Nikola Tesla’s revenge

Economist: Nikola Tesla's revenge

Transport: The car industry's effort to reduce its dependence on rare-earth elements has prompted a revival in the fortunes of an old-fashioned sort of electric motor.

ONCE again, worrywarts are wringing their hands over possible shortages of so-called "critical materials" crucial for high-tech industries. In America the Department of Energy is fretting about materials used to manufacture wind turbines, electric vehicles, solar cells and energy-efficient lighting. The substances in question include a bunch of rare-earth metals and a few other elements which—used a pinch here, a pinch there—enhance the way many industrial materials function. …

… The rare-earth element that other industrial countries worry about most is neodymium. It is the key ingredient of super-strong permanent magnets. Over the past year the price of neodymium has quadrupled as electric motors that use permanent magnets instead of electromagnetic windings have gained even wider acceptance. Cheaper, smaller and more powerful, permanent-magnet motors and generators have made modern wind turbines and electric vehicles viable.

That said, not all makers of electric cars have rushed to embrace permanent-magnet motors. The Tesla Roadster, an electric sports car based on a Lotus Elise, uses no rare-earth metals whatsoever. Nor does the Mini-E, an electric version of BMW's reinvention of the iconic 1960s car. Meanwhile, the company that pioneered much of today's electric-vehicle technology, AC Propulsion of San Dimas, California, has steered clear of permanent-magnet motors. Clearly, a number of manufacturers think the risk of relying on a single source of rare-earth metals is too high.

The latest carmaker to seek a rare-earth alternative is Toyota. The world's largest carmaker is reported to be developing a neodymium-free electric motor for its expanding range of hybrid cars. Following in AC Propulsion's tyre tracks, Toyota is believed to have based its new design on that electromotive industrial mainstay, the cheap and rugged alternating-current (AC) induction motor patented by Nikola Tesla, a Serbian-American inventor, back in 1888. …

This story has another lesson: As long as there are free markets, we will never run out of anything. Humans innovate and find substitute resources or processes as a resource becomes more expensive. As neodymium becomes too expensive, we find alternatives. As Douglas Hay observed 25 years ago, nearly everything we make can ultimately be made from renewable resources … including building materials and plastics. As recycling becomes more prevalent and efficient, it also drives down costs. Technology improves the efficiency of how resources are mined, processed, and utilized, eliminating waste. While neodymium may become so expensive that no one wants to use it, we will never run out of it as long as there are market economies. The Stone Age did not end due to an absence of stones, and the horse transportation age did not end due to the extinction of horses. Neither will the rare-earth age end because of the exhaustion of mineral deposits.

Related: Also see the article on rhenium.