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