Is Automotive a Promising Market for Rare Earth Elements?
Date: 03 January 2012

Rare Earth Elements (REEs) such as neodymium are widely used in commercial electronic products and a wide range of other industries. The automotive industry, a vast consumer of raw materials, is a big potential market for REEs, not least because of the move toward hybrid and electric vehicles (EVs) which require higher volumes of REEs. However, uncertainty currently exists over the future demand for EVs and the use of REEs.

IMS Research estimates that 16 million EVs will be produced in 2021, of which nearly 60% will be hybrid electric vehicles. This augers well for the mining industry: after all, several kilos of expensive REEs are required per vehicle. However, Alastair Hayfield, Automotive Research Director, cautions against over-optimism; “the long term forecast for EV production is subject to uncertainty as a lot rests upon governments and private enterprises incentivising and driving EV adoption.” Hayfield continues “it should also be noted that vehicle manufacturers are exploring technologies that don’t rely as extensively on REEs. Not only do vehicle manufacturers want to lessen their exposure to price fluctuations, they want to reduce their reliance on materials that are hard to source. Couple this with emerging REE recycling programs that are targeting ‘urban mines’ (REEs sequestered in consumer electronic devices, for example), and the REE mining industry might not achieve the level of mid-term success it hopes for from the automotive industry.”

Despite this more pessimistic viewpoint, companies would be wise not to overlook the opportunity presented by automotive body and control motors used in internal combustion engine vehicles. IMS Research estimates that an average of 25 electrical motors were used per light vehicle in 2011, equating to annual global shipments of 2 billion units. By 2018, annual global shipments of electrical motors are forecast to rise to 3.5 billion, a 75% increase. This presents a healthy opportunity for motor suppliers, magnetic material suppliers and REE mining firms.

There are three main factors driving this trend: the first is rising sales of light vehicles, most notably in emerging economies. Second, more convenience and comfort systems that require motors, such as HVAC or electric windows, are being used on lower segment cars. Third, in a bid to differentiate and offer a ‘better’ driving experience, vehicle manufacturers are offering ‘premium’ features that physically manipulate the driving environment, such as multi-zone HVAC or tailgate lift, on a wider variety of vehicles.

In the long term, the automotive industry will continue to be a major consumer of REEs, particularly as the use of motors increases. However, if REEs continue to be a ‘pain point’ for automotive suppliers – either through high price or scarcity – then an attempt to reduce their consumption should be expected.

Editors Note :

For more information please contact:

Alastair Hayfield – Automotive and Transport Research Director at IMS Research

T: +44 (0) 1933 402255 alastair.hayfield@imsresearch.com

About IHS Inc. (www.ihs.com)

IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today’s business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS employs more than 5,600 people in more than 30 countries around the world.

About IMS Research:

IMS Research is a leading independent supplier of market research and consultancy to the global electronics industry, offering syndicated market studies, custom research and consultancy services. Clients include most of the household names in the industry. IMS Research has offices in Europe, the US, China, Taiwan, South Korea, and Japan. To find out more, contact IMS Research: enquiries@imsresearch.com; T: +44 (0) 1933 402255; http://imsresearch.com

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