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Sylvia Ma

As Tesla CEO Elon Musk touted the motor of his company’s Cybercab – which, he claims, contains no rare earth elements – debate has emerged over whether the technology could mark a meaningful shift in electric vehicle (EV) supply chains, or undercut one of China’s trump cards in its protracted trade conflict with the US.
While the move has been viewed as an effort to reduce the EV industry’s reliance on rare earths – an essential component in the permanent magnets that power electric motors – analysts said it would be difficult to meaningfully weaken China’s leverage, given the challenges of scaling the technology and the minerals’ widespread use across other industries.
Their comments followed a social media post from Musk on Friday saying the motor of Tesla’s new self-driving Cybercab used no rare earth metals while maintaining the same range, a progress he described as “extremely hard to achieve”.
David Zhang, general ­secretary of the Shanghai-based International Intelligent Vehicle Engineering Association, said that Tesla’s rare-earth-free motor remained largely a “commercial concept”, and it was still not certain whether the vehicle’s engine could match the efficiency and performance of conventional motors containing rare earth permanent magnets.
“Musk’s recent claim reflects Tesla’s efforts to strengthen supply chain security as the US and China use advanced chips and rare earths, respectively, as leverage against each other,” he said.
Zhang noted that Tesla initially used rare-earth-free AC induction motors before adopting rare earth permanent-magnet motors in mass production with the Model 3 in 2017, which offered improved performance.
“I believe rare earth permanent-magnet motors will remain the mainstream solution for new-energy vehicles globally over the next five years, and Tesla’s rare-earth-free motor is unlikely to replace them at scale.”
Rare earths such as neodymium and dysprosium are critical to the permanent magnets used in many EV motors, helping them deliver greater power density and efficiency.
China is the world’s leading producer of rare earth elements, accounting for about 70 per cent of global rare earth mining and 90 per cent of global processing capacity, which gives its EV industry an advantage through access to a deeply integrated domestic supply chain, from raw materials and components to EVs.


Alfredo Montufar-Helu, China-based managing director at Ankura Consulting, noted that while the move carries importance amid “geopolitical tensions over rare earths and US efforts to reduce dependency on China”, it would be hard to meaningfully reduce the EV industry’s reliance on rare earths.
“Rare earths go into much more than motors in a typical EV, including in sensors, infotainment systems, displays and other electronics,” he said.
“So even a rare-earth-free motor wouldn’t remove rare earths from EV supply chains; it would just narrow where they show up.”
Xu Tianchen, senior economist at the Economist Intelligence Unit, also said it was “too early to call this a defining moment” or say that China had lost its “rare earths trump card”.
Even if Tesla fast-tracks the technology’s application, other carmakers could face intellectual-property barriers to accessing the technology, he noted.
Beyond the challenges of reducing the EV industry’s reliance on rare earths at scale, analysts pointed to their use across other key industries, suggesting China’s leverage in the sector would be difficult to erode.
“Musk’s technology may overcome the bottleneck of permanent magnet motors, but there’s the uncertainty whether the same solution can be applied elsewhere, say defence equipment,” Xu said.
Montufar-Helu expressed similar views, saying, “Rare earths are used across a wide range of industries and China dominates not just the supply of key rare earths but their processing as well.
“That leverage will continue,” he added.
Last month, China’s rare earth exports fell by 18.25 per cent year on year by volume, according to customs data released on Tuesday, as Beijing maintained tight control over shipments of the critical minerals.


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Elon Musk says Tesla’s new Cybercab motor has no rare earths, but analysts saw the move as only a slight step towards reducing industry reliance – or China’s leverage


Elon Musk says Tesla’s new Cybercab motor has no rare earths, but analysts saw the move as only a slight step towards reducing industry reliance – or China’s leverage.
