• Industrial EVs—trucks, buses, forklifts, and mining equipment—rely on rare-earth permanent magnets for high-torque motors, with China controlling ~94% of global NdFeB magnet production and heavy rare earth supply concentrated in geopolitically volatile regions.
• Heavy rare earths (dysprosium and terbium) are critical for high-temperature motor performance, and China’s 2025 export controls triggered immediate supply disruptions, exposing Western manufacturers’ dangerous dependency on a single-source supply chain.
• A structural collision is forming between accelerating electrification demand and constrained heavy rare earth supply by 2028–2032, potentially creating allocation crises where defense and major OEMs receive priority while smaller industrial manufacturers face lockouts.

This Rare Earth Exchanges™ report explains why industrial electric vehicles—from commercial trucks and buses to forklifts, port cranes, and mining equipment—are increasingly dependent on rare-earth permanent magnets. It maps global demand across the ten largest national markets, examines the OEM-to-magnet supply chain, explains when heavy rare earth elements such as dysprosium and terbium are required, and assesses the growing risk of a supply crunch as China’s dominance collides with accelerating electrification and geopolitical tension.

The Torque You Can’t See—But Can’t Replace

Industrial electrification is not primarily about batteries. It is about motors that survive brutal operating conditions: heat, vibration, heavy payloads, and continuous duty cycles.

Permanent-magnet synchronous motors (PMSMs) dominate these environments because they deliver:

• extremely high torque density
• superior efficiency
• compact packaging under high power loads

This is why many heavy-duty platforms—from electric trucks to construction equipment—use NdFeB permanent magnets in their traction motors. A simple example illustrates the trend: the Mack MD Electric truck built by Volvo Group uses a permanent-magnet synchronous traction motor, reflecting a broader industry shift toward magnet-based propulsion once performance and reliability matter.

Where the Magnet Demand Is Concentrated

Industrial EV adoption is accelerating globally.

According to the International Energy Agency, global sales in 2024 exceeded:

• 70,000 electric buses
• 90,000 medium- and heavy-duty electric trucks

China accounted for over 80% of electric truck sales, making it the dominant demand center.

Rare Earth Exchanges identifies the ten largest industrial EV markets driving magnet demand:

• China
• United States
• India
• South Korea
• Germany
• United Kingdom
• Italy
• Canada
• Brazil
• Mexico

Yet an even larger magnet consumer operates quietly in the background: industrial vehicles.

Warehouse forklifts, logistics equipment, and port vehicles represent massive electrification volumes. Global shipments of industrial trucks reached about 2.2 million units in 2024, according to World Industrial Truck Statistics.

These machines increasingly rely on permanent-magnet motors.

The Supply Chain Reality: OEMs Don’t Buy Magnets

Vehicle manufacturers rarely purchase magnets directly.

The supply chain typically looks like this:

Vehicle OEM → e-axle supplier → motor manufacturer → magnet producer → rare earth refiners → mines

The vulnerability sits at the magnet stage.

According to the International Energy Agency, China controls approximately:

• ~60–70% of rare earth mining
• ~90% of refining
• ~94% of NdFeB magnet manufacturing

China exported roughly 58,000 tonnes of rare-earth magnets in 2024 (with a slight decline in 2025), supplying industries from EV motors to robotics and defense systems.

If that supply is disrupted, the ripple effects are immediate.

Dysprosium and Terbium: Tiny Elements With Enormous Consequences

Many high-performance traction motors require heavy rare earth elements.

Why?

NdFeB magnets lose coercivity at high temperatures. Heavy rare earths—particularly dysprosium (Dy) and terbium (Tb)—are added to improve heat resistance and prevent demagnetization.

Rotor temperatures in heavy traction systems can approach 180–200 °C.

To cope with this environment, manufacturers often introduce Dy or Tb into magnet alloys.

Modern grain-boundary diffusion techniques reduce the amount needed, but they do not eliminate the requirement.

This creates a dangerous dependency.

And China overwhelmingly dominates heavy rare earth production, particularly dysprosium and terbium.

When Beijing introduced export controls on heavy rare earths in 2025, automakers and industrial manufacturers in the U.S. and Europe reported immediate supply disruptions and price spikes.

Great Powers Era 2.0—and the Queue That Follows

In a geopolitical crisis, rare earth magnets will not be distributed equally.

Industrial EV manufacturers compete with:

• wind turbine producers
• robotics manufacturers
• aerospace systems
• EV/hybrid (consumer)
• defense platforms

Defense procurement will almost certainly move to the front of the queue, followed by big automobile producers.

The U.S. Geological Survey reports the United States still imports significant rare earth material, much of it indirectly embedded in finished goods from China.

In a strategic disruption, the largest OEMs and military contractors will receive priority access.

Smaller industrial manufacturers may find themselves locked out entirely.

What Manufacturers Will Do Next

Industrial companies are already moving to reduce risk.

Five strategies are emerging.

1. Reduce heavy rare earth usage

Advanced magnet engineering and cooling systems can reduce Dy/Tb requirements.

2. Dual-source magnet supply

Manufacturers are qualifying non-Chinese suppliers despite higher costs.

3. Accelerate recycling

Magnet recycling may become the fastest mid-decade supply expansion.

4. Explore magnet-free motors

Induction and switched-reluctance motors avoid rare earths but sacrifice efficiency and power density.

5. Lock long-term supply agreements

Japan’s strategy—financing projects like Lynas in exchange for guaranteed output—has become a template.

The Clock Is Ticking

Building new supply chains takes time.

The International Energy Agency estimates new mines require roughly eight years to reach production.

Meanwhile, Western magnet manufacturing capacity remains limited.

The United States has begun developing a handful of mine-to-magnet projects, including expansion plans from MP Materials, USA Rare Earth, ReElement/Vulcan Elements, Energy Fuels (midstream refinery), but large-scale production, according to Rare Earth Exchanges' estimates, is unlikely before the late 2020s. And even major projects face delays.

In the meantime, industrial electrification continues to accelerate.

Which means the most important component in the electric industrial economy may be the magnet few people ever see.

And the race to secure it has already begun.

REEx Strategic Take: The Collision Course Investors Should Watch (2028–2032)

Rare Earth Exchanges™ sees a structural collision forming between NdPr demand growth and constrained heavy rare earth supply toward the end of this decade. Electrification across commercial vehicles, industrial machinery, robotics, and defense systems is expected to accelerate sharply through 2030. Most of those applications rely on NdFeB permanent magnets, meaning demand for neodymium and praseodymium will continue rising alongside EV adoption and electrified industrial equipment.

But high-performance magnets for heavy-duty motors still require small but critical additions of dysprosium or terbium to maintain coercivity at elevated temperatures. That is where the supply problem emerges. Heavy rare earth production remains heavily concentrated in China and Myanmar and perhaps Laos, with limited new supply projects in the Western pipeline. Even if light rare earth mines ramp up in the United States, Australia, and Africa, heavy rare earth availability could remain the binding constraint.

The result could be a market paradox: adequate NdPr supply but insufficient Dy/Tb to manufacture high-temperature magnets at scale. In that scenario, magnet allocation will prioritize defense, major automotive OEMs, and strategic national industries—leaving all the other manufacturers scrambling for supply. One ironic outcome to all of this—much of the manufacturing base of the West will continue to depend on China for even more output.