27 November 2025
The push to eliminate rare earth elements from EV motor supply chains
Article Summary
Find out how automakers are rethinking EV motor supply chains, as reliance on rare earth elements becomes a strategic risk, driving growth in rare earth-free motor technologies.
Amid shifting global trade dynamics, automakers are being forced to rethink supply chains for critical electric vehicle (EV) components. EV motors—long dependent on rare earth elements (REEs)—are now a strategic pressure point. Recent export restrictions from mainland China, which currently dominates the mining and refining of rare earth elements, combined with geopolitical uncertainty, have transformed automakers' dependence on REEs into a significant strategic vulnerability.
Rare earth elements and the strategic pressure on the production of EV motors
These converging trends are pushing OEMs toward EV motors that reduce or eliminate rare earth elements. Cultivating robust supply chains for these alternatives will require close collaboration across Tier-1 and Tier-2 suppliers, as well as substantial in-house investment in advanced manufacturing capabilities.
Automakers that act decisively to strengthen and diversify their operations will be better positioned to mitigate cost volatility, reduce geopolitical risk and accelerate EV adoption. Recent industry developments illustrate this shift. Reuters reported this month that Renault has ended its joint E7A rare earth-free motor project with Valeo. Renault is now actively seeking more cost-effective stator components from China while planning to manufacture the remaining parts internally, targeting full deployment by 2028. Similarly, Honda’s venture arm, Xcelerator Ventures, has invested in Enedym, a Canadian startup specializing in innovative switched reluctance motors (SRMs), a technology that eliminates the need for rare earth elements entirely.
According to S&P Global Mobility's forecast, the demand for EV motors is projected to grow at a compound annual growth rate (CAGR) of 7% in the 2025–2037 period. Our analysis indicates that EV motors that require REEs currently account for nearly 94.7% of the global light vehicle e-motor market in 2025. The need for risk mitigation will see REE-free EV motors steadily gain share and nearly triple their representation by 2037.
The shift to REE-free EV motors
Demand for REE-free motors is expected to increase at a CAGR of 15% from 2025 to 2037, with current-excited wound rotor synchronous motors (also known as externally excited synchronous motors, or EESM) emerging as the most promising alternative to interior permanent magnet (IPM) EV motors. BMW, Nissan, Renault and Volkswagen are expected to be the major users of current-excited wound rotor synchronous motors. Suppliers such as Vitesco (Schaeffler) and BorgWarner have also developed EESM motors.
“Recently, OEMs have been actively investigating EESM motors as a viable alternative to PMSM motors [permanent magnet synchronous motors], as EESMs mitigate the risks linked to REEs. Additionally, more suppliers are beginning to develop EESMs to meet this growing demand,” said Kartik Ganesh, principal analyst, technical research, S&P Global Mobility.
In addition, on Oct. 16, 2025, US-based startup Niron Magnetics
announced a partnership with Stellantis to develop rare earth-free EV motor designs. Niron’s permanent magnet, called a “clean earth magnet,” is made from iron nitride without any rare earth elements.
Similarly, some manufacturers are exploring induction motors as an alternative to magnet-based motors. Tesla is the primary OEM user of induction motors. By 2030, we expect other OEMs, including General Motors and Volkswagen, to incorporate induction motors in their EVs.
Among regions, Europe and North America are leading the push toward wider adoption of both EESM and induction motor technologies.
Building resilient supply chains for EV motors amid REE volatility
Mainland China’s recent rare earth elements policy has become increasingly dynamic. After a precipitous dip in May–September 2025, exports of rare earth permanent magnets to the US rebounded sharply in October, rising 56.1 percent to 656.3 tonnes (from 420.5 tonnes in September), as a tacit trade truce eased restrictions, according to a Nov. 20 report by the South China Morning Post citing data released by China’s customs administration.
However, Beijing continues to wield export licensing as a strategic lever—tightening upstream controls while selectively relaxing permits on finished magnets. Against this backdrop, OEMs are doubling down on EV motors free of rare earth elements—including EESM, SRM and induction motors—and accelerating recycling initiatives to protect against China’s fluctuating REE policies. US federal efforts—such as the DOD–MP Materials “10X Facility” and Idaho National Lab’s processing pilot—complement these industrial investments.
Automakers that proactively diversify designs for EV motors that reduce or eliminate rare earth elements, forge supplier partnerships and bolster domestic material flows will enhance resilience, manage costs and advance EV competitiveness amid shifting geopolitical pressures.
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This article was published by S&P Global Mobility and not by S&P Global Ratings, which is a separately managed division of S&P Global.