Tesla Bets on Zero-Rare-Earth Motors: Industry Insiders Say the "Fundamental Base" of Rare-Earth Permanent Magnet Demand Remains Unbroken

This article is reposted by Juncai Magnetic Applications, with the copyright belonging to the original author; the original link can be found in the "Sources" section at the end.

According to Cailian Press on September 13, Tesla has equipped its Cybercab with a "zero-rare-earth" motor, pressing the emotional button for the rare-earth permanent magnet sector. Recently, Tesla showcased the mass-produced Cybercab in Austin, Texas. Elon Musk confirmed on social media that the new drive motor equipped on the Cybercab has achieved zero use of rare-earth metals, with no impact on range, while reducing volume by 18% and weight by 25%.

Following the news, sentiment in the rare-earth permanent magnet sector showed obvious fluctuations. However, after Cailian Press reporters called several listed companies—including Northern Rare Earth (600111.SH), Zhongke Sanhuan (000970.SZ), JL MAG (300748.SZ), Longsheng Technology (300680.SZ), and Hengdian Dongci (002056.SZ)—in the capacity of investors, and interviewed rare-earth industry analysts and motor experts, it was found that the industry's judgment on this technology is not entirely consistent. Yet, there is a relatively clear consensus: the mass production of the Cybercab proves that zero-rare-earth motors have moved from the laboratory to specific vehicle models, but it is not yet sufficient to prove that they can replace mainstream rare-earth permanent magnet motors.

He Qiang, a rare-earth industry analyst at Mysteel, told Cailian Press that the direct impact of a single vehicle model on praseodymium-neodymium demand is "relatively small." He expects that the "physical fundamental base" of rare-earth permanent magnets in high-performance drive fields will not be broken before 2040. The overall attitude of the interviewed enterprises towards Tesla's zero-rare-earth motor leans towards "cautious observation," believing it will not pose a substantial short-term impact, but holding reservations about the long-term trend. Regarding zero-rare-earth motors, most listed companies are currently in the stage of "no clear layout" or "having R&D but no mass production."

Tesla Is Not Attempting to "De-Rarefy" for the First Time

In fact, the Cybercab is not Tesla's first attempt to use zero-rare-earth motors.

Multiple industry insiders told Cailian Press that Tesla's early Model S and Model X both used AC induction motors. It was not until the launch of the Model 3 in 2017 that the company shifted to rare-earth permanent magnet synchronous motors. In March 2023, during its Investor Day, Tesla proposed that its next-generation permanent magnet motor would completely eliminate the use of rare earths.

As of now, Tesla has not publicly disclosed the complete structure, material grades, and efficiency curves of the Cybercab's motor. Market speculation suggests its technical direction is close to a reluctance-assisted permanent magnet motor, while other views believe it is a permanent magnet-assisted synchronous reluctance motor.

Wu Deping, Chairman of Suzhou Dasiling New Energy Technology Co., Ltd., told Cailian Press that this solution cannot be simply called a "pure synchronous reluctance motor." According to his understanding, Tesla still retains the permanent magnet motor framework but adds reluctance design to the motor structure to improve the performance loss caused by the low magnetic density of ferrite. In other words, it may not be "completely free of permanent magnets," but rather uses low-cost materials like ferrite to replace rare-earth magnetic steel, relying on reluctance torque to make up for performance.

"This is using eliminated materials to build a low-speed vehicle, which does not affect the existing supply chain," Wu said.

A rare-earth permanent magnet industry analyst summarized it as an "enhanced version of ferrite." The analyst believes that the Cybercab is mainly used for low-speed urban operations, with lower requirements for continuous power, high-speed performance, and high-temperature conditions compared to main models like the Model 3 and Model Y. The advantages of rare-earth permanent magnets lie in high magnetic energy product, lightweight, and high-temperature demagnetization resistance, areas where ferrite still has a clear gap. Wu also mentioned that during low-speed operation, the motor temperature rise is relatively low, making the ferrite solution easier to meet requirements; if it enters high-speed, heavy-load, or complex temperature environments, material demagnetization and power density issues will become more prominent.

This is also the most easily confused point in the current market: the Cybercab achieving "zero rare earth" does not mean Tesla's main-selling models have completed a route switch. The analyst judges that the power of the Cybercab motor is still significantly lower than the existing solution for the Model Y. To migrate to the Model 3 and Model Y, issues such as motor power, supply chain, factory capacity, and existing equipment utilization must be re-addressed. Unless rare-earth prices surge significantly, it is difficult for automakers to bear the cost of switching the entire supply chain solely based on material cost savings.

