Highlights

• Advanced Electric Machines announces partnership with Asian automotive OEM for magnet-free electric motors.
• Partnership aims to eliminate dependency on neodymium and dysprosium, reducing exposure to China's supply chain.
• AEM's reluctance-based motor technology is credible but still unproven at scale.
• Efficiency data for the technology remains undisclosed.
• AEM is facing financial struggles, including declining revenues and widening losses after a major customer collapse.
• Automakers are funding rare-earth alternatives as a strategic hedge rather than an imminent replacement.
• This strategic move creates optionality, weakening the demand concentration of rare earths at the margin.

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Advanced Electric Machines (AEM), (opens in a new tab) a UK startup positioning itself at the center of the rare-earth-free electric motor narrative, has announced another development partnership—this time with an unnamed Asian automotive OEM—following a previously disclosed seven-figure deal with a Tier-1 supplier. The headline is attractive: magnets out, rare earths out, supply-chain risk reduced. The details, however, deserve careful parsing.

This is meaningful news—but not quite the breakthrough some readers may assume.

What Holds Up Under Scrutiny

The core claim is sound. Advanced Electric Machines develops magnet-free electric motors that eliminate neodymium and dysprosium—two rare-earth elements closely linked to Chinese processing dominance. That aligns with well-established industry facts: permanent-magnet motors remain one of the most China-exposed components in EV drivetrains.

AEM’s focus on reluctance-based motor architectures is also credible. These designs are known, manufacturable, and already deployed at scale in certain industrial and automotive contexts. The company’s SSRD (Super Speed Reluctance Drive) targeting passenger vehicles by decade’s end fits realistic automotive development timelines.

The strategic motivation cited by OEMs—reducing exposure to concentrated supply chains—is legitimate and consistent with broader industry behavior.

Where the Story Starts to Stretch

Several claims lean forward of the evidence. AEM has not disclosed its full operating principle, efficiency curves, or cost parity versus permanent-magnet motors at scale. That matters. Magnet-free motors historically trade material security for lower power density or higher system complexity.

The push to replace copper windings with compressed aluminium is also speculative at this stage. Aluminium windings are feasible, but they introduce conductivity penalties, thermal challenges, and packaging trade-offs. No public data yet shows this approach outperforming copper in automotive duty cycles.

The suggestion of “queues of global manufacturers” should be read as optimism, not proof. Development contracts are not production commitments.

The Financial Subtext Investors Should Not Ignore

AEM’s financials add context. Revenues declined sharply after 2022, and 2024 losses widened materially, driven in part by the collapse of a major customer. This does not invalidate the technology—but it reinforces that commercial execution remains unproven.

These announcements signal interest, not inevitability.

Why This Matters for the Rare Earth Supply Chain

The notable point is not that rare-earth-free motors are imminent replacements for permanent-magnet systems. It is that automakers are actively funding optionality. Even partial substitution weakens rare-earth demand concentration at the margin—especially in Europe and Asia.

This is not the end of rare earth magnets. It is the beginning of strategic hedging.

Source: Information via email (German); reporting by Cora Werwitzke, 28 Jan 2026