The CO2-emissions are rapidly rising with new records and the transport sector is considerably contributing to GHG emissions. The critical transition towards electrification and sustainable development demands a radical change in the transport industry. One of many solutions is to analyze the environmental benefits of optimized vehicle production and recycling of the vehicle components after its usable life to reduce dependency on limited raw materials. Electric motor is one of the most crucial powertrain components, yet studies on the overall ecological profile of production and end of its useable life is limited. This study examines the life cycle assessment (LCA) impacts of electric motors used in passenger cars and potential recycling of its materials. The analysis covers production and recycling of components, crucial elements, and permanent magnets. The results show that housing and rotor production have the highest impacts mainly due to steel, aluminum and permanent magnets. The findings discuss e-motor recycling innovations, state-of-the-art methods and emission reduction potentials of recycling. This paper also covers the understanding that a significant transformation to optimize the resource consumption in manufacturing of crucial vehicle powertrain component and reduce waste after end-of-life could bring combined ecological advantages.