Tesla's plan to slash its use of rare-earth metals in future vehicle production sends semiconductor stocks tumbling

• Tesla's plan to cut its use of silicon carbide sent some semiconductor stocks falling on Thursday.

• Wolfspeed, ON Semiconductor, and STMicroelectronics use the rare earth metal to produce semiconductors.

•  Tesla said its next generation powertrain will use a magnet motor that uses 75% less silicon carbide.

Tesla's recent investor day revealed plans for the company to significantly reduce its use of rare earth metals in its next generation vehicles, and that's dragging down a lot of stocks related to the sector.

Tesla said its next-gen powertrain will use a permanent magnet motor that will reduce its use of silicon carbide by 75%, enabling it to scale its vehicle production more efficiently.

"Silicon carbide is an amazing semiconductor, but it's also expensive and it's really hard to scale. So using less of it is a big win for us," Tesla's VP for powertrain engineering Colin Campbell said.