High-temperature magnet performance and EV electrification accelerate heavy rare earth demand through 2036

Industry Overview

The global heavy rare earths for EV motors market was valued at approximately USD 1.9 billion in 2025 and is estimated to reach USD 2.1 billion in 2026, reflecting a growth rate of 10.5%. Growth is being driven by increasing electric vehicle production, rising adoption of high-performance permanent magnet motors, and demand for improved motor efficiency and thermal stability. Dysprosium and terbium are particularly important in high-temperature NdFeB magnets because they improve coercivity and help magnets maintain performance under demanding operating conditions. EV expansion is expected to remain a major source of heavy rare earth demand, while supply concentration and export restrictions are increasing the strategic importance of these materials. 

Industry Insights: Scale, Segments, and Shifts

• Market Size & Growth: The global heavy rare earths for EV motors market is projected to reach approximately USD 5.6 billion by 2036, registering a compound annual growth rate (CAGR) of 9.5% between 2026 and 2036.

• Segment Analysis: Dysprosium dominates the market with approximately 63% market share, supported by its widespread use in high-temperature NdFeB magnets for EV traction motors. Terbium represents a smaller but higher-value segment and is expected to witness strong growth because of its superior contribution to magnet coercivity and thermal performance.

• Regional Highlights: Asia Pacific accounts for nearly 72% of global heavy rare earth demand for EV motors, supported by China's large EV manufacturing ecosystem and major electric motor and permanent magnet production capacity. Europe and North America are expanding domestic EV and magnet supply chains, while Japan and South Korea remain important markets for high-performance motor and magnet technologies. Global supply remains highly concentrated, increasing the strategic importance of alternative sources and regional processing capacity. 

• Competitive Landscape: The industry is closely linked to the rare earth mining, separation, alloy, magnet, and automotive value chains, with leading participants including China Northern Rare Earth Group, China Rare Earth Group, Lynas Rare Earths, Shin-Etsu Chemical, Proterial, TDK Corporation, JL MAG Rare-Earth, and Neo Performance Materials. Companies are focusing on high-performance magnet grades, reduced heavy rare earth intensity, recycling, grain-boundary diffusion, and localized supply chains.

Factors Shaping the Next Decade

• Market Gaps / Restraints: Limited heavy rare earth resources, highly concentrated refining capacity, export restrictions, price volatility, complex separation processes, and dependence on specialized magnet manufacturing continue to restrict market expansion. Dysprosium and terbium are particularly exposed to supply risks because their production volumes are relatively small and geographically concentrated. 

• Key Trends and Innovations: Adoption of grain-boundary diffusion, reduced dysprosium and terbium formulations, high-temperature NdFeB magnets, improved motor thermal management, advanced magnet design, and rare earth recycling is transforming the industry. Automakers and magnet manufacturers are also working to reduce heavy rare earth content without compromising motor performance.

• Potential Opportunities: Expansion of electric vehicles, high-performance traction motors, hybrid vehicles, premium EV platforms, magnet recycling, heavy rare earth recovery from end-of-life motors, and development of alternative non-China supply chains is expected to create substantial opportunities through 2036. 

Recent Industry Updates

• 2026: Growing EV adoption continued increasing demand for dysprosium and terbium-containing permanent magnets, with research highlighting the expanding role of dysprosium in high-performance EV motor applications. 

• 2026: Governments and manufacturers increased efforts to establish diversified rare earth and permanent magnet supply chains as heavy rare earth supply remained geographically concentrated. 

• 2025–2026: China’s rare earth export controls increased attention on dysprosium and terbium supply security, encouraging automakers and magnet manufacturers to pursue alternative sourcing, material efficiency, recycling, and lower-heavy-rare-earth motor designs. 

Industry Outlook Scope

By Heavy Rare Earth Element

• Dysprosium

• Terbium

• Yttrium

• Other Heavy Rare Earth Elements

By Magnet Application

• EV Traction Motors

• Hybrid Electric Vehicle Motors

• Auxiliary EV Motors

• Electric Powertrain Systems

• Electric Drive Units

By Motor Type

• Permanent Magnet Synchronous Motors

• Interior Permanent Magnet Motors

• Surface-Mounted Permanent Magnet Motors

• Other Permanent Magnet Motors

By Vehicle Type

• Passenger Electric Vehicles

• Commercial Electric Vehicles

• Electric Buses

• Electric Trucks

• Electric Two-Wheelers

• Hybrid Electric Vehicles

By Magnet Technology

• Conventional NdFeB Magnets

• High-Temperature NdFeB Magnets

• Grain-Boundary Diffusion Magnets

• Reduced Heavy Rare Earth Magnets

• Heavy Rare Earth-Enhanced Magnets

• Recycled Rare Earth Magnets

By Region

• North America

o U.S.

