Tesla’s Vision of EVs Without Rare Earths Will Spur Magnet Race

(Bloomberg) -- Tesla Inc.’s ambition to remove rare earths from future models has producers in the sector reeling, but it also should spur global efforts to deliver alternatives for electric car motors that currently rely on the materials.

Model 3 and Model Y powertrains have already reduced consumption of heavy rare earths by a quarter, and Tesla’s next drive unit includes a permanent magnet motor that doesn’t use any of the materials, Colin Campbell, vice president of powertrain engineering, said during the company’s investor day early this month.

The automaker is looking to keep driving down costs, avoid processes with environmental and health risks and reduce reliance on commodities that can be most susceptible to wild price swings.

Rare earths — which are used in magnets in everything from phones to wind turbines and fighter aircraft — have long been a pain point for automakers and the clean-energy sector, because of unpredictable prices and China’s tight grip on the supply chain. China accounts for around two-thirds of mining and 85% of refining of the materials.