Rare Earth Stocks Plunge as Tesla Seeks Alternatives

Shares of Chinese rare earth suppliers plunged Thursday after Tesla Inc. said it will reduce its use of the minerals in future electric vehicles to control costs.

The leading electric-car maker is designing next-generation powertrain that will use a permanent magnet motor that doesn’t rely on rare earth materials, Colin Campbell, Tesla vice president for powertrain engineering, said at an investor meeting. The change reflects Tesla’s efforts to control material costs and reduce its involvement in the health and environmental risks of mining the minerals, Campbell said.