Chinese Rulings Amplify Hybrid Paranoia

Edward Niedermeyer
by Edward Niedermeyer

China’s recent decisions to allow defaults on commodity future contracts and subsidize raw material imports are seriously messing with the commodities markets, giving voice to paranoia in every sector of the economy. In the auto industry, that means the now-familiar cries from those who worry far too much about the availability of raw materials for battery making. Automotive News [sub] reports that worldwide demand for 15 “rare earth” elements will exceed demand by 40k tons “in the next few years,” raising challenges for the nascent hybrid and battery electric segments.

And it’s not just batteries that have folks worried. AN identifies “neodymium, the key component of an alloy used to make the high-power, lightweight magnets for electric motors of hybrid cars,” as being ripe for a global shortage. Terbium and dysprosium are used in neodymium alloys, while lanthanum is used in batteries. Analysts reckon that a Toyota Prius uses 2.2 pounds of neodymium in its motor, 22-33 pounds of lanthanum in its battery. Calculate Toyota’s goal of selling 1m Priora globally, and the problem is clear.

The so-called “rare earth” dilemma (like similar concerns over lithium supplies) is not new, but with every unanticipated move in China it takes on a new, unsettling significance. Well, for the Japanese automakers, anyway. For US firms, the problems aren’t as acute if for no other reason than that Detroit is so far behind in the battery game.

And while Detroit tools up to become as dependent on these rare materials as its Japanese competition, the peak-whatever paranoiacs will have another obsession to lose sleep over.

Edward Niedermeyer
Edward Niedermeyer

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  • Savuporo Savuporo on Sep 01, 2009,_Comets,_and_Planets Oh, wait, NASA is in a mess itself as well, with the chance of Chinese getting space development going in a meaningful way before the west.

  • WildBill WildBill on Sep 01, 2009

    Chinese girls sure are cute, toothless might be good for certain wifely duties.

  • Stingray Stingray on Sep 01, 2009

    Ah, the joys of using ICE cars for my transportation needs. I will be able to choose from gas, LPG, CNG or ethanol mixes if it's Otto cycle or diesel/biodiesel/WVO if its Diesel cycle. Tree huggers can continue to drive their Priuses... ...increasingly are coming to believe “Chinese = hazardous” Well, this customer have a perception gap with chinese producs... Hazardous isn't coming to my mind right now

  • Wsn Wsn on Sep 01, 2009

    What's to fear? China still owns about $300B worth of Freddi and Fanny bonds. Just default on them to retaliate.