The Price Pain Threshold
When Neodymium prices spike (as they did in 2011), engineers get to work. Tesla has experimented with “Permanent Magnet Assisted Reluctance Motors” that use less rare earth material.
The Trade-off
It is physically possible to build an EV without rare earths (using Ferrite magnets or Induction motors), but there is a penalty: the car becomes heavier and loses range. For now, the efficiency gains of rare earths outweigh the cost, but if prices go too high, substitution becomes a real threat.