Tesla mentions "de-rare earth" and causes the collapse of rare earth sector, listed companies collectively respond: it is still the best solution.

One sentence?from Musk stirs up a thousand waves! At the Tesla Investor Day event that ended early in the morning of March 2, Tesla CEO Musk announced that no rare earth materials would be used at all in Tesla's next-generation permanent magnet drive motor. Once this news came out, the entire rare earth sector of the A-share in Chinese Stock Market was immediately brought crashing down.

However, in the reporter's March 3 interview with a number of industry insiders, the current talk about permanent magnet motor "de-rare earth" is not realistic. In addition, including the Sanhuan, JL permanent magnet and other rare-earth permanent magnet head companies have?also made a response. There are even car companies who say that "there is no cost problem with rare earth permanent magnet materials, there is no need to talk about this issue at this time".

As the programme mentioned by Tesla does not have any details yet, the industry generally believes that its programme is not yet economical and feasible. In the view of professional institutions, China is the number one producer of high performance NdFeB permanent magnet materials and there is no doubt about the long-term growth of the industry.

Rare earth materials bring energy efficiency and light weight

At the Tesla Investor Day, the company mentioned that they have managed to reduce the use of rare earths in the new Model 3 drive module by 25% between 2017 and 2022, thanks to improved drivetrain efficiency. It is reported that in the current motors used by Tesla, 500g, 10g and 10g of each of the three rare earth elements are used. according to Tesla, the next generation motors reduce the amount of all three rare earth elements to 0g.

The industry speculates that the first of the three rare earth elements shown by Tesla may be neodymium and the other two are dysprosium and terbium. In the industry's view, Tesla is only saying that the next generation of motors will not use rare earth elements and that other parts may continue to be used.

The motor is one of the three core components of a new energy vehicle and is known as the "heart" of a new energy vehicle, which is divided into permanent magnet synchronous motors and AC asynchronous motors, both of which have their own advantages and disadvantages.

Specifically, permanent magnet synchronous motors are more energy efficient and lightweight, but it requires the use of rare earth permanent magnet materials, so the cost of construction is higher, magnetic synchronous motors, rare earth permanent magnet materials account for about 50% of the cost of raw materials for the entire motor; and AC asynchronous motors have price advantages, but their power and torque is lower, and the volume is larger.

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Previously, rare earth permanent magnet materials have gone through three stages of development in the development of the first generation SmCo5, the second generation SM2Co17 and the third generation NdFeB Nd2Fe14B. At present, the fourth generation of iron-nitrogen (carbon) permanent magnets is still in the research and development stage, and there is still a certain distance from industrialization.

Rare earth permanent magnet motors are still the optimal solution

The A-share rare earth sector has been shaken by Musk's comments, and a number of listed companies on the rare earth permanent magnet track then responded to this.

Rare earth permanent magnet head company Zhongke Sanhuan said publicly that from the current point of view, rare earth permanent magnet motor is still the optimal solution for new energy vehicle drive motors, and the new energy vehicle market is vast. The company said outright that whether a single manufacturer uses rare earth permanent magnet motors or not will not have a fundamental impact on the whole industry in the short term. "Any kind of permanent magnet material has a long way to go from research and development to industrial application, and a more cost-effective permanent magnet material has not been found yet," the company said.

Guangsheng non-ferrous sources also said that the industry's most advanced grain boundary penetration technology can only reduce the addition of dysprosium, terbium and other medium and heavy rare earths by about 50%-70%, Tesla's so-called non-use of rare earths is only a brief piece of news, does not indicate its alternative products or solutions, while there is no other major technological breakthroughs in the industry that can replace rare earths. "If Tesla does not use rare earths at all, the efficiency of the product may not be up to par," the company's sources said.

In addition, JL?permanent magnet also said that NdFeB rare earth permanent magnet technology has been invented from the 1980s to now nearly 40 years, and is in the development stage of large-scale application and is still in the process of development.

Car companies: the "de-rare" programme is a paradox

On the side of the car companies, the industry has also agreed that even if it is possible to go rare-earth free, it will take a long time to verify, while having harsh assumptions. This is not likely to happen in the short term.

A head new energy vehicle manufacturer told reporters that the use of high performance NdFeB in permanent magnet motors is currently both an economical and reasonable solution. In his opinion, taking rare earth permanent magnet material, on the one hand, does not have any cost problem, on the other hand, it will also improve the range of electric vehicles. "So Tesla's reference to not using rare earth permanent magnet materials is actually a paradox for us, there is no evidence that the de-rare earth solution is more advantageous," the source said bluntly.

It should be noted that Tesla first used an AC asynchronous motor that did not use rare earths, but started using a permanent magnet DC motor with the Model 3 and eventually used this motor in other models as well.

Another new energy vehicle company also said that although there may be a technical path of permanent magnet motor without rare earths, but the permanent magnet synchronous motor using rare earth permanent magnet material is still the most advantageous. "From the comprehensive performance point of view, at present, if you do not use rare earths, it will inevitably affect the whole range of new energy vehicles, affecting the stability of the whole vehicle is unacceptable," said the person.

In the opinion of this person, there is no cost issue with the use of rare earth permanent magnet materials and there is no need to talk about this issue at this time.

Tesla may?intend to get rid of imports?

The industry is puzzled as to why Tesla is mentioning "de-rare earth" at this time.

A reluctant industry insider explained, prompting Tesla "de-rare earth" reason may be the United States rare earth supply shortage, mainly dependent on imports, which will also make rare earth permanent magnet material supply price is high. "Tesla focus on each link of cost control, rare earth permanent magnet materials basically occupy permanent magnet synchronous motor fifty percent of the cost, this link is bound to be cut."

Information shows that China is the number one producer of high performance NdFeB permanent magnet materials and the country is further moving downstream from being the largest producer and refiner of rare earth elements. With the technological progress of domestic companies in recent years and the policy encouragement of transformation to high-end products, the production of high performance NdFeB magnets has been rising rapidly and now occupies nearly 70% of the world production ratio.

According to data from the General Administration of Customs, China's exports of rare earth permanent magnets have continued to grow since 2013, and China's exports of rare earth permanent magnets reached 53,288 tonnes in 2022, an increase of 8.6% year-on-year and a record high.

However, it is worth noting that CITIC Securities mentioned an industry variable in a research report. 30 December 2022, the Ministry of Commerce issued a "notice on the revision of the public consultation", the feedback ended on 28 January 2023, this revision or restrict the reconstruction of the overseas rare earth supply chain, to further strengthen the leading position of China's rare earth industry chain.

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CITIC Securities pointed out that in the past decade, rare earth permanent magnet downstream application scenarios continue to open, traditional demand such as automotive, wind power, inverter air conditioning, consumer electronics and other solid support; emerging demand such as new energy vehicles, industrial energy-saving motors, industrial robots and other booming development; future humanoid robots, BYD easy four-way, permanent magnetic floating track technology and other demand potential growth points or will continue to emerge, rare earth permanent magnet long-term growth is undoubtedly The long-term growth of rare earth permanent magnets is beyond doubt.