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More Price Increases Expected for E-Bikes and E-Scooters

3 5566 Sales & Trends

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SHANGHAI, China - The dramatic rise of costs for rare earth materials, specifically Neodymium (Nd, 60), has caught many e-bike motor makers and buyers by surprise, and is such a large increase that it affects the future of electric bikes, and other light electric vehicles.

Nd metal is about 35% of the content of a NdFeB magnet. These are very powerful permanent magnets and are one of the reasons that modern electric motors can have such high torque and efficiency. Today, a ton of Nd sells for more than $102,500 USD inside China, and can sell for more than twice that outside China, due to supply limitations. And those supply limitations have important implications for the world electric bicycle industry.

  • Electric bicycle motors made in China (which is most of them) now have a price increase of 15-30% just due to magnet costs.
  • Electric motors made outside China can experience materials price increases of 30-60% depending on the design and size of the magnets, if the maker can get enough magnets.

One of the issues affecting the bike industry is that a lot of magnets are used, but electric bikes and e-scooters are not the highest value products that uses such magnets. Nd magnetic materials are important to the electronics industry, and such a small percentage of their costs, that they can afford to pay a much higher price for Nd. This effectively runs up the price on Nd exported from China – a miserable situation for motor makers in Canada, USA, Germany, Holland, UK, Taiwan, Japan, and elsewhere.

But there is an interesting opportunity offered by the Chinese government. If a motor is made in China and exported as a motor – there is no export limit or quota. So many western motor makers have or are building plants and JVs in China to build their motors there. Since these are technological products, this involves a technology transfer to China that some companies resist, and others regard as unimportant – depending on their technology.

What are the effects for the world e-bike and e-scooter industry?

  • The price of e-bikes has gone up, and will go up again. E-bikes use a lot of materials that are in great and growing demand. This is not the first or the last price increase due to materials costs.
  • Many motor makers are moving to China.
  • There may be shortages of some motors in 2011 and 2012.
  • Other motor technologies, such as SRM (Switched Reluctance Motor) will become more and more interesting.
  • Motors using ceramic magnets instead of Nd magnets will be found on some models. (Probably less performance.)
  • Others sources of Nd are already resuming production and major investment is being made in mines and processing plants in USA, Australia, Malaysia and Canada.
  • It will take 10-15 years for those new sources to put price pressure on the Chinese – so the high prices are here to stay.

Electric vehicles will be the most visible place for Nd price increases to reach the public. But the high value and benefits of electric bicycles far exceeds the costs.

A comprehensive article (from Edward Benjamin, MD of eCycleElectric Consultants) on the rising costs for Nd metal, NdFeB magnets and the results of the export restrictions applied to Nd material and magnets by the Chinese central government, is in Bike Europe’s December edition.

Edward Benjamin
Managing Director of eCycleElectric Consultants, www.eCycleElectric.com

by Bike Europe last update:11 Jul 2012

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3 comments

  • # 1

    Jay Bennett

    When will America smarten up and start playing this game. Surely there are some commodities we can leverage to gain control of some Chinese technologies too. Two can play this game. America needs to get our Rare Earth mines in Mountain Pass California back on line - and quickly. Canada also has vast reserves of Neodymium - there is no shortage in the ground in fact. I believe Molycorp who owns the old mines, now has some DOE funding for restarting production. Magnet production (also dominated by China) and U.S. Motor manufacture could follow rare earth availability, perhaps with a little help from some import tarrifs, particularly appropriate if this unethical business practice continues. Ooops is this counter to our free trade philosophy, one that is playing to the advantage of American corporations but not to American jobs and our future in too many instances like this.

    The rare earth magnets are also a key component in wind turbines - units that have to be produced at GE's PRC plant instead of the U.S.. Unfortunately many U.S. manufacturers have already or soon will take the bait and hand over their technology(often subsidized by our government) to the Chinese just to get low cost motors and remain competitive. Did I mention the weapon systems that rely on Rare Earth magnets monopolized by China. I hope we don't have to hand over our missile technology to get the magnets!

    And with half our political system ignoring the strategic need to prepare for a world of electric vehicles - it's no wonder the Chinese ransom situation is not getting enough attention. Not surprising since our major corporations look to Global profit motives before Made in America. The executive bonus, the lobby's they fund, money flows for our politicians lavish exits - Made in America and our future Energy problems are back seat items. When are Americans going to wake up to this stuff, and demand policies that protect and nurture U.S. interests & jobs. Leave it to the corporate interests, they will take their tax breaks and go to China because the Chinese government knows how to leverage their resources and trade policies to keep their factories running. Unfortunately with our politicians on the take - not much expected to change on that score here. Go OWS!
  • # 2

    Henry Keultjes

    Interesting comments from Jay Bennett. Would like to get in touch with him.
  • # 3

    Per Hassel Sørensen

    The higher cost of NdFeB magnets is a good reason to use switched reluctance motors instead. Switched reluctance motors do not use expensive, heavy and fragile permanent magnets in the rotor. They also accept a much higher running temperature. The drawback has been the requirement for advanced vector control of the magnetic field in addition to excessive noise.
    With modern VLSI electronics these are former issues. ABB launched sitched reluctance motors this spring with excellent performance. It is only a matter of time before bicycle motors no longer need Chinese magnets.

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