Reuters reported that Toyota Motor Corporation has developed a way to make hybrid and electric vehicles without the use of expensive rare earth metals, in which China has a near monopoly.
Toyota, the world's top producer of fuel saving hybrid cars such as the Prius, could bring the technology to market in 2 years if the price of rare earths does not come down.
A Toyota spokeswoman said that the company continues to research ways to reduce rare earth usage and has no time frame yet for commercialization.
Rare earth metals like neodymium and dysprosium are used in the powerful magnets in motors that power hybrid and electric cars and demand is expected to surge as more of the environmentally friendly cars hit the market.
China produces more than 95% of the world's rare earth metals. Its efforts to limit exports, citing resource depletion and environmental degradation have alarmed its customers and trading partners and have sent prices soaring.
Japan accounts for a third of global rare earth demand and is aiming to cut consumption providing subsidies for recycling and investing in new ways to limit their use.