E-motors value chain

Executive Summary:

From hybrid vehicles to battery electric vehicles (BEVs) and fuel cell vehicles, electric motors (e-motors) play a crucial role in converting electricity into vehicle propulsion. In the United Kingdom, there is a significant opportunity to leverage existing expertise and capitalise on the growth in both domestic and export demand. The European market is projected to expand to over £27 billion, representing a threefold increase over the next decade.

Diverse e-motor designs:

E-motors come in various designs, each with distinct advantages and disadvantages. Even within design families, there are choices related to wire winding and cooling mechanisms. Additionally, material selection plays a pivotal role. Considerations include substituting copper for aluminium or exploring different magnet materials, each with its own trade-offs. This report delves into these design options and their implications.

Material supply chains play a critical role:

• Rare earth elements (REEs): Ensuring availability and stable pricing for REEs, like neodymium, is essential for cost-effective production.
• Electrical steel (E-steel): Vital for all motor types, E-steel was once a UK capability, but the steel industry has contracted. In 2023, only 6 million metric tonnes of crude steel were produced.
• Copper: Demand for copper has surged across energy transition technologies. Its price has tripled in the last 15 years and is expected to continue rising. Replacing copper by transitioning to aluminium presents design challenges.

Focus on magnets:

Among these considerations, magnet materials stand out due to their significant impact on motor pricing. Permanent magnets, commonly used in e-motors, often contain rare earth elements (REEs), such as neodymium. China dominates the neodymium magnet market with an 85% share, but new supply sources are emerging from Myanmar, the USA, Australia, and Canada. Pricing depends on relative prices of other rare earth elements associated with neodymium mining. However, mining neodymium also generates hazardous waste and poses safety concerns due to its association with radioactive elements.

UK’s growth opportunity:

Despite supply chain challenges, the UK boasts a thriving ecosystem. Motor manufacturers, design houses, tier one and tier two suppliers, and academia contribute to this vibrant landscape. Linking the UK supply chain, aggregating demand, and facilitating material supply chain investments are crucial steps to support expansion.

Cross-sector cooperation can strengthen the UK’s motor supply chain, fostering growth in export markets. Opportunities extend to rail, maritime, aviation, and renewable energy applications. Identifying emerging sectors, niche markets, and international partnerships will diversify revenue streams and enhance market penetration for UK electric motor products.