The global auto industry faces a raw materials dilemma. Rare earths are costly, dirty, and controlled by China. New tech offers hope — but can Europe break free, and how fast?
00:00Germany's auto industry is caught in a raw materials trap. Rare Earths are
00:04costly, dirty and politically risky. China dominates and supply risks loom, but new
00:11technologies could change that. Magnet free motors, innovative lighting and
00:15advanced recycling could enable a future less dependent on critical raw materials.
00:20But how realistic are these solutions? Why is reliance on rare earths a risk?
00:28After all, the metals are found worldwide. As this map shows, some 100 known
00:35deposits are spread across the globe, but one country dominates production, China.
00:42China invested early and strategically, environmental standards and labor costs
00:48are lower, and expert quotas and tariffs offer leverage over the global market.
00:53There are three key stages. Mining. China extracts roughly 70% of the world's rare
01:01earths. Processing. Separating rare earths elements is a complex process. Over 80% of
01:09global processing takes place in China. Refining. It's the production of ultra-pure
01:15materials. China's share here is about 90%. A large portion of these metals goes into
01:21magnets, essential for electric vehicle motors. In spring 2025, China tightened export controls
01:30on key rare earths, alarming German industry.
01:34So meaning that no imports or no exports were taking place to Germany. Having stabilized supply
01:44chains in the past companies were confronted with not receiving the necessary materials for production.
01:51Anna Lauenroth is a raw materials expert with the Federation of German Industries, which represents
01:56German business interests. When the export controls maintained for a longer time and the new licensing process
02:05was not yet in place. That meant that there was crisis also with regard to certain production lines.
02:12The automotive industry is putting on a brave face. Production is stable and there are no major bottlenecks thus far.
02:20But experts warn reserves won't last. Some production stoppages have already occurred and more could follow.
02:30Electric vehicles or EVs rely on magnets. They're mostly made from rare earths, 94% of which come from China.
02:39The remaining supply doesn't come directly from China, but often from countries linked to Chinese supply chains.
02:46That's a risk. The industry has to pay the asking price and has been slow to build independent supply networks.
02:55There's also the environmental toll. Rare earth mining contaminates soil and water with acids, heavy metals and radioactive waste.
03:08So how can automakers eliminate the use of rare earths?
03:15At the Institute for Electrical Energy Conversion in Stuttgart, researchers are developing an electric motor that doesn't rely on permanent magnets made from rare earths.
03:34Here's a graphic. A conventional electric motor contains permanent magnets with fixed north and south poles.
03:44The motor's outer poles attract and repel the inner ones. That push-pull interaction keeps it spinning.
03:51The Stuttgart motor uses no magnets at all. Instead, it uses coils, wires that carry electric current.
03:59The current generates a magnetic field. That field drives the motor. The key difference is that the field is created electrically, not by permanent magnets.
04:09The team is optimizing the motor and preparing it for mass production.
04:14At our Institute at the University of Stuttgart, we're working on this type of machine now for more than 10 years.
04:21An electric motor without rare earth magnets performing like magnet-based drives. Low maintenance, minimal wear.
04:28It could reduce the auto industry's dependence on critical raw materials. What makes it unique?
04:34Compared to a standard electrically excited synchronous machine with the slip rings, our machines have less wear because we get rid of the slip rings.
04:46We use the wireless power transfer system to replace the slip rings and therefore we don't have any contacts.
04:53The patent has already been sold to a major German automotive supplier.
04:58The Institute's director hopes the fully developed motor will reach the market within two to three years.
05:06Lower costs could speed up mass production.
05:09Yes, it is cheaper because at the moment, if you observe the cost of the permanent magnets, they are changing a lot.
05:18And almost 40% of the cost share in a motor is because of the permanent magnets.
05:27So we eliminate these magnets, but we replace them by windings and copper and so on.
05:33One motor without magnets is 10% cheaper than a motor with magnets.
05:39Electric motors that don't need rare earths could sharply reduce imports from China.
05:46But rare earths aren't just in motors.
05:48High performance lighting like LED headlights depends on metals with unique optical properties sourced from China.
05:56Even interior LEDs usually contain critical metals, though in much smaller amounts.
