Japan advances EV magnets without heavy rare earths to reduce China supply risk

Japanese magnet makers target a vulnerable link in car production

Japan's Proterial is developing magnets for electric and hybrid vehicle motors that work without dysprosium and terbium, two heavy rare earth elements used to keep powerful magnets working when temperatures rise. Daido Steel has already commercialized magnets without these elements and plans to invest 5 billion yen to expand production at a plant in Gifu Prefecture.

The companies are addressing a supply problem that has reached vehicle assembly lines. China produces about 90 percent of the magnets used in cars and electronics, according to industry surveys and reporting. Recent restrictions and permit delays have left manufacturers seeking alternative supplies, while Suzuki Motor temporarily idled some assembly lines because of a shortage of inputs.

Proterial, formerly Hitachi Metals, says samples of one new magnet grade are already available from a mass production line. A version designed for greater heat resistance is scheduled to be ready for sampling by April 2026. The company is preparing domestic production in Kumagaya, Saitama Prefecture, and Yabu, Hyogo Prefecture.

Daido Steel and its subsidiary Daido Electronics have a longer record with the technology. Honda adopted their magnets in hybrid models in 2016, a first for a major automaker. Daido now reports growing inquiries from vehicle manufacturers in Japan and the United States.

As of September 7, 2025, the opportunity is to remove a particularly vulnerable group of materials from the motor supply chain while preserving the magnetic strength and resistance to heat that vehicles need. Turning that opportunity into dependable supplies requires both suitable magnet designs and consistent factory production.

Why tiny amounts of heavy rare earths matter

Electric and hybrid vehicle motors use magnets to help produce torque, the turning force that drives the vehicle. The strongest commercial magnets are made from neodymium, iron and boron. Their strength allows manufacturers to obtain high torque from a compact motor.

Neodymium magnets lose strength as temperatures rise. Manufacturers have traditionally added small amounts of dysprosium and terbium to improve coercivity, a magnet's resistance to being demagnetized. Those additions help the magnet retain its field when a traction motor, the motor that moves the vehicle, becomes hot.

China mines a large share of the world's rare earth ores and refines the majority of rare earth oxides and metals. Its position extends through several stages of production, from processing raw materials to making finished magnets. Heavy rare earth supplies are particularly concentrated.

Export restrictions can therefore affect manufacturers quickly. Automakers and parts suppliers have scrambled for backup supplies of magnet materials, with some describing the pressure as a possible repeat of the semiconductor shortage. That earlier comparison reflects the risk of assembly stopping because a necessary component is unavailable.

Proterial and Daido are targeting the need for dysprosium and terbium within neodymium magnets. Their products retain neodymium, so the change removes heavy rare earths from these designs while leaving another rare earth element in the magnet.

What Proterial says its new grades can deliver

Proterial says it has developed neodymium magnets for traction motors that maintain performance without any heavy rare earth elements. Its approach involves tighter control of impurities and the material's microstructure during processing. Microstructure means the arrangement of the small grains and boundaries inside the magnet.

Technical details describe two new sintered neodymium grades without dysprosium or terbium. Sintering is the manufacturing route used for these grades. The first targets driving motors, electric power steering systems and compressors, with residual magnetic flux density, written as B_r, of about 1.40 tesla and intrinsic coercivity, written as H_cJ, of at least 1,671 kiloamperes per meter.

The second grade targets applications requiring higher torque. It raises B_r to about 1.42 tesla, with H_cJ at or above 1,830 kiloamperes per meter. B_r describes how much magnetic flux a magnet can deliver. H_cJ describes how strongly it resists demagnetization, a property engineers examine when judging performance at high temperatures.

Both measurements matter to a motor designer. A strong magnetic field helps produce torque, while resistance to demagnetization helps the motor retain that capability when it becomes hot. Proterial says its control of impurities and texture during sintering allows it to reach the required combination without the traditional heavy rare earth additions.

