Permanent Magnet Motor Market Trends

Growth Drivers

• Shift towards electric vehicles (EVs): The increase in global EV adoption is accelerating demand for permanent magnet synchronous motors (PMSM). As per the International Energy Agency (IEA), global sales of electric cars increased by more than 25% to reach 17 million in 2024. The total number of electric vehicles delivered in 2020 was surpassed only by the 3.5 million more vehicles sold in 2024 than in 2023. The high efficiency and high torque density of PMSMs are essential in EV powertrains. Currently, Asia-Pacific, aided by China, is the largest producer of EVs, contributing to the PMM market demand for the region through 2030. China exports 16,000 tons of rare earth permanent magnets to Europe annually, which accounts for almost 98% of the EU market.
• Energy efficiency legislation and sustainability goals: Global regulations for energy efficiency, such as the EU's Ecodesign Directive and the U.S. Department of Energy efficiency standards, create a mandate for PMM adoption. The NIST framework for cybersecurity in manufacturing promotes secure, energy-efficient systems, leading to the adoption of PMMs in smart factories. The European regions' carbon neutrality targets by 2050 are fostering greater PMM adoption. Likewise, the Asia-Pacific region is benefiting from China's recently implemented energy efficiency policies.
• Industrial automation and Industry 4.0: The growth of industrial automation is generating demand for small form-factor, very high-performance PMMs for new applications in robotics and smart manufacturing. According to the World Robotics report, 4,281,585 units were working in factories across the globe in September 2023, a 10% rise. More than half a million units were installed annually for the third year in a row. Among all newly deployed robots in 2023, Asia accounted for 70% of installations, followed by Europe at 17% and the Americas at 10%. There is a strong interest for PMMs in precision applications that incorporate AI and IoT.

Emerging Trade Dynamics in the Market

In 2023, global rare-earth metal compounds trade reached $3.52 billion, up 3.49% from 2022’s $3.4 billion. Over five years, it grew annually at 22.5%, ranking 631st in global trade value (0.016%) and 341st in product complexity with a PCI score of 0.58.

Export and Import of Rare-Earth Metal Compounds in 2023

Source: OEC

Challenges

• Rare earth material supply constraints: Permanent magnet motors are heavily reliant on rare earth elements like neodymium and dysprosium for high-performance magnets. These rare earth elements are concentrated in geographic areas, most notably in China, which adds supply chain risk and variability in pricing of the materials.  The effect of geopolitical relations, a lack of trade agreements, and strict export quotas may enhance limited supply, threaten tariffs, or increase prices overnight. To offset a declining rare earth supply chain (price or availability), manufacturers need to find other supply sources, start investing in magnet recycling practices, or simply develop a motor technology that uses permanent magnets with less rare earth content.
• High initial manufacturing costs: Manufacturing permanent magnet motors is expensive because of the materials, precision engineering, and specialized manufacturing processing, costing a manufacturer more at the beginning than for an induction or wound-field motor.    While PM motors are inherently more efficient and result in lower total lifetime operating costs, the upfront cost of the PM motor can be prohibitive for price-sensitive environments such as small-scale industrial automation or residential HVAC.   Finding PM motor efficiency increases while also making them price competitive is an ongoing challenge, and many manufacturers are experimenting with economies of scale and optimization of design to help find a balance.