From Prototype R&D to Customer Validation:

Enterprises Deploy Multiple Routes

In recent years, the zero-rare-earth motor track has heated up. Cailian Press found that, in addition to Tesla, multiple automakers and component suppliers have made substantial progress in the field of zero-rare-earth motors, mainly divided into three routes: electrically excited synchronous, synchronous reluctance, and ferrite permanent magnet.

In traditional perception, zero-rare-earth motors mean poor performance, heavy weight, and short range. However, Mysteel analysis suggests that Tesla's zero-rare-earth motor reduces leakage flux through the Halbach array, increases the slot fill rate from 40% to 70% using hairpin stators to improve power density, and raises the speed to over 15,000 rpm to compensate for the insufficient magnetic field, achieving "strong magnetic output" with "weak magnetic materials." It can be seen that zero-rare-earth motors are not simply about canceling rare earths, but involve systematic engineering innovation in motor structure, materials, windings, and control algorithms. In other words, the Cybercab's "return" is not equivalent to simply switching back to an old route.

Regarding zero-rare-earth motors, multiple listed companies have disclosed their latest layout progress, but the mass production pace varies.

As a leading ferrite enterprise, a representative from the securities department of Hengdian Dongci confirmed to Cailian Press that the company is a magnetic material supplier for Tesla, but did not disclose the specific products supplied. "Rare-earth permanent magnets are like small individuals with great strength, but they are expensive. If there is no strict requirement for volume, ferrite will be relatively cheaper," the representative noted.

In December 2025, Hengdian Dongci stated on the investor interaction platform that rare-earth price increases or export restrictions would make some customers inclined to develop zero-rare-earth motors. In January this year, the company's zero-rare-earth products achieved small-batch delivery.

A representative from Longsheng Technology, a Tesla supplier, told Cailian Press that the induction asynchronous motor (a zero-rare-earth motor) is not a new technology, and the company already has mature supporting capabilities. The industry trend is the coexistence of multiple technical routes. As a component supplier, the company needs the ability to respond to different customer demands and will not bet solely on one technical route. Currently, the company's asynchronous motor clients include some mid-to-high-end new energy vehicles.

A representative from the securities department of JJE (688280.SH) told Cailian Press that zero-rare-earth motors are one of the company's R&D directions, but "there are currently no zero-rare-earth projects in mass production." According to disclosures, the company has reserved zero-rare-earth permanent magnet motors in the new energy vehicle motor field and also possesses induction motor technology. Wolong Electric (600580.SH) once stated on the interaction platform that zero-rare-earth permanent magnet motors are one of its layout directions and has published research results on them in journals. Enpower (300681.SZ) previously stated on the investor interaction platform that the company has reserved zero-rare-earth motor technology, possessing copper rotor/aluminum rotor AC asynchronous motors with zero rare-earth components in its new energy vehicle drive motor product series, and achieved mass production in 2022.

Regarding overseas manufacturers, BMW is the fastest in terms of mass production progress. Its fifth- and sixth-generation eDrive electric drive systems both use electrically excited synchronous motors. The new generation iX3 50 xDrive is already equipped with the sixth-generation system, and the entire system uses no rare-earth materials. Astemo, a joint venture between Hitachi and Honda, has developed a synchronous reluctance motor for pure electric vehicles, replacing neodymium-iron-boron permanent magnets with ferrite magnets, and plans to mass-produce it in 2030. After terminating the E7A zero-rare-earth motor cooperation project with Valeo, Renault turned to seek lower-cost Chinese suppliers, and the new motor is expected to be equipped on Renault's next-generation compact electric vehicle in 2028.

From the perspective of technology maturity, BMW's EESM is already in mass production, while Tesla has just landed it. Astemo and Renault plan to mass-produce in 2030 and 2028, respectively. Various manufacturers are currently in different stages from R&D to mass production introduction, but still face differentiated challenges in performance benchmarking.

Rare-Earth Prices Have Not Collapsed, Core Players Deny the "Disruption Theory"

Tesla's zero-rare-earth motor has brought a shockwave of "substitution expectations" to the capital market, but the reaction from the industrial end is much calmer than the securities market. Cailian Press reporters found during research that from upstream rare-earth suppliers to downstream magnetic material enterprises, core players generally do not agree with the "disruption theory."

He Qiang told Cailian Press that after the news landed, the prices of praseodymium-neodymium products only fell slightly, and transactions actually warmed up due to peak season expectations. Magnetic material enterprises were already in a state of cautious observation before the news, and the situation did not further deteriorate after the announcement. Enterprises are still mainly arranging procurement based on peak season orders.

