The biggest blind spot in the EV battery supply chain

Rare earth elements are used in the drive motors of nearly all electric vehicles produced globally to-date and are also used widely in micromotors and sensors that help automakers minimize vehicle weight, thereby allowing them to thrift costly battery capacity and/or increase driving range (e.g., miles per charge).

In a new report, titled “Rare Earth Magnet Market Outlook to 2035”, industry expert Adamas Intelligence forecasts that global demand for rare earth elements used in electric vehicle motors and sensors will increasingly exceed global production through the end of the decade resulting in the depletion of historically accumulated inventories and rising shortages that could challenge the electrification strategies of automakers and governments alike.

Among the findings of the new report:

The Global Market for Magnet Rare Earth Oxides to Triple by 2035

With total magnet rare earth oxide demand forecasted to increase at a CAGR of 8.3% and prices projected to increase at CAGRs of 3.2% to 3.7% over the same period, Adamas Intelligence forecasts that the value of global magnet rare earth oxide consumption will triple by 2035, from US $15.1 billion this year to US $46.2 billion by 2035.

Ongoing Coup in Myanmar a Major Risk to Already Unstable Market

With Myanmar currently responsible for 40% of global dysprosium and terbium oxide mine production annually, and a coup ongoing in the nation since January 2020, the country presents a major supply risk to the already unstable rare earth market.

Without a Surge of Supply, Demand Growth Will Soon Reach Escape Velocity

If the global industry continues to operate myopically – preparing, anticipating and investing only for a three to five-year outlook – the rate of demand growth for magnet rare earths will soon reach ‘escape velocity’; a point at which annual demand growth becomes so great (i.e., >10,000 tonnes per annum) that it is simply implausible for the already-lagging supply-side to catch up and keep up.

Amidst Shortages, China to Halt Magnet Rare Earth Oxide Exports, Become Net-Importer by 2035

Within the next decade or so, as shortages blanket the market, Adamas expects China will halt exports of magnet rare earth oxides and transition to becoming a net-importer by the end of the forecast period.

The Current Strong Pricing Environment for Rare Earths is Here to Stay

A return to lower magnet rare earth price levels going forward would be unsustainable as it would stimulate those end-users walking away from the rare earth market today (e.g., Amazon) to return en masse, pushing demand up to levels even more out of reach for the supply side that, because of long lead times and high incentive prices needed to develop new production, cannot respond sufficiently.

For more information about the report and Adamas Intelligence’s industry leading services please visit Adamas Intelligence’s website.