06:03Here in Düsseldorf, a university team is trying to replace these rare earths.
06:09Europium and cerium are key for strong light output.
06:13How can they be replaced?
06:17Different materials vary widely in light output efficiency.
06:21These metals are often used in powder form.
06:25Some perform better in terms of brightness and light quality.
06:29Our final aim should be to substitute earth elements as far as possible.
06:35Manganese is more sustainable in the production process and it's cheaper and more available because there are not some big players in the world who produce it, but many smaller players.
06:45Lukas Träger is optimistic he'll reach his goal by the end of the project and hopes the auto industry takes notice.
06:53Initial tests show that manganese-based phosphors don't quite match rare earths in light output, but they come close.
07:01Unlike rare earths, manganese is abundant and widely available.
07:06I'm really sure that manganese-based phosphors should be much cheaper because manganese as an element is way cheaper.
07:13It can be mined everywhere in the world and it is much easier in its purification.
07:18Experiments show it works, especially for lighting that doesn't need vivid brightness.
07:23In those cases, rare earths could be phased out fast.
07:26For example, for indoor lighting, you don't need a super high power LED, but for headlights, for cars, for example, you need high intensity.
07:35And this is difficult to achieve with manganese.
07:37Wealth elements are the first choice here.
07:40Not ready for mass production, but demand drives the Dusseldorf team.
07:47Recycling is key.
07:48Yet today, only around 1% of magnets are reused.
07:53Most valuable materials are lost.
07:57Researchers at the Karlsruhe Institute of Technology are working to change that.
08:02Inside a conventional electric motor, the shaft turns the wheels.
08:06Magnets are built into circular lamination stacks, often firmly glued in place.
08:13There is a very strong bond between the magnets and the lamination stack.
08:18So there are large forces necessary to disassemble them.
08:23And these large forces often cause the magnets to break, which destroys them.
08:29Once broken, a magnet is almost unusable.
08:32Here, they take a different approach.
08:36Detaching the magnets in a controlled process without breaking them.
08:40That's the crucial step for reuse.
08:43The process removes the magnet intact, ideal for a second life.
08:49The higher the prices, the more viable it is to disassemble them.
08:55Because then there is just more money that can be made with it.
09:00The process can be scaled up, but it's often still more expensive than buying new magnets from China.
09:09We are able to do the process, but further industrialization is needed.
09:15But therefore, we would need more electric motors coming back from used cars,
09:21which will take some time in the future because there are not so many electric cars yet.
09:26Anyone aiming to reduce import dependence needs solutions like this.
09:30KIT's research shows that electric motor recycling can recover valuable materials, not just scrap.
09:39Automakers are interested in the research.
09:42For now, though, recycling remains more expensive than sourcing fresh materials and magnets.
09:50The search for rare earth alternatives has moved beyond the lab.
09:54Some products are already close to mass production.
09:57The new motor developed in Stuttgart shows that powerful drives are possible without critical raw materials.
10:04And there already are production models.
10:06BMW's iX3 uses a rare earth-free motor.
10:11Tesla and Toyota are also reducing their reliance on hard-to-source metals.
10:18Recycling is feasible and gaining importance.
10:21It can be scaled up, and as rare earths enter the recovery loop, costs should fall.
10:27The potential is enormous, but recovery remains a technical and economic challenge.
10:33The EU and the German government have announced plans to reduce dependence on China,
10:38but experts say much more urgency and clearer commitments are needed.
10:43The most important thing is diversification.
10:46So really investing as EU, as Germany, in own capacities along the whole value chain.
10:54You need to invest into alternatives, because otherwise there is always kind of the challenge
11:01for the companies to single source and only have one supplier.
11:04From an industry perspective, progress looks slow.
11:12By 2040, dependence on China's rare earth processing is projected to drop only slightly, from 91% to 85%.
11:22Faster change will require larger industrial investment and stronger political action,
11:27including international agreements.
11:29Germany is expanding cooperation with Canada on raw materials extraction.
11:34Another step to reduce dependence on China.
11:37Solutions exist, but they must be pursued and implemented.
11:41The question is not if, but how fast.
11:44How independent can Europe really become from China's rare earths?
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