The transformation of the automotive industry toward electrification, autonomy, and software-defined vehicles is often framed through the lens of software architecture, battery chemistry, or AI systems. But beneath these visible shifts lies a deeper, more foundational issue—the global availability and engineering implications of rare earth elements (REEs). These elements, essential to traction motors, battery packs, power electronics, and sensor systems, are quietly becoming a defining constraint in the future of mobility.
At Goken, our engineering and consulting teams have rigorously analyzed the real-world impact of rare earths across the evolving product lifecycle—from cost modeling and supply chain engineering to long-term validation strategies. This article distills that in-depth analysis, delivering a factual, technical perspective often missing from mainstream coverage.
Why Rare Earth Elements Are Not Rare—But Still Problematic
Despite the name, rare earth elements like neodymium (Nd), dysprosium (Dy), praseodymium (Pr), and terbium (Tb) are not geologically rare. What makes them strategically scarce is the geopolitical, environmental, and technological complexity involved in mining, refining, and integrating them at scale.
In electric drivetrains, neodymium-based permanent magnet synchronous motors (PMSMs) have emerged as the gold standard due to their high-power density, an essential feature for long range but compact EVs. However, 90%+ of the global REE refining capability currently resides in China, creating an immediate dependency risk. This has already prompted U.S., EU, and Japanese governments to classify rare earths as critical strategic resources, with multi-billion-dollar investments now flowing into alternative supply chains.
Technical Dependencies in EV Architecture: Motors, Magnets, and More
Rare-earth permanent magnets play a significant role in the traction motors of many electric vehicles across various OEM platforms. While some manufacturers explore alternatives such as induction or wound-rotor motors, each approach involves trade-offs in efficiency and performance that impact overall vehicle design and supply chain considerations.
Beyond motors, REEs are critical in:
Battery thermal management systems: where yttrium and lanthanum compounds are used in heat-resistant coatings and ceramics.
ADAS and sensor units: where precision actuators and gyros depend on terbium-dysprosium alloys.
Power electronics: where high-temp magnets are used in inverter assemblies.
This interconnected material dependency adds invisible complexity to every new EV architecture being planned for 2025–2030.
Engineering Consequences: Cost, Validation, and Lifecycle Risk
The implications are not limited to sourcing. The cost volatility of rare earths—driven by geopolitical factors and environmental regulation—has already caused up to 20–30% fluctuation in magnet pricing over the last 24 months. This directly impacts bill-of-materials forecasts, cost engineering, and sourcing strategies for OEMs.
More importantly, material substitutions or alternative motor designs require re-validation of vehicle subsystems—from durability testing to electromagnetic interference (EMI) studies. Goken’s work in validation planning and CAE simulation is increasingly intersecting with materials engineering, as clients look to future-proof systems that may need to tolerate shifts in REE content or form factor without degrading performance.
Global Supply Chain Reactions: Realignment Underway
In response to the material risk, OEMs and Tier-1s are diversifying their sourcing and motor technologies. Toyota is investing in magnet designs with lower dysprosium content. GM and Stellantis have signed contracts with North American REE producers. The EU’s “Critical Raw Materials Act” mandates domestic refining targets.
However, these are strategic signals—not immediate solutions. Engineering programs in flight today must operate within the current material constraints while planning for second-generation architectures that may look materially different. This dual-reality—designing for today, while planning for post-REE dependencies—is where deep engineering advisory becomes essential.
Goken’s Role: Engineering-Aware Material Foresight
At Goken, we approach the rare earth conversation not from a policy or commodity angle—but from a product engineering and lifecycle validation lens. Our teams are helping OEMs and Tier-1 suppliers navigate this issue across:
Cost Engineering: Through should-cost modeling that accounts for REE volatility and magnet substitution scenarios.
Design for Validation: Supporting simulation and test strategies that tolerate material variation without full platform requalification.
CAD/PLM Readiness: Ensuring that part libraries and design rulesets are REE-aware, supporting both primary and fallback material specs.
In partnership with our global clients, we are embedding material-aware thinking into the earliest phases of system engineering—recognizing that rare earths are not just a supply problem, but an engineering risk vector that must be understood and managed holistically.
Conclusion: Strategic Engineering Requires Material Intelligence
The rare earth supply landscape is no longer a secondary consideration in mobility design—it is a primary constraint with technical, economic, and geopolitical dimensions. At Goken, we believe that true engineering leadership in this new era will be defined not only by electrification or software, but by the ability to anticipate, absorb, and adapt to material realities.
Our role is to bring clarity, foresight, and execution capability to this conversation—helping companies design the next generation of advanced vehicles with full awareness of the rare earth challenge.
If your team is exploring new propulsion systems, revising cost models, or rethinking validation pipelines in the context of REE risk, we invite you to speak with our technical experts.
