The electric vehicle industry has a new priority: finding a way to make batteries without the need for lithium, cobalt, and other rare earth minerals. Not only are these minerals pricey and getting pricier every day, they’re also locked up in monopolized value chains that give outsized energy influence to China. As the world is still reeling from the disastrous consequences of being overly reliant on Russian energy exports in a tumultuous geopolitical climate, many countries and industries have a new and frightening perspective on the current vulnerable state of clean energy supply chains in general and especially rare earth markets.
Tesla has led the charge toward developing next generation EV batteries that aren’t reliant on permanent magnets made from key rare earth minerals. Way back in 2020 the company announced that it was actively working toward removing cobalt from their batteries to create a better and cheaper model. Money was the main concern, as lower EV prices are essential to securing a greater market share, and the components needed to make EVs just keep getting more and more expensive. And while cobalt isn’t one of the rare earth minerals sourced primarily from China, it’s overwhelmingly produced in the Democratic Republic of Congo where instability and risk of supply chain disruption is high, as are the chances of child labor and other forms of worker exploitation.
Now, Tesla continues to lead the charge away from rare earth minerals and toward greener, more diversified pastures. The company announced earlier this year that it plans to eliminate rare earths from its next-generation EVs, and the rest of the EV market has followed. Automakers including General Motors, Jaguar Land Rover, and Nissan are all currently researching or have already developed motors with little to no rare earth content. Most of these models rely 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 manufacturing EESMs are popping up in response to what they think will be a coming demand boom as the sector pivots away from rare earths and away from China. Tesla’s public decision to walk away from traditional lithium-ion and lithium-iron battery production "opened up buyers' eyes to the fact that you don't really need rare earths to make EV magnets," said Jonathan Rowntree, CEO of Niron Magnetics, one of the new crop of EESM startups.
EVs are just one of the many sectors that are currently concerningly reliant on Chinese rare earth markets. Lots of industries including solar cell and wind turbine manufacturing need considerable amounts of these materials, and have almost no choice but to turn to China to get it. China is home to 34% of the planet’s rare earths (with 44 million tonnes of rare earth oxide (ROE) equivalent in reserves), carried out 70% of global rare earth mining in 2022, and represents 85% of global capacity (at least) to process rare earth ores into manufacturing materials. This has given China an outsized role in global energy markets and granted a great deal of leverage to a regime that many world powers don’t entirely trust.
In addition to shoring up global energy security and easing geopolitical concerns, the phasing out of rare earth minerals 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, involves solvents and toxic waste that conflict with sustainability goals,” Reuters reported earlier this month. Plus, 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.
By Haley Zaremba for Oilprice.com
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