Advanced Electric Machines, the Newcastle University spinout, has raised £16m to move its rare-earth-free electric motor technology into commercial-scale production.

The round includes £5m of government-backed debt from Innovate UK, alongside equity from existing backers Barclays Climate Ventures, Northstar Ventures, PXN Ventures and the Low Carbon Innovation Fund, joined by new investors.

AEM's motors are designed to replace the rare-earth permanent magnets used in many electric vehicle drivetrains, along with the copper windings inside them, substituting compressed aluminium coils instead.

The rare-earth magnets used in conventional EV motors depend on a supply chain heavily concentrated in China, exposing manufacturers to price volatility and geopolitical risk that has become a live concern across the automotive industry.

AEM says its motors are designed as drop-in alternatives, fitting the same packaging and delivering comparable performance without that dependency, while also being easier to recycle at end of life.

The technology is moving from prototype to production. AEM's HDRM150 motor completed validation and the automotive industry's Production Part Approval Process in the final quarter of 2025, and initial units are now being delivered to a European Tier 1 commercial vehicle supplier.

In November, AEM signed a partnership with an Asian carmaker to explore the same aluminium-coil technology in its vehicles, alongside SSRD, the passenger-car platform it is developing separately.

AEM was spun out of Newcastle University in 2017 by Dr James Widmer and Dr Andy Steven, commercialising motor research developed at the university, and manufactures at Washington in Tyne and Wear. The company is building international automotive relationships from its manufacturing base in Washington, with customers now in both Europe and Asia.

That the round is led by AEM's existing investors, alongside new backers, points to continued confidence in the underlying technology. It follows AEM's £23m Series A in 2023. AEM's accounts show the company remains in transition from grant-supported development to commercial revenue, with this latest funding intended to support that next stage.

Converting those European and Asian partnerships into volume orders is the next step, and one that will determine how far AEM can turn its North East manufacturing base into a larger export business.