Rare earth market seen reaching $31.55 billion by 2035 as EVs and wind power drive demand

The global rare earth elements market is projected to nearly triple by 2035, driven by electric vehicles, offshore wind, and defense demand for permanent magnets. Asia-Pacific remains the center of gravity, while the U.S. and Europe push harder to localize supply chains.

Why it matters: - Rare earth elements are a core input for electric vehicle motors, offshore wind turbines, and defense systems. - The market’s projected growth to about $31.55 billion by 2035 underscores rising pressure on a supply chain still dominated by China. - Western reshoring and stockpiling efforts are reshaping investment, refining, and magnet manufacturing capacity.

What happened: - The global rare earth elements market was valued at about $11.78 billion in 2025. - The market is forecast to rise from $13.29 billion in 2026 to roughly $31.55 billion by 2035. - That implies a compound annual growth rate of 10.08%. - Electric vehicle traction motors, direct-drive offshore wind turbines, and next-generation defense platforms are the main demand drivers. - Request Sample Copy

The details: - Automotive and electronics were the two largest application segments in 2025, at about $3.15 billion and $3.14 billion, respectively. - Automotive demand is projected to grow at 10.78% annually, faster than electronics at 9.91%. - Renewable energy is the fastest-growing application segment, with a 14.07% annual growth rate. - Offshore wind turbines require about 600 kilograms of NdFeB permanent magnets each. - Defense applications were valued at about $1.09 billion in 2025 and are growing at 5.42% annually. - Other applications, including petroleum refining catalysts, glass manufacturing, metallurgy, and water treatment, totaled about $2.08 billion. - Bastnasite was the dominant ore type in 2025, generating about $7.21 billion and representing roughly 61% of the market. - Xenotime is the fastest-growing ore segment, with a projected growth rate of 12.77% annually. - Monazite generated about $2.45 billion in 2025 and is growing at 9.85% annually. - Asia-Pacific generated about $9.45 billion in 2025 and accounted for more than 80% of global revenue. - North America generated about $1.53 billion in 2025, Europe about $534 million, the Middle East and Africa about $118 million, and South America about $140 million. - Report Summary

Between the lines: - The market is becoming more strategic as governments tie rare earth access to industrial policy, energy transition goals, and defense readiness. - China still controls mining, separation, oxide production, metal refining, alloy production, and magnet manufacturing across much of the value chain. - China accounts for roughly 75% of Asia-Pacific revenue and remains the benchmark producer across the industry. - The U.S. has allocated more than $500 million through the Department of Energy’s Critical Materials Initiative to accelerate domestic supply chain development. - Europe’s Critical Raw Materials Act requires by 2030 that at least 10% of EU rare earth consumption come from domestic extraction, 40% from domestic processing, and 25% from recycling. - Heavy rare earth supply is getting more attention as dysprosium and terbium demand rises for high-temperature magnet applications. - Analysis: The fastest growth is not in the biggest current markets, but in the inputs needed for electrification and defense resilience.

What's next: - Renewable energy could overtake or match automotive as the largest application segment by 2035. - Lynas Rare Earths’ new heavy rare earth processing facility in Malaysia, commissioned in October 2025, adds 5,000 tons per year of capacity outside China. - MP Materials is building a magnetics manufacturing facility in Fort Worth, Texas, as part of a fuller U.S. supply chain. - Less Common Metals and Carester partnered in May 2025 to build rare earth processing infrastructure in France. - LKAB’s Swedish rare earth deposit is not expected to reach commercial production before 2030 to 2032. - More information

The bottom line: - Rare earth demand is rising quickly, but supply-chain control remains concentrated, making mining, processing, and magnet capacity a geopolitical as well as commercial race.