Musk once again made a bold statement at the “Tesla Investor Day” release, “Give me $10 trillion, I’ll solve the planet’s clean energy problem.” At the meeting, Musk announced his “Master Plan” (Master Plan). In the future, battery energy storage will reach 240 terawatts (TWH), renewable power 30 terawatts (TWH), the next generation of car assembly costs reduced by 50%, hydrogen to completely replace coal and a series of big moves. Among them, what triggered a hot debate among domestic netizens was that Musk said the permanent magnet motor of the next generation of electric cars will have no rare earths.
The focus of the netizens’ hot debate is about rare earths. Because rare earths are an important strategic export resource in China, China is the world’s largest exporter of rare earths. In the global rare earth market, changes in demand will have an impact on the strategic position of rare earths. Netizens are concerned about how much impact Musk’s claim that the next generation of permanent magnet motors will not use rare earths will have on rare earths.
To make this clear, the question needs to be broken down a bit. First, what exactly are rare earths used in; second, how much rare earths are used in permanent magnet motors as a percentage of the total demand quantity; and third, how much potential space is there for rare earths to be replaced.
First of all, let’s look at the first question, what are rare earths used in?
Rare earths are a relatively scarce resource, and after excavation, they are processed into various rare earth materials. The downstream demand for rare earth materials can be divided into two major areas: traditional and new materials.
Traditional applications include metallurgical industry, petrochemical industry, glass and ceramics, agriculture, light textile and military fields, etc. In the field of new materials, different rare earth materials correspond to different downstream segments, such as hydrogen storage materials for hydrogen storage batteries, luminescent materials for phosphors, permanent magnet materials for NdFeB, polishing materials for polishing devices, catalytic materials for exhaust gas purifiers.
The use of rare earths can be said to be very wide and very, the global reserves of rare earths are just hundreds of millions of tons, and China accounts for about one-third of them. It is because rare earths are useful and scarce that they have a very high strategic value.
Secondly, let’s look at the number of rare earths used in permanent magnet motors to account for the total number of demand
In fact, this statement is not accurate. It is meaningless to discuss how many rare earths are used in permanent magnet motors. Rare earths are used as raw materials for PM motors, not as spare parts. Since Musk says that the new generation of permanent magnet motor is without rare earths, it means that Musk has found a technology or new material that can replace rare earths when it comes to permanent magnet material. So, to be precise, this question should discuss, how much rare earths are used for the part of permanent magnet materials.
According to Roskill data, in 2020, rare earth permanent magnet materials are the largest share of global demand for rare earth materials in downstream applications, up to 29%, rare earth catalytic materials accounted for 21%, polishing materials accounted for 13%, metallurgical applications accounted for 8%, optical glass applications accounted for 8%, battery applications accounted for 7%, other applications accounted for a total of 14%, which includes ceramics, chemicals and other fields .
Obviously, permanent magnet materials are the downstream application with the largest demand for rare earths. If we consider the actual situation of the rapid development of the new energy vehicle industry in the past two years, the rare earth demand for permanent magnet materials should have long exceeded 30%. (Note: At present, the materials used in permanent magnet motors of new energy vehicles are all rare earth permanent magnet materials)
This leads to the conclusion that the demand for rare earths in permanent magnet materials is very high.
One last question, how much potential space is there for rare earths to be replaced
When there are new technologies or new materials that can meet the functional needs of permanent magnet materials, it is reasonable to assume that all applications using rare earth permanent magnet materials, except for permanent magnet motors, can be replaced. However, being able to replace does not necessarily mean that it will be replaced. This is because commercial value must be considered when it comes to actual use. On the one hand, how much the new technology or material will improve the functionality of the product and thus turn into revenue; on the other hand, whether the cost of the new technology or material is high or low compared to the original rare earth permanent magnet material. Only when the new technology or material has a higher commercial value than the rare earth permanent magnet material will a full-scale replacement be formed.
What is certain is that in Tesla’s supply chain environment, the commercial value of this alternative is higher than that of rare earth permanent magnet materials, otherwise there would be no need to invest in R&D. As for whether Musk’s new technology or new materials have versatility, whether this set of solutions can be copied and popularized. This will be judged according to the time Musk fulfilled his promise.
If in the future this new scheme of Musk is in line with the laws of business (higher commercial value) and can be promoted, then the global demand for rare earths should be reduced by at least 30%. Of course, this substitution will take a process, not just a blink of an eye. The reaction in the market is a gradual decrease in global demand for rare earths. And a 30% reduction in demand is going to have a significant impact on the strategic value of rare earths.
The development of human technological level is not shifted by personal feelings and will. Whether individuals like it or not, accept it or not, technology is always moving forward. Instead of resisting the progress of technology, it is better to join the team of technological development to lead the direction of the times.
Post time: Jul-31-2023