PARIS (Reuters) -France's Renault has ended a project with Valeo to develop a new rare-earth-free electric vehicle motor and is looking instead for a cheaper Chinese supplier, two sources familiar with the matter told Reuters.

Automakers including Renault, General Motors and and suppliers such as ZF, BorgWarner ( BWA ) and Valeo have been developing EV motors which do not require rare earths.

Renault said in late 2023 it was working with Valeo on a new, more powerful and more compact EV motor without rare earths, which it described as "an innovation made in France".

China controls 70% of global rare earths mining and 85% of refining and Beijing's decision to impose growing exports curbs on rare earths has sent the industry scrambling for supplies.

Renault has used rare-earth-free motors since 2012, while Valeo brought expertise on the stator, the fixed part where the rotor is housed, using new copper wire technology.

"The E7A engine project is no longer being done with Valeo," one of the two sources said, adding: "It will be done entirely in-house across the entire value chain, except for the stator which could be bought from a Chinese supplier."

Renault's decision to end Valeo's involvement in the rare-earth free motor project and the French carmaker's search for a lower-cost Chinese supplier have not previously been reported.

The move was driven by the need to cut costs, both sources said, with Chinese suppliers offering very competitive prices.

    "A Chinese partner is a possibility," a spokeswoman for Ampere, Renault's EV subsidiary, said, adding that a decision has not been made and "the process is still ongoing".

Valeo declined to comment.

'MADE IN FRANCE' OBJECTIVE REMAINS

Even if a Chinese company does contribute to the stator, the motor would still be made in Renault's plant in Cleon, France, with silicon carbide modules provided by Franco-Italian firm STMicro for the inverter, another central EV component.

"We are studying the possibility of locating (the stator) in France," the Ampere spokeswoman said.

Renault is the smaller of the mainstream legacy carmakers and has built numerous partnerships over the last few years to help it manage the costs associated with developing EVs.

It has also turned to suppliers in China, which has been at the forefront of EV technology. A Chinese engineering team helped it develop its new electric Twingo in just two years.

The new rare-earth-free motors will drive Renault's next generation of compact EVs by 2028. These will be at the heart of a strategic plan CEO Francois Provost is due to share in March.

The E7A motor will have 200 kW of power, 25% more than the current generation such as the Scenic, and a much shorter charging time thanks to its 800-volt system, which is twice the voltage of current Renault EV models.

Valeo is still working with German supplier Mahle to develop its own magnet-free "iBEE" EV motor, which will deliver power of up to 350 kW and is also due to go on the market in 2028.