As a core supplier of neodymium-iron-boron magnets for Tesla, a representative from JL MAG told Cailian Press that the dominant position of rare-earth permanent magnets in the main drive motor field of new energy vehicles will not change in the short term. Tesla's zero-rare-earth motor is more like a scenario-specific solution rather than a comprehensive replacement for rare-earth permanent magnets. The company has absolute confidence in the future of rare-earth permanent magnets.

A representative from Zhongke Sanhuan told Cailian Press that zero-rare-earth motors are not a new concept. Tesla used induction motors before building its factory in China, and later shifted to rare-earth permanent magnets, which is also related to China's mature rare-earth permanent magnet industry chain. Market validation shows that rare-earth-containing permanent magnets are still the current comprehensive optimal solution for automotive drive motors. If zero-rare-earth motors truly possessed comprehensive substitution capabilities, the reaction of the market and industry chain would not be just at the current level.

A representative from Northern Rare Earth told Cailian Press that Tesla's motivation is supply chain security, not cost-effectiveness. Rare-earth elements have excellent optoelectronic and magnetic properties. Adding rare earths is the most obvious and direct way to improve the performance of magnetic materials. Zero-rare-earth motors will not damage the development prospects of the rare-earth and permanent magnet industries.

From the feedback of the industry chain, Tesla's zero-rare-earth motor is more like a backup plan: reducing costs on specific models, adding choices when the supply chain is restricted, and validating technology in low-speed urban operations. It has indeed pushed zero-rare-earth motors from "concept" to "installed in vehicles," but it has not yet pulled mainstream new energy vehicles away from rare-earth permanent magnet motors.

China's Rare-Earth Advantage Must Shift from Resources to Technological Enhancement

After Tesla released the zero-rare-earth signal, the prospects of the rare-earth industry have attracted much attention. However, interviewees generally believe that a single vehicle model switching motor routes is not yet sufficient to change the global rare-earth demand landscape.

Rare-earth industry insiders told Cailian Press reporters that current rare-earth prices are mainly affected by supply and demand relations, industry inventory, production quotas, export policies, and downstream production scheduling. New energy vehicles are only one of the application fields of rare-earth permanent magnet materials; industrial motors, wind power, robotics, and energy-saving equipment also have demand. Even if some vehicles adopt zero-rare-earth motors, it is difficult to form a significant impact on overall rare-earth demand in the short term.

He Qiang stated that China controls about 92% of the global refining capacity for praseodymium-neodymium oxide, and an even higher 98% to 99% for medium and heavy rare earths like dysprosium and terbium. A single Cybercab model has a very small impact on the global incremental demand for praseodymium-neodymium, but technological diffusion is the real variable that needs attention. In his view, the response space for China's rare-earth industry chain is concentrated in five directions: accelerating the R&D of zero-heavy-rare-earth/low-heavy-rare-earth magnet processes; extending to high value-added links such as complete motors and magnetic assemblies; laying out overseas compliant capacity; building a closed-loop for scrapped magnet recycling; and using new demands from robotics and industrial efficient motors to replace some incremental demand from automakers.

He Qiang judges that in the next 1 to 3 years, the impact of zero-rare-earth motors on rare-earth prices will be very small, and the price center will still be dominated by supply quotas, mine source disturbances, and policy control; if 3 to 7 years later, zero-rare-earth motors increase their penetration rate in affordable cars and commercial vehicles, the price center of praseodymium-neodymium oxide may fall 10% to 30% from its high position, and the premium shrinkage of heavy rare earths like dysprosium and terbium will be more obvious. But from a longer cycle perspective, robotics, wind power, and industrial efficient motors will still provide new demand. Rare-earth permanent magnets are more likely to experience "peak shaving" rather than a "collapse."

The aforementioned analyst stated that the real competition for zero-rare-earth motors does not lie in whether they conceptually get rid of rare earths, but in whether they can simultaneously meet the requirements of power density, efficiency, reliability, thermal management, and total lifecycle cost. For passenger cars, motors need to withstand long-term, high-frequency, and complex environment operations. Simply proving feasibility through laboratory prototypes does not mean they are ready for mass production.

From current information, the Cybercab is more like a signal of changes in automotive motor technology routes, rather than the beginning of the comprehensive elimination of rare-earth permanent magnet motors. The key to future industry competition will shift from "whether to use rare earths" to a comprehensive balance of efficiency, power density, reliability, and total lifecycle cost. For Chinese enterprises, multi-technology route reserves and real customer validation are more important than simply betting on a single solution.

Sources

• tech.ifeng.com (2026-09-13)
• Original link: Tesla Bets on Zero-Rare-Earth Motors: Industry Insiders Say the "Fundamental Base" of Rare-Earth Permanent Magnet Demand Remains Unbroken
• https://tech.ifeng.com/c/8wOQmrCZwCt