The Conversation (2)
Rare Earth Investing News spoke to Ford’s Chuck Gray about the company’s new strategy to cut costs and reduce its use of rare earth elements, as it replaces nickel-metal-hydride batteries with lithium-ion alternatives. One silver lining for miners is the need for more lithium in auto manufacturing.
Ford (NYSE:F) has announced that its nickel-metal-hydride batteries will be replaced with lithium-ion alternatives in a move that could see the company cut 500,000 pounds of rare earth elements (REEs) from its manufacturing process annually.
According to a press release, the move comes from both a financial and physical standpoint. First, the cost of the new batteries is expected to be 30 percent less than that of previous-generation hybrid batteries. Second, lithium-ion batteries are 50 percent lighter and 25 to 30 percent smaller in size.
The rare earth metals used in nickel-metal-hydride batteries include neodymium, cerium, lanthanum and praseodymium, none of which are used in the company’s new lithium-ion battery range. Ford also confirmed that it has reduced its use of dysprosium — the most expensive rare earth metal used across its vehicle range — by approximately 50 percent in magnets employed in the hybrid system’s electric machines.
Increased focus on cost of extracting key materials
In a conversation with Rare Earth Investing News (REIN), Chuck Gray, Ford’s chief engineer of global core engineering, hybrid and electric vehicles, said that the company’s move away from rare earths is a result of the reality of the widespread electrification of automobiles. He noted that in addition to focusing on vehicles’ environmental and social impacts, more automakers are now also taking into account the cost of extracting and processing key materials, including REEs.
“The production of rare earth metals — which are used in electric motors for vehicles, wind turbines and other advanced technologies — is currently concentrated in a few countries, leading to questions about volatile prices as demand puts pressure on existing supplies,” said Gray.
When asked whether Ford plans to implement a move away from rare earths across all of its models, Gray noted that each of the brand’s electrified products, including hybrids, plug-in hybrids and all-electric vehicles (EVs), will make use of the new lithium-ion cells based on its physical properties and improved fuel efficiency.
Ford not alone
Ford’s announcement that it is decreasing its reliance on REEs is not unheard of within the automotive sector. Since the industry underwent a severe shake up following the 2008 financial crisis, more and more auto manufacturers have begun seeking alternative methods aimed at either decreasing their dependence on rare earths or even securing their own REE supply.
Earlier this year, Toyota (TSE:7203) announced that it has developed a method to manufacture hybrid and EVs without the use of REEs, while a team of researchers from Toda Kogyo (TSE:4100) confirmed that they have succeeded in creating a magnetic material without the need for rare earth metals.
In another attempt to rein in costs, Japanese auto manufacturer Honda (NYSE:HMC) stated that it is developing what is being hailed as the world’s first mass-production rare earth recycling process. It noted that the recycling process will allow it to increase its resource base. Until now, techniques for the extraction of REEs have been undertaken on a relatively minor scale and required highly-controlled conditions; however, the manufacturing giant believes it has established the world’s first process to extract rare earth metals from various used parts in an actual mass-production recycling plant. In May it began extracting metals from used nickel-metal batteries collected from hybrid vehicles.
Responding to whether Ford has plans to implement a similar rare earth recycling program, Gray noted that the company recognizes the importance of recycling materials, including batteries, to minimize the material going to landfills, but has not yet implemented a program aimed at rare earths specifically.
Direct to the source
While many manufacturers prefer to seek alternatives, some are going directly to the source.
In July, Matamec Explorations (TSXV:MAT), a junior rare earth exploration company in Quebec, received a payment of $8.5 million from Toyotsu Rare Earth Canada for the purchase of the first 25 percent of an undivided interest in its Kipawa heavy REE deposit. Toyotsu has since agreed to purchase 100 percent of the company’s mixed rare earth oxide concentrate once it reaches the production phase.
Commenting on Ford’s long-term view on the REE market, Gray told REIN that to offset the chance that future demand for electrified vehicles will put pressure on existing rare earth supplies, Ford is taking steps to continue to engineer products that offer improved fuel efficiency.
“Additionally, we have conducted and published a study of lithium availability and demand with scientists at the University of Michigan. We found that there are sufficient resources of lithium to supply a large-scale global fleet of electric vehicles through to at least the year 2100. We are also conducting a study of rare earth element availability and demand with scientists at the Massachusetts Institute of Technology,” he concluded.
Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article