- Toyota's new magnet for electric motors uses far fewer rare-earth elements.
- Rare earths may become increasingly expensive as electronic demand rises.
- China controls the vast majority of the market.
Toyota 7203.T-JP has made a key electric-vehicle component that uses smaller amounts of certain materials that are either expensive or are found in politically risky countries.
The Japanese carmaker has designed a new kind of magnet that cuts its use of rare-earth elements by about half. The new magnet does not use the expensive rare-earth elements terbium and dysprosium and uses less of the increasingly popular element neodymium.
The new design could both lower the cost of producing electric batteries and reduce dependency on rare-earth elements, a market essentially controlled by China.
The new magnet is expected to have uses in high-output motors on electrified vehicles, electric power steering, robots and household appliances, Toyota said. The company plans to include the magnets in electric power-steering motors by the end of 2025.
Rare-earth elements are key to the manufacture of electronics and are found in a wide range of devices, such as smartphones, cars and military technology. In particular, rare earths are used in the design of high-power magnets found in electric motors for cars, vacuums, wind turbines and other machines. About 30 percent of the elements used in such magnets are rare-earth elements, Toyota said.
China began seizing control of the market in rare earths in the mid-1980s, and many experts today estimate that China controls anywhere from 90 to 95 percent of the supply of rare earths. That control has sparked concerns that China has the capacity to regulate access to materials so essential to so many technologies or that rising demand or other factors could pose risks to the global supply.
Dysprosium and terbium, for example, are relatively expensive, and subject to "geopolitical risks," Toyota said in a release. Dysprosium prices indeed rose in 2017, in part because the Chinese government began cracking down on illegal mining operations .
Neodymium is relatively plentiful, but Toyota is concerned that demand for electrified vehicles, including hybrid and battery electric vehicles, could lead to shortages. Toyota replaced some of the neodymium with the lower-cost elements lanthanum and cerium.
Toyota said the magnet will "contribute to reducing the risks of a disruption in supply and demand of rare earths and price increases."
WATCH: New plant for Toyota/Mazda in Alabama
More From CNBC