On April 4, 2025, the Chinese Communist Party did something that should terrify every American.
They pulled the trigger on what amounts to economic warfare against the United States—restricting exports of seven critical rare earth elements and the permanent magnets made from them.
The result? Chaos.
Ford Motor Company was forced to shut down its entire Explorer SUV production line at its Chicago assembly plant in May 2025. The reason? They ran out of rare earth magnets.
German and Austrian automotive component plants went dark in June 2025 as magnet inventories ran dry. The European Association of Automotive Suppliers reported a mere 25% success rate in securing Chinese export licenses.
Even Tesla CEO Elon Musk admitted on the company’s Q1 2025 earnings call that China’s restrictions are “delaying” his Optimus humanoid robot program—a project critical to Tesla’s future.
Here’s what the mainstream media isn’t telling you:
China controls 90% of the world’s rare earth processing. They produce 99% of the world’s supply of rare earth minerals and 90% of the rare earth magnets that power everything from electric vehicles to F-35 fighter jets.
Every Tesla. Every iPhone. Every Tomahawk missile. Every MRI machine. All of them depend on materials controlled by a hostile foreign power.
As one auto executive told Yahoo Finance off the record: China’s export ban is a “gigantic issue for all automakers.”
But here’s where it gets interesting.
While the rest of the auto industry is scrambling—begging China for export licenses, stockpiling whatever magnets they can find, praying for diplomatic intervention—one man has been quietly working on a solution.
And I believe he’s about to change everything.
Tesla’s Secret Weapon
At Tesla’s 2023 Investor Day in Austin, Texas, something extraordinary happened.
Colin Campbell, Tesla’s VP of Powertrain Engineering, stepped on stage and made an announcement that sent shockwaves through the rare earth mining industry.
“We have designed our next drive unit, which uses a permanent-magnet motor, to not use any rare earth materials at all.”
Read that again.
Zero rare earths. In a permanent magnet motor. The kind of motor that powers every Tesla on the road.
The reaction from China was immediate. Shares of JL Mag Rare-Earth Co. and Jiangsu Huahong Technology—both Chinese rare earth companies—plunged more than 7% in mainland China trading.
Campbell explained why this matters: “As the world transitions to clean energy, demand for rare earths is really increasing dramatically. And not only is it going to be a little hard to meet that demand, but mining that rare earth… has environmental and health risks.”
But Campbell didn’t reveal how Tesla planned to accomplish this seemingly impossible feat.
That’s when the speculation went into overdrive.
Reddit threads exploded with theories. Engineering forums lit up with debate. Was Tesla using iron nitride? Some exotic lab-created compound? A secret material nobody had heard of?
I spent months digging into this mystery. And what I found shocked me.
Because the answer isn’t some exotic, never-before-seen material.
It’s something that’s been hiding in plain sight for over 60 years.
The Mystery Metal Revealed
When IEEE Spectrum—one of the world’s most respected engineering publications—contacted experts to find out what Tesla might use to replace rare earth magnets, the answer was unanimous.
Ferrite.
You’ve probably never heard of it. Most people haven’t. But ferrite magnets—made from iron oxide with barium or strontium additives—account for nearly 30% of the permanent magnet market by sales.
And here’s what makes ferrite so interesting:
It’s cheap. Ferrite magnets cost a fraction of what rare earth magnets cost.
It’s abundant. The materials are available in large quantities right here in the United States.
It’s China-proof. Not a single ounce of ferrite production is controlled by Beijing.
Now, ferrite has been around since the 1950s. So why hasn’t anyone used it in EVs before?
Simple: It’s weaker than rare earth magnets.
The best ferrite magnets have a maximum energy product of around 4 MGOe (megagauss-oersteds). Rare earth neodymium magnets hit 35 MGOe. That’s nearly nine times more magnetic power.
As Daniel Salazar Jaramillo, a magnetics researcher at the Basque Center for Materials, told IEEE Spectrum: “Even if you get the best-performance ferrite magnet, you will have performance about five to 10 times below neodymium-iron-boron.”
So how does Tesla plan to make it work?
That’s where Musk’s engineering genius comes in.
The Engineering Breakthrough
In December 2024, Tesla just confirmed they’re working on ferrite motors.
The key insight is this: You don’t need a stronger magnet if you design a smarter motor.
Researchers at MotorXP conducted a fascinating study to see if they could design a ferrite-based motor that matches Tesla’s current Model 3 motor performance. Their conclusion?