From samples to production in Japan

Proterial says sample quantities of the first grade are already available from a mass production line. The company plans to make the variant with greater heat resistance ready for sampling by April 2026, giving customers a later option for more demanding operating conditions.

Kumagaya and Yabu are the locations where Proterial is preparing domestic production. If customer contracts follow, those operations would provide a Japanese source of traction motor magnets at a time when automakers are seeking supplies less exposed to policy changes in Beijing.

Proterial holds hundreds of patents related to neodymium sintered magnets. The company has also highlighted work on a soft magnetic alloy with high magnetic flux that could reduce weight and losses in certain motor cores. That work concerns another part of the motor, alongside the permanent magnets being developed for traction applications.

The schedule brings together an established manufacturing line, samples for customer evaluation and a further grade planned for 2026. Vehicle manufacturers still need to determine whether the materials meet the requirements of their particular motors before committing them to vehicle programs.

Daido builds on Honda's 2016 adoption

Daido Steel and Daido Electronics have already commercialized neodymium magnets for hybrids that contain no heavy rare earths. Their method produces much finer crystal grains inside the material. Refining those grains raises coercivity and helps stabilize the magnet's performance as the motor heats up.

Honda's adoption in 2016 gave the technology an early application in hybrid vehicles. Daido now reports increased inquiries from automakers in Japan and the United States for both hybrid and battery electric applications.

Daido plans to invest 5 billion yen in the Daido Electronics plant in Nakatsugawa, Gifu Prefecture. The aim is to raise monthly capacity to about 45 tons by spring 2026 and around 150 tons in fiscal year 2030. The later target is more than three times the planned spring 2026 capacity.

Daido is also advancing hot deformed magnet technology that avoids heavy rare earths and uses less electricity during manufacturing than conventional sintered production. Lower electricity consumption can reduce carbon output at the factory while the material choice reduces exposure to the tightest parts of the rare earth market.

Daido Electronics is spreading production and customer support across Japan, Thailand, China and the United States. Its plans include manufacturing traction motor magnets in Ohio. The expansion combines a change in magnet materials with a wider geographic production network.

The dates shaping the manufacturing plans

Honda's early adoption and the next round of capacity plans show that magnets without heavy rare earths are at different stages of commercial development. Daido has an existing vehicle application, while Proterial is providing samples of new grades for evaluation.

• 2016: Honda adopted magnets from Daido Steel and Daido Electronics that use no heavy rare earths in hybrid models, a first for a major automaker.
• September 7, 2025: Proterial says samples of its first new grade are available from a mass production line, with domestic production being prepared in Kumagaya and Yabu.
• Spring 2026: Daido aims to raise monthly capacity at Nakatsugawa to about 45 tons.
• April 2026: Proterial plans sample readiness for its variant designed for greater heat resistance.
• Fiscal year 2030: Daido targets monthly capacity of around 150 tons at Nakatsugawa.

The spring 2026 and April 2026 milestones concern different steps. Daido's target is production capacity, while Proterial's date concerns samples of a further magnet grade. Customer testing and purchasing decisions will determine how those plans translate into vehicle production.

Can the magnets withstand the heat of driving?

Traction motors in family cars can experience internal temperatures well above 150 degrees Celsius. Local hot spots can become hotter during steep climbs or repeated acceleration. Heat reduces magnetic strength and can cause an irreversible loss if the magnet's intrinsic coercivity is too low.

Dysprosium and terbium became standard additions in the most demanding grades because they raise H_cJ. Removing them puts greater weight on how the magnet is manufactured and how its internal structure is controlled.

Proterial says its new grades achieve adequate H_cJ and B_r through control of impurities and texture. Independent validation of performance remains a step for these new materials, including whether they can match or exceed the best grades containing dysprosium on both performance and cost.

Vehicle use also demands more than a satisfactory initial measurement. The magnets need to perform through thousands of cycles of heating and cooling, across the motor's full range of speeds and loads, and after exposure to humidity and salt spray.

