Toyota, Tesla give China’s rare earths the electric car snub

Looks like one company has had enough of the rare earth shortages.

Toyota is in the advanced stages of creating a hybrid car “induction motor” that doesn’t use rare earths, Bloomberg reported today. Rare-earth minerals are used in a number of clean technologies and consumer electronics. They can be found in magnets that power electric cars and hybrids like Toyota Prius, Nissan Leaf, Chevrolet Volt, as well as cell phones, wind turbines and hard drives.

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Toyota’s move feels reminiscent of electric car makers saying “booyah” to oil. It also shows that at least one major automaker is bearish on the prospect of the rare earth shortages lessening any time soon. The article also notes that Toyota’s electric RAV4 (pictured), which it paid Tesla $60 million to help develop, will use a special Tesla induction motor that is rare earths-free. The motor is similar to the (also rare earths-free) technology in Tesla’s all-electric Roadster sports car and 2012 Model S sedan.

It’s an interesting tactic. And, if it works, it could put Toyota — and Tesla — ahead of the curve if rare earth prices soar out of control. It also shows that at least one major automaker is actively preparing a contingency plan to keep supply of its green cars stable should things rare earths shortages get worse.

In case you’ve been living under a rock, there’s been a lot of hubbub about rare earths lately. Namely that they’ve become — well … really rare.

Rare earths are important materials that are mostly controlled by China, where over 90 percent of the world’s rare earths are mined. So the global business community didn’t react well to China’s announcement that it wants to reduce exports by about 75 percent.

The rare earths shortage, which has been brewing for several months now, has set off a lot of talk and speculation and sent U.S. rare earth mining company Molycorp’s stock soaring. It has affected a number of industries, such as the petroleum sector, where the shortage has resulted in increasing costs for oil refineries.

This isn’t the only cleantech trade brouhaha brewing between the U.S. and China. The U.S. also has plans to bring forth a case to the World Trade Organization — prompted by a complaint from the United Steelworkers Union — that China’s subsidies of its solar panel manufacturers violate free trade agreements. (Those subsidies have allowed Chinese companies to undercut the competition in pricing.)

Perhaps Toyota’s move is all for the best. China hasn’t been shy about wielding its considerable power over rare earths supply. While it’s a small move in the grand scheme of all rare-earths-supplied products, Toyota’s move may well pave the way to reinvented products that wean consumers off a highly sought-after material mostly controlled by a burgeoning and sometimes-cantankerous global superpower. It almost reminds you of oil and electric cars.