing the use of heavy rare earths.

Rare earth elements not only participate in the preparation of current mainstream lithium battery electrode materials but also serve as excellent raw materials for preparing positive electrodes in lead-acid or nickel-metal hydride (NiMH) batteries.

1. Nickel-Metal Hydride (NiMH) Batteries
   For hybrid vehicles, selecting power-type NiMH batteries and their management systems offers advantages like high power characteristics, durability, reliability, and a large safety margin. Currently, most commercially available power-type NiMH batteries use AB5-type rare earth hydrogen storage alloy as the negative electrode material. Using rare earth hydrogen storage alloy powder as the negative electrode material offers benefits like high capacity, no environmental pollution, and long cycle life, holding an important position in battery development. Currently, 85% of global HEVs use NiMH batteries. For the foreseeable future, NiMH power batteries will remain the preferred choice for HEVs, and the hydrogen storage negative electrode materials used can fully meet the requirements of HEV NiMH batteries.
2. Lithium-ion Batteries
   The addition of rare earth elements provides greater structural stability for the materials and expands the three-dimensional channels for active lithium-ion migration. This endows the prepared lithium-ion batteries with higher charging stability, electrochemical cycling reversibility, and longer cycle life.
3. Lead-Acid Batteries
   Domestic research indicates that adding rare earths is beneficial for improving the tensile strength, hardness, corrosion resistance, and oxygen evolution overpotential of the lead-based alloy in electrode plates. Adding rare earths to the active material can reduce oxygen evolution from the positive electrode and increase the utilization rate of the positive active material, thereby improving battery performance and lifespan.

It's well known that not all NEVs achieve zero emissions. For instance, hybrid and extended-range electric vehicles still emit exhaust during operation. Some vehicles are mandated to install three-way catalytic converters (TWC) upon manufacture, which use built-in catalysts to react and convert harmful gases into harmless ones. The primary constituent of TWCs is precisely rare earth elements. Due to their unique electron structure, rare earths possess distinctive oxygen storage capacity. For example, cerium in CeO₂ can change its oxidation state, offering excellent oxygen storage and release capabilities. It can store/release oxygen under lean/rich fuel conditions, thereby improving the conversion efficiency of the catalyst for CO, HC, and NOx.

Rare earth elements are also called the "vitamins" of special ceramics because they are often used as additives in ceramic materials to enhance performance. For instance, the core component of a zirconia oxygen sensor is a zirconia film, typically formed by doping zirconia with rare earth elements. When exposed to oxygen, the conductivity of the zirconia film changes, thereby controlling engine combustion efficiency and emission levels.

Rare earths are important doping components in MLCC dielectric powders, effectively improving MLCC reliability. They are indispensable raw materials in developing ceramic powders for high-end MLCCs. For example, rare earth oxides like Y₂O₃ and La₂O₃ are used as additives in MLCCs to improve the dielectric properties of ceramics and increase capacitor density and operating frequency range. Secondly, forming a thin layer of rare earth oxide between the ceramic and electrode can enhance the bonding force and interface stability, reducing capacitor failure rates and leakage current. Additionally, rare earth oxides have high melting points and thermal stability, which can reduce dielectric loss in high-temperature environments and improve MLCC reliability and lifespan.

Silicon nitride (Si₃N₄) ceramic bearings are considered the best material for manufacturing automotive bearings due to advantages like lightweight, high hardness, high strength, low friction, high heat resistance, excellent electrical insulation, and long life. However, pure silicon nitride is difficult to sinter. Introducing rare earth oxide sintering aids can form complex oxide/nitride intergranular phases within the ceramic structure, granting silicon nitride materials good performance at elevated temperatures.

Furthermore, rare earths play a significant role in automotive body steel, gears, wheel hubs, and even screws. Even the tire manufacturing industry requires rare earth polymer materials as stabilizers. It can be said that in the automotive field, rare earths, though used in small quantities, are indispensable!

On March 1st, Tesla held its 2023 Investor Day and announced that its next-generation motors would completely eliminate the use of rare earths. This news attracted considerable attention and skepticism.

It is important to note that in 2020, 77% of global electric vehicles used rare earth-based permanent magnet motors. In China's NEV market, over 90% of EVs use rare earth permanent magnet motors.

