Industry Market Trends

Are Hybrid Vehicle Manufacturers Shifting Gears Away from Rare Earth Elements?

Dec 11, 2012

Credit: London Commodity Markets

If you drive a hybrid vehicle, you'll know a few things about it. You'll know that you're saving gas and reducing your emissions. You'll know that it has a high "cool" factor. What you probably don't know is that you're driving around on top of roughly 60 pounds of rare earth elements.

Hybrid engines are a combination of a battery-powered electric train drive and a traditional internal combustion engine. Rare earth elements (REEs) are an important component: they are used by the hybrid's nickel-metal hydride (NiMH) battery, the electric traction motor and the regenerative braking system (which recaptures energy generated while braking and returns it to the battery).

While the penetration of hybrid electric vehicles hasn't been speedy, it has been steady. Today, there are more than two million of them on U.S. roads. As gas prices escalate, more Americans will likely turn to hybrid and electric vehicles, which will drive up the need for rare earth elements. The problem is, some rare earth elements are, as the name implies, rare -- and getting rarer. 

Not all of them are truly "rare." Lanthanum is plentiful, which is good, because a car like the Toyota Prius carries about 10 pounds of it in its battery. (It's the metal in the nickel-metal hydride.) Neodymium, an ingredient in the alloy used to make the magnets for hybrid motors, isn't as common. Nor are terbium and dysprosium, which are also added to the alloy to preserve neodymium's magnetic properties at high temperatures.

Where are the REEs in Toyota Prius? Source: Owaki/Kulla/Corbis

The Toyota Prius, which holds over 50 percent of the hybrid market in the U.S.,has been called the biggest user of rare earths of any object in the world. This is a distinct weakness for Toyota and other manufacturers of hybrids. While some rare earth minerals aren't precisely rare, they do occur in small deposits (there is no "mother lode" of REEs) in only a few locations around the world and are difficult to mine. As their applications increase - they are heavily used by the wind turbine industry as well as in fiber optic telecom cables -- so too does demand. Reuters has estimated that demand for rare earth elements may exceed supply by about 40,000 metric tons per year within the next few years unless new production comes online. These shortages turn REEs into a bit of a political pivot point.

Why politics? China is currently the world's number one producer of REEs with more than 90 percent of the market. While other nations have mining sites of value, China's increased production has driven down prices to the point where few other nations can compete. In 2005, China also restricted its exports of REEs, ostensibly to limit the environmental damage caused by mining but also so it could ensure that it had enough to meet its own domestic demand.

One of the largest mines in the U.S., located in California, was shut down for several years due to environmental concerns as well as competition from China. While that mine, which is owned by Colorado-based Molycorp Minerals LLC, reopened in 2010, it's still unlikely to make much of a dent in demand. A recent Congressional Research Service report determined that demand for rare earth metals is estimated to be 136,000 tons per year, and projected to rise to at least 185,000 tons annually by 2015. Both figures far exceed supply.

While many other nations around the world have found rare earth element deposits -- notably Canada, South Africa, Australia, Russia, Brazil and India - industry analysts say it could take a decade or more before many of these sites are operational and producing ore. So in the meantime, what to do when demand far outstrips supply?

One way is to figure out a way to make hybrid automobiles without REEs. Several groups are flirting with prototypes of something called a "switched reluctance motor," or SRM. This is essentially a rotating disc that operates inside a stationary disc. Each disc has poles that come in contact with each other in a way that allows the stationary disc to move the rotating disc and create mechanical energy. While the idea isn't new, in previous attempts, it was prone to too much noise and torque ripple, a problem that some organizations working on the SRM concept say they have solved.

One of them, Chicago-based HEVT (Hybrid Electric Vehicle Technologies), together with the University of Texas at Dallas and General Atomics, was the recipient earlier this year of $3 million in funds from the U.S. Department of Energy's ARPA-E program, which had earmarked the funds for the U.S. organization closest to producing an SRM prototype. (HEVT was also the recipient of the Cleantech Open Award for 2012.)  According to HEVT, the benefits of newer hybrid technologies will include not only lower total cost of ownership (thanks to the reduction in pricey REEs) but also increased performance from the SRMs, particularly at higher speeds.

According to HEVT, the SRM is ready for commercialization, but the cars may have to wait a bit. The first HEVT SRM motor will likely show up in an electric bicycle, said the company. While a design for a hybrid vehicle may be next, HEVT says its SRM is also suitable for motors in appliances and industrial equipment, from heating and cooling systems to pumps for oil and gas operations.

HEVT will have stiff competition from abroad, however. A Belgian research and development company called Inverto, which is collaborating with the University of Ghent and the University of Surrey in England, has taken the switched reluctance motor to the point where it is said to be already working with an unidentified automaker. The team is rumored to have an SRM prototype already running in a car. Researchers at Newcastle University in England are currently working with several companies to produce switched reluctance motors for both cars and trucks, and a team led by Nobukazu Hoshi of the Tokyo University of Science is currently experimenting with an SRM in a Mazda, according to the Economist.

While some organizations continue with the development of a better SRM, others haven't abandoned the magnet concept. Another recipient of ARPA-E funding is the University of Alabama, which has developed nanostructure magnets that are composites made of iron and manganese instead of rare earths. The magnetic properties of the resulting product is said to be superior to REE-based magnets, is far easier to source and costs far less. The nanostructure magnets are still very much in the prototype stage, however. A Missouri-based company called QM Power is also working on magnets that use no rare earth minerals, and the Ames National Laboratory in Iowa is using ARPA-E funds to develop a new class of magnets that bypass rare earth elements and are instead based on the much easier to obtain element cerium. The results are said to be better operation at higher temperatures than magnets made from REEs.

Even if the world manages to ramp up the mining of REEs to meet demand (as China did earlier this year), environmental concerns remain. Most rare earth metals contain radioactive elements such as uranium and thorium, which are dangerous to handle and can contaminate water, air and soil, and the mining process often releases dangerous substances such as arsenic, barium, copper, aluminum, lead and beryllium into the atmosphere, all of which can be hazardous to human health.

Should the hybrid electric vehicle industry (as well as the wind turbine industry) commercialize engines that don't require a lot of REEs -- or any at all -- then the REE mines of the world may once again go quiet.