Material Insights · Understanding the Material World

Electric motors and drives and Vehicles, ships, rail, aircraft

Electric vehicles move on traction motors, and most of those motors use rare-earth permanent magnets made almost entirely in China, so the motor is where the vehicle industry's exposure to magnet supply sits, as 2025's export curbs showed.

Electric motors and drives (energy) and Vehicles, ships, rail, aircraft (industry): 4 relationships.

How they are linked

1. Traction motors

Physical flow · Strong · Electric motors and drives → vehicles, ships, rail, aircraft

Every electric car, two-wheeler, bus, locomotive or electric ship needs a traction motor and inverter drive, and conventional vehicles carry many small motors too; the site rates motors 5 of 5 for magnet and traction-motor makers.

  • 3 enterprise types in this industry that depend on motors and drives
  • 5 of 5 criticality for rare-earth magnet and traction-motor makers (core product)

Tier-1 suppliers that build electric drives, and the makers of presses, robots and paint shops for car plants, also depend on motors, both rated 3 of 5.

Enterprise types that depend on it:

  • Rare-earth magnet and traction-motor makers: core product (criticality 5 of 5)
  • Tier-1 component and system suppliers: electric drives (criticality 3 of 5)
  • Press, robot, paint-shop and tooling suppliers: robots and presses (criticality 3 of 5)

Sources: Material Insights

2. Magnet supply from China

Shared risk · Strong · Chinese magnet exports → motor and vehicle output

High-efficiency traction motors use neodymium magnets, and China made about 94% of sintered magnets in 2024 and refines most rare earths, so its export licensing controls the motor supply chain.

  • 94% China's share of sintered permanent magnet output, 2024
  • 91% China's share of refined rare earth output
  • 47% fall in Bajaj Chetak EV output, July 2025 against July 2024, blamed on magnet shortages

After China introduced export controls on seven heavy rare earths, related compounds and magnets in April 2025, export volumes fell sharply, some European parts plants suspended output, and Europe's supplier association said in June that only about a quarter of auto suppliers' licence requests since early April had been approved. Licences were later granted and volumes recovered, but magnets made outside China still carried a significant premium; the IEA puts potential direct automotive losses outside China, if such controls were applied in full, at over US$3 trillion.

Sources: IEA; Dawn; Autocar Professional

3. Magnet-free motors

Substitution · Medium · Induction and wound-rotor motors can replace magnet motors

Induction and wound-rotor motors use copper windings on the rotor instead of magnets, so they avoid rare earths at some cost in efficiency, size or complexity.

  • 86% permanent magnet share of the EV motor market, first half of 2022

Carmakers have kept choosing magnet motors for their efficiency despite magnet material costs. Supply shocks such as 2025's curbs make magnet-free and reduced-rare-earth designs more attractive, but switching takes a vehicle design cycle, so it cannot ease a short shortage.

Sources: IEA; The Fabricator

4. India's magnet scheme

Policy · High in India · Indian industrial policy → domestic magnets for EV motors

India imports all of its magnets, so its EV makers felt the 2025 curbs directly, and the government now funds domestic magnet capacity aimed at motor users.

  • ₹7,280 crore outlay of India's rare-earth permanent magnet scheme over seven years, approved November 2025
  • 6,000 t a year magnet capacity targeted under the scheme
  • 4,000 to 5,000 t India's annual magnet demand, all imported

Production is expected to begin in two to three years, so the scheme does not remove near-term exposure. Its success depends on feedstock: India would still need refined rare earth oxides and metals, which China also dominates.

Sources: IEA; Down To Earth

For investors

Key learnings

  1. Traction motors are where EV makers' rare earth exposure sits, with China making 94% of sintered magnets in 2024.
  2. The 2025 curbs showed the risk is real: Bajaj's EV output fell 47% in July 2025 and European parts lines stopped.
  3. Magnet-free motors are a hedge, not a quick fix, because switching takes a full vehicle design cycle.

What to track

  • Chinese rare earth magnet export volumes and licences: Supply risk for EV and motor production (Monthly · China customs data)
  • NdPr oxide price inside and outside China: Cost of magnets and the premium for non-Chinese supply (Weekly · Asian Metal, Benchmark Mineral Intelligence)
  • EV production by maker: Whether magnet supply is limiting output (Monthly · SIAM, VAHAN)

For policymakers

Key learnings

  1. India's EV push depends on imported magnets, so motor supply is a strategic dependency, not only a trade item.
  2. The ₹7,280 crore magnet scheme addresses magnet making, but refined oxide and metal supply also needs a plan.
  3. Support for magnet-free and low-rare-earth motor designs reduces exposure while domestic magnet capacity is built.

What to track

  • Magnet imports by source country: India's dependence on China for motor magnets (Monthly · DGCI&S)
  • Capacity commissioned under the magnet scheme: Progress towards 6,000 t a year of domestic magnets (Half-yearly · Ministry of Heavy Industries)

India

India imports all of the 4,000 to 5,000 t of magnets it uses each year, and magnet shortages cut EV two-wheeler output in 2025; a ₹7,280 crore scheme approved in November 2025 targets 6,000 t a year of domestic magnet capacity.

Sources

  1. Vehicles, ships, rail, aircraft: materials, Material Insights (2026)
  2. Rare Earth Elements: executive summary, IEA (2026)
  3. China's rare earth export curbs hit global auto industry (Reuters), Dawn (2025)
  4. Bajaj Chetak production plunges by 47% in July due to shortage of rare earth magnets, Autocar Professional (2025)
  5. Permanent magnet motors remain most popular choice for EVs despite material costs, says report (IDTechEx), The Fabricator
  6. Centre approves Rs 7,280-crore scheme to cut rare-earth magnet imports, secure supply chains, Down To Earth (2025)