# Rare earths and Vehicles, ships, rail, aircraft

Most electric cars, and many ships, aircraft and weapons, run on neodymium magnets whose heavy rare earths China separates almost alone, so Chinese export licensing can stop vehicle lines within weeks.

Source page: https://www.materialinsights.org/links/rare-earths-and-vehicles-ships-rail-aircraft/

[Rare earths](https://www.materialinsights.org/commodities/rare_earths/) (commodity) and [Vehicles, ships, rail, aircraft](https://www.materialinsights.org/industries/vehicles/) (industry): 4 relationships.

## How they are linked

### 1. Industry input

*Physical flow · Strong · Rare earths to vehicles, ships, rail, aircraft*

Neodymium-iron-boron magnets, with dysprosium and terbium added for heat resistance, give traction motors their torque in a small, light package; the site rates rare earths 5 of 5 on criticality for magnet and traction-motor makers.

- **5 of 5** criticality for magnet and traction-motor makers
- **84%** of the electric car market using permanent-magnet motors, 2021
- **over 900 lb** rare earths in one F-35 fighter

Permanent-magnet motors held about 84% of the electric car market in 2021 and 86% in the first half of 2022. The need goes beyond traction: carmakers that use magnet-free main motors still need rare earths for small motors such as wipers and window lifts. Defence platforms in this industry are heavy users too, about 5,200 lb in an Arleigh Burke-class destroyer and 9,200 lb in a Virginia-class submarine.

Enterprise types that depend on it:

- Rare-earth magnet and traction-motor makers: neodymium, dysprosium, terbium (criticality 5 of 5)

Sources: [Material Insights](https://www.materialinsights.org/industries/vehicles/materials/); [IDTechEx](https://www.electricvehiclesresearch.com/articles/28314/the-ev-market-doubles-down-on-permanent-magnets-despite-material-costs); [CSIS](https://www.csis.org/analysis/consequences-chinas-new-rare-earths-export-restrictions); [Mining.com (Reuters)](https://www.mining.com/web/chinas-rare-earth-export-curbs-hit-europes-auto-industry)

### 2. Chinese export licensing

*Shared risk · Strong · China's controls on rare earths reach vehicle assembly lines*

China mines most rare earths and processed about 99% of heavy rare earths until 2023, so a licence requirement on its exports leaves magnet buyers with almost no other source.

- **7 of 17** rare earths under licence since 4 April 2025
- **69.2%** China's share of world mine output, 2025
- **1 week** Ford Explorer output lost in Chicago, May 2025

From 4 April 2025 exports of samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium, and magnets containing them, need case-by-case licences. Within two months Ford shut its Chicago Explorer line for a week and Suzuki halted the Swift from 26 May, and European suppliers reported idled lines. A wider October 2025 package was suspended until 10 November 2026; as of 5 November 2026 China had published no notice extending the pause, although the wider US and China trade truce had been extended to 10 January 2027. The April 2025 licensing stays in force throughout.

Sources: [CSIS](https://www.csis.org/analysis/consequences-chinas-new-rare-earths-export-restrictions); [Reuters (via Yahoo Finance)](https://finance.yahoo.com/news/factbox-auto-companies-face-shortages-145217523.html); [Mining Technology](https://www.mining-technology.com/news/china-rare-earth-export-pause-nears-expiry-amid-persistent-supply-concentration/); [CIRS Group](https://www.cirs-group.com/en/chemicals/china-temporarily-suspends-export-controls-on-key-raw-materials-including-rare-earths-lithium-batteries-and-diamond); [Mining.com (Reuters)](https://www.mining.com/web/chinas-rare-earth-export-curbs-hit-europes-auto-industry); [The Motley Fool](https://www.fool.com/investing/2026/11/05/china-rare-earth-export-pause-usar-mp-materials/)

### 3. Magnet-free motors

*Substitution · Rising · Magnet-free or low rare-earth motors can replace rare-earth magnets*

Externally excited synchronous motors use copper windings on the rotor instead of rare-earth magnets, at some cost in efficiency, so carmakers can trade performance for supply security.

- **nearly 30%** of the EV market projected on rare earth-free motors by 2036

Renault, BMW and Nissan already use externally excited motors, and better motor design can cut rare earth use by tens of percentage points. IDTechEx still expects most EVs to use rare-earth magnets in 2036, so substitution softens rather than removes the dependence, with faster uptake in Europe and the United States than in China.

Sources: [Autocar Professional](https://www.autocarpro.in/news/ev-motor-supply-chains-shift-away-from-rare-earth-reliance-idtechex-129877); [Mining.com (Reuters)](https://www.mining.com/web/chinas-rare-earth-export-curbs-hit-europes-auto-industry)

### 4. India magnet scheme

*Policy · High in India · Indian industrial policy targets the magnets its vehicle makers import*

India meets magnet demand mainly through imports, and the 2025 shortages put its EV and two-wheeler makers at risk, so the government is paying for domestic sintered magnet capacity.

