Hybrid Auto Production May Lead to Shortage of Rare Earth Metals

Toyota’s popular Prius hybrid vehicle may provide an alternative to high emissions and volatile fuel prices but it, along with similar gas-electric hybrids and all-electric vehicles (AEVs) may soon face another dilemma.

The Prius and similar vehicles depend on electric motors and batteries which are manufactured using a little-known class of elements known as rare earth metals. Some experts predict that the worldwide demand could exceed supply by as much as 40,000 metric tons as the world’s largest producer of rare earth metals, China, limits exports.

To alleviate the need for Chinese imports of the materials, Molycorp Minerals, LLC is racing to reopen a 55-acre, dormant rare earth metal mine in California and hopes to be operational by 2012.

Experts predict that of the 15 rare earths listed on the periodic table, neodymium may be the one in shortest supply. Neodymium is the primary component used to make the magnets used in the motors of a number of hybrid vehicles including the Honda Insight, Ford Focus and Toyota Prius. The material is also used in the creation of wind turbine generators.

Other rare earths that may become scarce are terbium and dysprosium which are used to preserve neodymium’s magnetic properties under extreme temperature. Another key component is lanthanum, which is used in large quantities in currently available hybrid motors.

Toyota currently controls 70% of the U.S. hybrid vehicle market, and the Prius is the top selling hybrid worldwide.

The electric motors used in the Prius require 2.2 lbs of neodymium and their batteries require between 22 lbs. and 33 lbs. of lanthanum. As Toyota seeks to reduce the Prius’ dependence on fossil fuel, those numbers are likely to double.

Independent commodities consultant and strategic metals expert, Jack Lifton, says the Prius is “the biggest user of rare earths of any object in the world.”

Toyota expects to sell approximately 100,000 Prius hybrids in the U.S. in 2009 and expects that number to increase nearly two-fold in 2010. Worldwide, the automaker is forecasting sales to exceed 1 million annually beginning next year.

Meanwhile, China’s booming industrial economy has begun to consume most of the rare earths it is producing. China has begun to cut back on exportation of rare earths, leaving Toyota and other non-Chinese automakers to seek alternative suppliers.

In 2008, Reuters reported that Japanese automakers had expressed an interest in a Canadian mining site which was under development near Thor Lake in that country’s Northwest Territories. Although the automaker has declined to comment, recent media reports suggest Toyota is also considering Vietnam as a potential supplier.

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