From a Resource Perspective: According to USGS data as of 2021, using Rare Earth Oxide (REO) reserves as the statistical metric, global total rare earth resource reserves are approximately 120 million tons. They are mainly distributed in China, Vietnam, Brazil, Russia, and other countries. The combined reserves of these four countries account for 86.4% of the global total, with China holding 44 million tons, and Vietnam, Brazil, and Russia each holding over 20 million tons.

Currently, China accounts for 35.2% of global reserves, 58% of global mining output, and 65% of global consumption—ranking first globally in all three aspects. It is the world's largest producer, exporter, and consumer, holding a dominant position.

An executive from Zhongke Sanhuan previously stated that on average, each NEV currently uses about 2.5 kilograms of NdFeB permanent magnet material. Based on this, global NEV demand for rare earth magnetic materials is projected to reach 30,000 tons by 2025.

Simultaneously, China is tightening its control over rare earths. In 2021, the Ministry of Industry and Information Technology and the Ministry of Natural Resources issued the "Notice on Issuing the 2021 Total Control Indicators for Rare Earth Mining and Smelting Separation." The total control indicators for rare earth mining and smelting separation in 2021 were 168,000 tons and 162,000 tons, respectively, an increase of about 20% compared to 2020. A previous draft opinion explicitly stated that no unit or individual may invest in or construct rare earth mining or smelting separation projects without approval, establishing an overall tone for future domestic rare earth mining and separation: continued implementation of total quota control.

In the same year, the U.S. White House's "100-Day Supply Chain Review Report" highlighted that U.S. dependence on rare earth magnet imports within the rare earth industrial chain poses a threat to national security. In response, a U.S. Department of Commerce report recommended increasing support for domestic U.S. permanent magnet manufacturers through tax credits, subsidies, priority procurement, and defense stockpiling, vigorously promoting processes to reduce/eliminate rare earths in permanent magnet materials and "de-Sinicize" the permanent magnet industry chain.

According to Nikkei, the U.S. is rebuilding its rare earth magnet supply network. To reduce dependence on China in strategic materials, some production processes where China holds a high share will be relocated to the U.S. mainland, and U.S. companies receiving government support are accelerating investment. However, rebuilding a supply network long dependent on China is no easy task. The U.S., with its higher raw material procurement and logistics costs, lacks a competitive advantage. Bloomberg analysis suggests it would take the U.S. at least a decade to achieve self-sufficiency in its rare earth supply chain.

Coupled with factors like rising rare earth prices, it's not surprising that Japanese, European, and American automakers are seeking alternatives and beginning to research and develop rare-earth-free motors.

From a Performance Perspective: When the Tesla Model S launched in 2012, it was equipped with an induction motor. While induction motors have certain cost advantages, they also have drawbacks like large size and lower efficiency, which affect range.

For NEVs, driving range is a key competitive factor. The heavier weight and lower conversion efficiency of induction motors lead to reduced vehicle range. This is a major reason why many automakers opt for permanent magnet motors.

It's worth noting that Tesla switched to a permanent magnet DC motor starting with the Model 3 and eventually adopted this motor in other models as well. Data shows that the permanent magnet motor used in the Model 3 is about 6% more efficient than the previously used induction motor.

From a Material Perspective: Regarding "de-rare-earthing," the most prominent alternative material currently is "ferrite." This ceramic composed of iron and oxygen, mixed with small amounts of metal, can produce magnets. It is cheap and easy to manufacture.

However, ferrite has always been a low-end substitute for rare earth NdFeB. Its performance, volume, and other aspects are difficult to match NdFeB levels. It can be used in some micro-motors in vehicles. As for samarium-cobalt (SmCo) permanent magnets, they themselves contain the rare earth element samarium and are radioactive. They are currently used only in military, aerospace, and similar fields. Substituting them in NEVs would be counterproductive.

Currently, several manufacturers have begun researching rare-earth-free options. However, whether it's the startup Niron's nitrogen-iron magnets or another high-magnetic-force material containing manganese, neither can be manufactured and preserved long-term in an ideal form. Even the previously reported prototype manganese-bismuth (Mn-Bi) magnets successfully produced by DA Technology and Koreen are currently only undergoing performance verification and improvement work.

Clearly, considering the NEV industry's pursuit of low cost and high efficiency, coupled with the unresolved technical challenges, completely breaking free from rare earth resources is not impossible, but it is unachievable in the short term. At the very least, in China, rare earth motors will remain the mainstream direction for vehicle applications for the foreseeable future.