“This study demonstrates the feasibility of designing a permanent-magnet motor using ferrite magnets that rivals the efficiency and power density of the Tesla Model 3 motor.”
The trick is using axial flux motor topology and multiple motors on the same shaft. Independent studies show ferrite-based motor designs can achieve efficiencies as high as 98%—nearly identical to Tesla’s rare earth motors.
This isn’t theory. General Motors already proved it works.
GM’s second-generation Voltec powertrain—used in the 2016 Chevy Volt—used a ferrite-driven permanent magnet motor alongside a traditional neodymium motor. It worked.
And Proterial (formerly Hitachi Metals) has unveiled EV motor designs using ferrite magnets that match the output and maximum rotation speed of comparable rare earth motors.
The technology exists. The engineering is proven. And Tesla—with its relentless focus on manufacturing efficiency and vertical integration—is perfectly positioned to make it happen at scale.
The Supplier Behind the Revolution
Now here’s where it gets really interesting for investors.
If Tesla is going to mass-produce ferrite motors for millions of vehicles, they’re going to need a world-class supplier. And there’s one company that stands head and shoulders above the rest.
TDK Corporation.
TDK isn’t some fly-by-night startup. They’ve been developing ferrite magnet materials since 1959—that’s over 65 years of expertise.
They developed the world’s first La-Co high-performance ferrite magnet. They manufacture the FB12H—considered the strongest available ferrite magnet grade by researchers studying Tesla’s motor options.
And in March 2025—just weeks before China’s export restrictions went into full effect—TDK announced the expansion of its ferrite magnet production line at its Japan facility.
The timing is not a coincidence.
According to industry reports, TDK’s expansion features advanced sintering equipment and automated quality inspection systems designed to enhance magnetic consistency and reduce production cycle times—exactly what you’d need to supply automotive-grade components at massive scale.
TDK serves industries including consumer electronics, automotive, and industrial machinery. They’re already one of the world’s leading suppliers of electronic components to automakers.
The Numbers Don’t Lie
The global ferrite magnet market is projected to reach $10.52 billion by 2033, growing at a CAGR of 6.5%, according to Grand View Research.
The North America ferrite magnet market alone was valued at $1.82 billion in 2024.
And that’s before Tesla potentially converts its entire vehicle lineup to ferrite-based motors.
Consider what happens if Tesla succeeds:
Every other automaker will be forced to follow. They’ll have no choice. GM, Ford, Volkswagen, Toyota—all of them are hemorrhaging money right now trying to secure rare earth supplies. If Tesla offers a China-proof alternative that works, the entire industry will pivot.
MP Materials—America’s only significant rare earth producer—received a $400 million equity investment from the Department of Defense in July 2025. But even they won’t produce more than 1,000 tons of neodymium magnets by year-end 2025. That’s less than 1% of China’s 138,000-ton annual output.
Rare earth independence isn’t coming from mining. It’s coming from engineering.
And ferrite is the key.
What This Means For You
I’ve been following markets for a long time. And I’ve learned that the biggest opportunities come when the crowd is looking in the wrong direction.
Right now, everyone is focused on the rare earth crisis. The panic. The shortages. The geopolitical chaos.
But the smart money is looking ahead—to the solution.
Tesla has already shown its hand. They announced their rare-earth-free motor plans. They confirmed they’re working on ferrite. They’ve reduced rare earth usage in their current motors by 25% since 2017 as a stepping stone.
The transition is happening. The only question is whether you’ll be positioned to benefit from it.
I’m not here to tell you what to buy or sell. That’s not my job. My job is to show you what’s really happening in the markets—the stories that the mainstream financial press either misses or ignores.
This is one of those stories.
The rare earth chokehold is real. China’s willingness to weaponize its control is proven. And the companies working on solutions—like Tesla and its potential suppliers—are worth watching very closely.
Do your own research. Make your own decisions. But don’t ignore what’s happening right in front of you.
Because when the history of this decade is written, I believe the shift away from rare earth magnets will be remembered as one of the most important industrial transformations of our time.
Stay vigilant,
Tom Anderson
Wall Street Watchdogs is committed to uncovering the truth about financial markets and helping individual investors prepare for systemic risks that mainstream media won’t discuss. We receive no compensation from the companies or assets we analyze. This article is for educational purposes only and should not be construed as investment advice.
