China is learning an interesting lesson: Only take a hostage if the other side wants it back. According to Japan’s Kyodo Newswire [sub], Toyota “has acquired technology to produce hybrid and electric vehicles without using rare earths and may begin doing so in about two years.”
In 2010, China used its rare earth as a political tool. To make a point with the Senkaku islands, China tinkered with the rare earth supply, and prices shot up. Rare earth is in the magnets that power everything from disk drives to hybrid and electric cars. Japan relies on China for about 90 percent of its rare earth supply, says Kyodo. Japan did not want to be blackmailed. Universities in Japan stepped-up research into dirt-free magnets. A year later, Toyota’s engineers reached an “advanced stage” of research on a new “induction”-type electric motor which holds the promise of freeing the Japanese automaker from dependence on rare-earth materials.
Toyota now seems to be close to commercialization, and it engages in its own, well, bargaining. Says Kyoto:
“Toyota will keep using rare earths if their prices drop, but will consider putting the newly acquired technology into practical use if their value continues to surge.”
When asked by Reuters, “a Toyota spokeswoman said the company continues to research ways to reduce rare earth usage and has no time frame yet for commercialization.”
Sure. Remain unpredictable, lesson number two.