- **₹7,280 crore** outlay of the sintered magnet scheme, 2025
- **6,000 t** per year of integrated magnet capacity targeted

The scheme, approved in November 2025, runs seven years including two years to build plants, and splits capacity among five bidders. Demand is expected to double by 2030, led by EVs, renewables, electronics and defence. In mid-2025 Bajaj Auto warned that further magnet delays could seriously hurt its EV output.

Sources: [Reuters (via Yahoo Finance)](https://finance.yahoo.com/news/factbox-auto-companies-face-shortages-145217523.html); [All India Radio News](https://www.newsonair.gov.in/cabinet-approves-rare-earth-magnet-manufacturing-scheme)

## For investors

### Key learnings

1. The exposure sits in heavy rare earths and finished magnets, not ore: a licensing rule from April 2025 stopped named car lines within about two months.
2. Licensing risk is dated: China's wider October 2025 controls were paused only until 10 November 2026 and no extension notice had been published by 5 November 2026, while the April 2025 licences continue.
3. Magnet-free motors cap the downside for some carmakers, but projections still see most EVs on rare-earth magnets in the 2030s, so magnet supply ex-China remains a scarce asset.

### What to track

- **China MOFCOM export control notices and licence approvals**: New controls or slow approvals signal line stoppages for carmakers without magnet stocks (As announced · MOFCOM)
- **NdPr and dysprosium oxide prices, China versus ex-China**: A widening gap shows buyers paying for non-Chinese supply and pressure on motor costs (Weekly · Fastmarkets, SMM, Benchmark)
- **China's monthly rare-earth magnet exports**: Falls signal licence tightening before carmakers report shortages (Monthly · China customs (GACC))

## For policymakers

### Key learnings

1. India's 6,000 tonne a year magnet scheme needs two years to build plants, so stockpiles and supplier diversification carry the risk until then.
2. Magnet plants alone do not secure supply while China processed about 99% of heavy rare earths until 2023; separation of dysprosium and terbium is the harder gap.
3. The same magnets serve EVs, ships, aircraft and weapons, so magnet supply is both an industrial and a defence question.

### What to track

- **Award and build progress under the sintered magnet scheme**: Delays extend India's dependence on imported magnets (Quarterly · Ministry of Heavy Industries, PIB)
- **India's imports of permanent magnets by source country**: A falling China share shows diversification is working (Monthly · Commerce ministry TradeStat)
- **Status of China's October 2025 controls after the 10 November 2026 expiry**: Reinstatement would widen licensing to more elements, equipment and foreign-made items (As announced · MOFCOM)

## India

India imports most of its rare-earth magnets and its carmakers felt the 2025 Chinese licensing; in November 2025 it approved a ₹7,280 crore scheme for 6,000 tonnes a year of domestic sintered magnet capacity.

## Sources

1. [Vehicles, ships, rail, aircraft: materials](https://www.materialinsights.org/industries/vehicles/materials/), Material Insights (2026)
2. [The EV Market Doubles Down on Permanent Magnets Despite Material Costs](https://www.electricvehiclesresearch.com/articles/28314/the-ev-market-doubles-down-on-permanent-magnets-despite-material-costs), IDTechEx (2022)
3. [The Consequences of China's New Rare Earths Export Restrictions](https://www.csis.org/analysis/consequences-chinas-new-rare-earths-export-restrictions), CSIS (2025)
4. [Factbox: Auto companies face shortages due to China's rare earth restrictions](https://finance.yahoo.com/news/factbox-auto-companies-face-shortages-145217523.html), Reuters (via Yahoo Finance) (2025)
5. [China rare earth export pause nears expiry amid persistent supply concentration](https://www.mining-technology.com/news/china-rare-earth-export-pause-nears-expiry-amid-persistent-supply-concentration/), Mining Technology (2026)
6. [China temporarily suspends export controls on key raw materials including rare earths, lithium batteries and diamond](https://www.cirs-group.com/en/chemicals/china-temporarily-suspends-export-controls-on-key-raw-materials-including-rare-earths-lithium-batteries-and-diamond), CIRS Group (2025)
7. [EV motor supply chains shift away from rare earth reliance: IDTechEx](https://www.autocarpro.in/news/ev-motor-supply-chains-shift-away-from-rare-earth-reliance-idtechex-129877), Autocar Professional (2025)
8. [Cabinet approves rare earth magnet manufacturing scheme](https://www.newsonair.gov.in/cabinet-approves-rare-earth-magnet-manufacturing-scheme), All India Radio News (2025)
9. [China's rare earth export curbs hit the auto industry worldwide](https://www.mining.com/web/chinas-rare-earth-export-curbs-hit-europes-auto-industry), Mining.com (Reuters) (2025)
10. [China's rare-earth export pause expires Nov. 10](https://www.fool.com/investing/2026/11/05/china-rare-earth-export-pause-usar-mp-materials/), The Motley Fool (2026)