o Canada

o Mexico

• Europe

o UK

o Italy

o Spain

o Germany

o France

o BENELUX

o Nordics

o Rest of Europe

• Asia Pacific

o China

o India

o Japan

o South Korea

o Southeast Asia

o Australia & New Zealand

• Middle East & Africa

o Saudi Arabia

o Other GCC

o South Africa

o Rest of Middle East & Africa

• South America

o Brazil

o Chile

o Argentina

o Rest of South America

Geographical Insights: Emerging Corridors of Growth

Regional Overview: North America is increasing investment in EV manufacturing, permanent magnet production, and critical mineral supply chains, creating opportunities for heavy rare earth suppliers. Europe is strengthening localized EV and magnet supply chains while focusing on reducing dependence on concentrated external sources. Asia Pacific remains the dominant market because of its large EV manufacturing base and established rare earth processing and magnet production capabilities. Japan and South Korea continue to emphasize high-performance magnet technologies, while India is developing domestic permanent magnet manufacturing capabilities to support electric mobility and advanced manufacturing.

Countries to Watch: China remains the dominant country to watch because of its integrated rare earth mining, separation, refining, alloy, magnet, and EV manufacturing ecosystem. Japan continues to lead in high-performance magnet technologies and material-efficiency improvements, while South Korea is expanding EV and battery-related manufacturing. India is emerging as an important market through domestic rare earth permanent magnet initiatives, while the United States and Germany are increasing efforts to build resilient critical-mineral and EV supply chains. 

Regulatory Environment and Policy Support

Government Regulations & Supportive Policies: The industry operates under critical-mineral, mining, environmental, chemical processing, trade, recycling, automotive, and electric vehicle regulations covering rare earth extraction, separation, refining, magnet production, and end-of-life recovery. Increasing emphasis on critical mineral security and localized EV supply chains is encouraging investment in domestic heavy rare earth processing, magnet manufacturing, recycling, and material-efficient motor technologies.

Key Government Initiatives: Government programs supporting electric vehicle adoption, critical minerals, rare earth processing, permanent magnet manufacturing, clean transportation, recycling, and domestic advanced manufacturing are encouraging investment across the heavy rare earth value chain. India's Rare Earth Permanent Magnet manufacturing initiative, for example, is designed to establish domestic integrated magnet manufacturing capacity and strengthen supply for applications including electric vehicles and industrial motors. 

Competitive Landscape and Strategic Outlook

The heavy rare earths for EV motors market exhibits high supply-chain concentration, with mining and refining capabilities concentrated among a limited number of countries and companies. Competition is increasingly focused on securing long-term dysprosium and terbium supply, reducing heavy rare earth consumption per magnet, improving grain-boundary diffusion processes, and developing recycling systems. Automakers and magnet manufacturers are also evaluating motor architectures that reduce or eliminate heavy rare earth requirements while maintaining power density and efficiency. 

Industry Competition

• China Northern Rare Earth Group

• China Rare Earth Group

• Lynas Rare Earths

• Shin-Etsu Chemical

• Proterial

• TDK Corporation

• JL MAG Rare-Earth

• Neo Performance Materials

• Ningbo Yunsheng

• Zhong Ke San Huan

• Solvay

• Iluka Resources

• Energy Fuels

• Arafura Rare Earths

• ReElement Technologies

Analyst Perspective

The heavy rare earths for EV motors market is becoming strategically important as electric vehicle manufacturers increasingly rely on high-performance permanent magnet motors. Dysprosium and terbium provide critical high-temperature performance, enabling magnets to maintain coercivity and reliability under demanding motor operating conditions. At the same time, manufacturers are under pressure to reduce heavy rare earth intensity because of supply concentration, pricing volatility, and geopolitical risks. 

Frequently Asked Questions (FAQs)

Q1. What is the current size of the global heavy rare earths for EV motors market?

Answer: The global heavy rare earths for EV motors market was valued at approximately USD 1.9 billion in 2025.

Q2. What is the projected market value of the heavy rare earths for EV motors market by 2036?

Answer: The market is projected to reach approximately USD 5.6 billion by 2036, growing at a CAGR of 9.5% during 2026–2036.

Q3. What are the key factors driving the growth of the heavy rare earths for EV motors market?

Answer: Major growth factors include increasing EV production, growing adoption of permanent magnet motors, demand for high-temperature motor performance, higher power density requirements, and expansion of electric mobility.

Q4. Which heavy rare earth element holds the largest share of the market?

Answer: Dysprosium leads the market, accounting for approximately 63% of demand because of its important role in improving the thermal stability and coercivity of NdFeB magnets used in EV motors.

Q5. What are the major trends shaping the heavy rare earths for EV motors market?

Answer: Key trends include grain-boundary diffusion, reduced dysprosium and terbium content, high-temperature NdFeB magnets, advanced motor thermal management, rare earth recycling, and alternative motor designs.