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Is the US advanced air mobility supply chain ready for a trade war?

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Trump 2.0 a plus for advanced air mobility in the US

After falling so far behind China on EVs, President-elect Trump views advanced air mobility as a market that the US can lead in.

“Dozens of companies in the USA and China are paving the way to develop electric take-off and landing vehicles for families and individuals,” Trump said in 2023 speech. “Just as the United States led the automobile revolution in the last century, I want to ensure that America, not China, leads the revolution in air mobility.”

Coupling the above with Trump’s affinity for expediting decisions and circumnavigating regulatory hurdles and we see strong tailwinds forming behind the US advanced air mobility sector and associated motor, magnet and rare earths demand.

Sabers rattling

Simultaneously, we hear trade war sabers rattling as Trump readies to retake office and see potential for an escalating tit-for-tat with China that could expose US vulnerabilities in the advanced air mobility supply chain – namely, the utter lack of a motor making midstream.

While many emerging eVTOL aircraft makers, such as Archer Aviation and Joby Aviation, make their own motors in house, the vast majority of American commercial and consumer drone manufacturers do not, relying instead on abundantly available imported motors from China. (Here’s a single factory in China that allegedly cranks out 2 million motor stators per month).

With the US drone manufacturing sector growing around 35% annually in recent years and expected to grow at a CAGR of 19% over the next decade, the widespread reliance on China-made motors, and other components like batteries and controllers, is a growing vulnerability for the US commercial drone sector and the mission-critical defense industry that it serves.

Motors are a major blindspot

As per the US National Defense Authorization Act (NDAA), the US Department of Defense may not purchase drones made in a “covered foreign country” or by a company based in such a country, as well as drones “that use components like flight controllers, radios, data transmission devices, cameras, gimbals, ground control systems, or operating software manufactured in [a] covered foreign country or by a company based there”, explains Drone U.

This law, which is called Section 848 of the Fiscal Year 2020 National Defense Authorization Act, lists China as a “covered foreign country.” In 2022, the US expanded the list to include Russia, Iran and North Korea and more recently broadened to include several private companies as well.

As it reads, NDAA legislation is highly focused on components for data collection, transmission, controls or others that could facilitate espionage or enable malicious activity. The explicit focus on listed components like flight controllers, radios, data transmission devices and software provides a clear call to action for US-based manufacturers of alternatives – if you build it, they will come.

However, the lack of explicit directive on sourcing of key mechanical components, namely propulsion motors, reveals a blindspot in how supply chain vulnerability is being measured and addressed. The risk to drone manufacturers and users exists not only on the cyber front but also systemically in the supply chain itself due to the overwhelmingly high reliance on China for supply of motors (and the rare earth magnets these motors contain).

US mine-to-magnet supply chain is coming together

In the US, a rare earth mine-to-magnet supply chain is actively coming together via MP Materials, VAC Group, Noveon Magnetics and others, but the lack of a robust motor making midstream presents a crippling bottleneck that must be imminently addressed.

By virtue of its raison d’être, Corvex Systems most likely agrees. The company is one of few manufactures of drone motors in America, which it does “in partnership with domestic material suppliers” and is working to domesticate the American unmanned aerial vehicle (UAV) supply chain.

According to Corvex, “motors are currently the single most vulnerable component of the UAV tech tree, with over 85% of the global supply manufactured overseas” (i.e., China).

“China has made it abundantly clear that they will arbitrarily deny the United States access to their UAV industry, and in fact have already done so multiple times. Impending trade relation restructuring by the Trump administration and planned escalations by the CCP against Taiwan guarantee that these restrictions will only continue to strangle America’s military and commercial objectives”, the company adds.

Reliance on imported motors also a risk to the nascent drone delivery market

Beyond risks to the defense sector, the lack of domestic motor production in the US also presents a considerable risk to the burgeoning commercial drone industry and in particular the drone delivery market.

Last year Amazon announced that the US Federal Aviation Administration (FAA) granted it permission to operate its drones beyond visual line of sight, enabling it “to serve more customers via drone and effectively expand and scale [its] drone delivery operations.”

By the end of this decade, Amazon aims to deliver a whopping 500 million packages per year by drone, a strategy that simply won’t fly without access to motors.

More on this topic at Rare Earth Mines, Magnets & Motors 2025

Join us in Toronto in September 2024 for Rare Earth Mines, Magnets & Motors 2025 where we’ll explore this topic further with leading industry experts.

The two-day event will bring together business and technical leaders from across the global mine-to-OEM supply chain for high caliber discussions and networking at a 5-star venue.

Key themes of this year’s conference will include robotics, automation, advanced air mobility, and the emerging mine-to-magnet supply chain coming together upstream.

Special guest: Steve Wozniak, co-founder of Apple

More information: www.adamasevents.com

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