This is an area of concern. Monopolization of source materials like rare earth elements can only lead us down the primrose path again. All industrial nations intent on manufacturing new-energy products should move to secure these resources. The global community will be better served if resources are freely traded without political restriction.

The automobile industry is dependent on a number of scarce elements, including platinum, rhodium, palladium, (for catalytic converters), and now neodymium for high-performance magnets that are essential to electric/hybrid electric vehicles.

So I urge the following: First, we MUST recycle such elements as much as possible. Illegal recycling, i.e. theft of motor vehicles or of catalytic converters, must be prosecuted but legitimate recovery of scarce elements must be encouraged.

To incentivize intelligent use and recycling, the cost of scarce elements MUST be allowed to rise to levels dictated by supply-and-demand.

At this time General Motors, Ford and Chrysler are on the ropes. I have long believed the Big Three ought to pool their fuel economy, safety and emmisions control technology to meet ever more stringent government demands in the aforementioned areas. Scarcity of elements like neodymium is yet another reason for them to pool their knowledge.

Toyota has probably become the largest manufacturer of high power servos on the world, so it is probably natural they would want to eliminate the middleman as much as possible for magnetic materials.

I would just like to add to your post, Alex, that most would agree that for pure electrics the induction motor will do just fine for the traction motor. On the other hand the HSD used by Prius needs the traction motor, MG2, to act as a generator both for cruising as well as braking. The cruising requirement may be difficult to achieve with an induction motor considering the high voltage that MG1 could impress on the main bus. Therefore the shortage of magnet material to manufacture either of these servos could be a showstopper.

However it doesn't have to be all doom and gloom. Seperately excited machines are possible, of course, but the addition of slip rings for field excitation will add complication.
T2

I agree that we need to recycle, but rare earths are "not so rare". From Wikipedia :
"However, with the exception of the highly-unstable promethium, the rare earth elements are found in relatively high concentrations in the earth's crust with Cerium being the 25th most abundant element in the earth's crust at 68 parts per million."

To T2 comment. I suggest you do some more research to see how rare this stuff actually is. Why do you think China is trying to keep their production to themselves. Anyway, let me know how you go with your research. You can start at www.arafuraresources.com.au

You can count on two hands the number of deposits around the world that contain Rare Earth Elements in economically viable concentrations. You can count on one hand the deposits large enough to make any kind of dent on the steady growth in world demand. The strategic nature of these elements (the 'vitamins' of industry), the overwhelming dominance of Chinese supply in the market and their cut backs in export quotas, and the technical challenges of bringing new resources to production make securing supply a significant issue to several non-Chinese based manufacturers globally.
Two of the front runners (Australian companies) for new supply:
www.arafuraresources.com.au
www.lynascorp.com/