Why would Tesla and SpaceX need to invest in rare earth minerals?

Tesla and SpaceX consume over 5,000 tonnes of rare earth magnets annually for EV motors and aerospace actuators. With China controlling 90% of processing and 92% of magnet manufacturing, both companies face critical supply chain vulnerability that competitors like Apple, BMW, and defense contractors have already begun addressing through upstream investments.

What are the most critical minerals for Tesla and SpaceX operations?

The most critical are rare earth elements (neodymium, praseodymium, dysprosium) for permanent magnets, plus lithium for batteries, cobalt for battery stability, nickel for energy density, copper for wiring and motors, and gallium for power electronics. Dysprosium is especially critical as it enables magnets to function at high temperatures required for EV motors and aerospace applications.

How does the Physical AI Stack framework apply to Tesla and SpaceX?

The Physical AI Stack (Materials → Energy → Hardware → Infrastructure → Software) shows that while Tesla and SpaceX excel at the upper layers (software, infrastructure, hardware), they remain vulnerable at the foundational materials layer. The stack is only as strong as its weakest layer, making materials security a strategic imperative.

What realistic options do Tesla and SpaceX have for securing mineral supply?

Realistic entry models include: long-term offtake agreements with equity warrants, processing joint ventures in allied jurisdictions (US, Canada, Australia), magnet supply investments in companies like Vacuumschmelze or Shin-Etsu, closed-loop recycling from end-of-life vehicles, and strategic stockpiles of critical materials.

Which companies have already made upstream mineral investments?

Apple has built recycled rare earth supply chains and cobalt offtakes. BMW invested $500M+ in lithium JVs. GM took a $650M equity stake in Lithium Americas. Ford secured lithium offtakes with Albemarle. Volkswagen invested $2B+ in Northvolt and Quebec lithium processing. Defense primes Lockheed Martin and Northrop Grumman maintain classified rare earth supply agreements.

Why Tesla and SpaceX Could Treat Rare Earths and Critical Minerals as Strategic Infrastructure

Elon Musk's companies face unprecedented materials exposure. As competitors and defense primes secure upstream supply, vertical integration into critical minerals may become a strategic imperative—not a distraction.

Published: January 13, 2026 By Aisha Mohammed Category: Mining

Why Tesla and SpaceX Could Treat Rare Earths and Critical Minerals as Strategic Infrastructure

Intelligence Brief: The Materials Imperative

Dimension	Assessment
Strategic Impact	Tesla and SpaceX face concentrated materials risk that rivals Apple and defense primes have already begun addressing through supply chain investments
Key Materials	Neodymium, praseodymium, dysprosium, lithium, cobalt, nickel, copper, gallium
Concentration Risk	China controls 60% rare earth mining, 90% processing, and 92% permanent magnet production
Precedent Players	Apple, BMW, GM, Lockheed Martin, Northrop Grumman have all made upstream investments
Timeline	18-36 months for meaningful offtake agreements; 5-10 years for processing capacity

For physical AI, the upstream constraint is not compute—it is the materials layer of the Physical AI Stack. This thesis is explored in depth in our analysis of AI's Next Bottleneck Is Physical, Not Computational.

Tesla and SpaceX sit at the apex of this constraint. Their products demand rare earth permanent magnets, advanced battery chemistries, and specialty alloys at scales that dwarf most industrial competitors. Yet neither company has publicly secured the upstream supply relationships that their risk profile demands.

This analysis examines why that may change.

Section 1: What Minerals Actually Matter

The materials conversation often conflates rare earths with critical minerals. Precision matters.

Rare Earth Permanent Magnets

Tesla motors and SpaceX actuators rely on neodymium-iron-boron (NdFeB) magnets—the strongest permanent magnets commercially available. These magnets require:

Element	Function	Supply Risk
Neodymium (Nd)	Primary magnetic strength	High (China 85%)
Praseodymium (Pr)	Magnetic enhancement	High (China 85%)
Dysprosium (Dy)	High-temperature stability	Critical (China 99%)
Terbium (Tb)	Temperature coefficient	Critical (China 99%)

Without dysprosium, NdFeB magnets degrade above 150°C—rendering them unsuitable for EV motors and aerospace applications.

Critical Minerals Beyond Rare Earths

...

Read the full article at BUSINESS 2.0 NEWS

Mineral	Application	Primary Producer	Concentration
Lithium	Battery cathodes	Australia/Chile	75% combined
Cobalt	Battery stability	DRC	70%
Nickel	Energy density	Indonesia	50%
Copper