What engineers need to test before adoption

Design teams will examine full demagnetization curves at operating temperatures. These curves show how the magnet behaves under conditions that work against its magnetic field. Engineers will also check for permanent losses after overload events.

Torque and efficiency must be assessed with the generator and inverter pairing used in the vehicle. The inverter controls the electricity supplied to the motor. Magnet measurements alone cover only part of the operating system that the manufacturer needs to evaluate.

Mechanical durability matters alongside magnetic performance. The magnet's grade, shape, coating and adhesive, together with the rotor sleeve, must withstand repeated thermal and mechanical stress. Those parts work together to keep the magnet secure and functioning inside a moving motor.

Production consistency creates another test. A grade that meets its specification during a pilot run must continue doing so month after month at larger volumes. Customers will seek statistical process control data, traceability and failure analyses from accelerated life testing. In practical terms, they need records showing that quality stays steady, that parts can be tracked and that potential failures have been investigated.

Laboratory validation can take months. Once parts are installed in prototype vehicles, the process can take a year or more. Those requirements help explain why sample availability, capacity expansion and adoption in a finished vehicle are separate milestones.

Supply pressure is also changing motor designs

Recent permit slowdowns have temporarily shut some European supplier lines, while some automakers have warned that unreliable magnet deliveries could force factory idling. The pressure has encouraged manufacturers to diversify both the materials they use and the places where they buy them.

Alternative motor designs include wound rotor synchronous motors, induction motors and switched reluctance machines, which can avoid permanent magnets. Other approaches use ferrite magnets, which are abundant but weaker, alongside different motor geometries to recover performance. Several European brands have introduced motors without magnets in selected models.

Tesla has said its next generation permanent magnet unit will use no rare earths. That announcement has encouraged a wider search for alternative materials and motor layouts. Market research nevertheless indicates that permanent magnet motors held more than three quarters of the electric car market between 2015 and 2022, alongside efforts to reduce rare earth content and a gradual rise in alternatives.

India's motor manufacturers and startups are licensing traction designs based on ferrite magnets and reluctance principles. Ferrite versions retain magnets without requiring rare earths, while reluctance designs use a different approach to producing rotation. Domestic recyclers are also working to recover rare earths from electronic waste, with the aim of building a regional supply chain for growing vehicle programs.

Recycling adds another route to supply

North America is pursuing recycling and new processing hubs alongside changes in motor technology. Ontario based Cyclic Materials has reached an offtake agreement with chemical group Solvay for recycled rare earths. An offtake agreement gives a producer a buyer for its output.

Canada is also investing in processing capacity intended to supply customers in the Americas and Europe. These efforts address the availability and location of material processing, while the Japanese magnet developments focus on reducing demand for particular elements.

Industry leaders say trade tensions have strengthened plans to build independent supplies. Pat Ryan, chief executive of UCore, has expressed that view in a recent statement about the policy shift.

Japan's manufacturers are therefore working within a wider response that includes recycling, processing investment and alternative motors. For carmakers, the concrete task is to secure enough suitable components to keep assembly running while qualifying materials that can meet the heat, durability and production demands of future vehicles.

Key Points

• Proterial says two new neodymium magnet grades avoid dysprosium and terbium while targeting the strength and heat resistance required by vehicle motors.
• Samples of the first grade are available from a mass production line. A variant with greater heat resistance is scheduled for sampling by April 2026.
• Daido plans a 5 billion yen investment in Nakatsugawa, targeting about 45 tons a month by spring 2026 and around 150 tons in fiscal year 2030.
• Honda adopted Daido's magnets without heavy rare earths in hybrid models in 2016.
• China produces about 90 percent of magnets used in cars and electronics, making supply diversification a priority for manufacturers.
• Customer testing must assess magnetic performance, durability, cost and consistent production before new grades enter vehicle programs.
• Alternative motors, rare earth recycling and new processing capacity are being pursued alongside the Japanese magnet developments.