Modal Motors is trying to cut China out of electric motors entirely

The Rare Earth Trap

Building hardware has always been the harder path in tech. While software founders worry about cloud credits and latency, hardware founders have to deal with physical borders, geopolitical posturing, and the brutal reality of the global supply chain. If you are building anything that moves—drones, robots, or even industrial cooling systems—you are likely dependent on China for the heart of your machine: the electric motor.

Specifically, we are talking about rare-earth magnets. About 90% of the world's permanent magnet production flows through China. For a long time, this was just the cost of doing business. They had the materials, the refining capacity, and the scale. But as trade tensions rise and export controls become common weapons, being reliant on a single geographic source for your core component isn't just a logistical headache—it is a massive systemic risk for any startup.

Modal Motors is stepping into this gap with a pitch that sounds simple but is technically exhausting: they want to build high-performance electric motors that use zero rare-earth materials. They aren't just trying to build a better motor; they are trying to rebuild the supply chain from the ground up.

The Magnet Problem

To understand why this matters for builders, you have to look at what is inside a standard drone motor. Most use neodymium magnets. These materials are incredibly efficient at creating high torque-to-weight ratios, which is why your DJI drone can hover so steadily. However, mining and processing these materials is an ecological nightmare and a geopolitical bottleneck.

Modal Motors is pivoting toward a different architecture. By utilizing alternative materials and smarter design, they are targeting the mid-sized hardware market—think autonomous delivery drones, warehouse robotics, and specialized fans. The goal is to provide a motor that matches the weight and power output of traditional Chinese-made motors without the baggage of the rare-earth supply chain.

For a founder, this is about more than just ethics or environmental impact. It is about predictability. If you are building a fleet of 10,000 robots, a sudden export ban on magnets could end your company overnight. Modal is betting that U.S.-based companies will pay for the peace of mind that comes with a domestic, stable source of propulsion.

Building for the Real World

One of the biggest hurdles for any hardware startup trying to "de-risk" a supply chain is the performance tax. Historically, non-permanent magnet motors were heavy, bulky, and inefficient. They worked fine for a washing machine, but they were useless for a drone that needs to stay in the air for 30 minutes.

Modal is focusing on high-frequency, high-efficiency designs that bridge this gap. They aren't trying to replace the motor in a Tesla yet. They are starting small, where the margins for error are thin but the demand for innovation is high. By focusing on drones and robotics, they are entering a market where weight is everything. If they can prove that a magnet-free motor can keep a drone airborne for the same duration as a traditional one, the business case makes itself.

This is a classic example of what I call "Foundational Engineering." It isn't flashy like a new AI model, and it doesn't give you the instant feedback of a software beta. It is slow, expensive, and requires moving atoms instead of bits. But if they succeed, they become the infrastructure for everyone else.

The Logistics of Independence

We have spent the last decade hearing about "decoupling" from China. In reality, very few companies have actually done it because the cost is too high. Most "Made in USA" hardware is really just "Assembled in USA" with a box full of components from Shenzhen.

Modal Motors is taking the harder path of true vertical independence. This involves re-thinking the manufacturing process itself. To make this work at scale, they can't just be better at engineering; they have to be better at manufacturing. They are competing against decades of Chinese industrial optimization. That is a tall order for any startup.

From a builder's perspective, the success of Modal Motors would be a massive win for the ecosystem. It would lower the barrier to entry for domestic robotics companies who are currently forced to navigate complex import regulations and long lead times. It provides a level of sovereign resilience that the US hardware sector has been missing for a long time.

Skepticism and Scale

As much as I want to see a domestic motor revolution, we have to be honest about the challenges. China isn't just ahead because of materials; they are ahead because of the ecosystem. In Shenzhen, you can get a prototype part in 24 hours. In the U.S., you might wait two weeks. Modal isn't just fighting a material shortage; they are fighting a speed deficit.

There is also the question of cost. Rare-earth magnets are expensive, but mass-produced Chinese motors are still incredibly cheap. For many startups, the "geopolitical risk" is a theoretical problem, while the "unit cost" is a right-now problem. Modal has to prove that their motors aren't just reliable, but commercially viable for a startup that is watching every penny.

The real test for Modal won't be in the lab; it will be on the balance sheets of the companies buying their hardware.

The Takeaway for Builders

If you are in the robotics or drone space, you need to be watching this closely. The era of cheap, frictionless global trade is cooling off. Whether it is through Modal Motors or someone else, the move toward localized, material-independent hardware is inevitable.

Don't just look at this as a new part to buy. Look at it as a shift in how we think about product longevity. If your entire business model relies on a component that could be restricted by a foreign government at any moment, you don't have a business—you have a lease on someone else's permission.

• Check your dependencies: Map out where your core components come from. If it all leads back to one city in China, you have a single point of failure.
• Performance vs. Resilience: Sometimes, a slight dip in efficiency is worth a massive gain in supply chain stability.
• Watch the small players: The next generation of hardware won't come from the giants; it will come from the startups willing to tackle the boring, difficult problems like motor windings and magnet substitutes.

Modal Motors is doing the heavy lifting that most founders avoid. It is a gamble on the future of American manufacturing and a bet that the world is ready to stop relying on rare earths. It won't be easy, but it is exactly the kind of building we need right now.

Read the original at TechCrunch Startups →