The automobile sector has been waiting with bated breath since Toyota Motor Corp. (TSE:7203) announced that it has developed a method to manufacture hybrid and electric vehicles (EVs) without using increasingly expensive rare earth metals. According to Japanese media reports, Toyota, the world's top producer of fuel-saving hybrid vehicles, could bring the technology to market if the price of rare earth does not recede. A company spokeswoman commented on the announcement, stating that the company will continue to research ways to reduce rare earth usage, but provided no time frame for commercialization. Essential components Rare earth alloys are essential components in most modern electronics, especially EVs. They are mainly used as battery motors and battery packs in EVs, with each new Prius accounting for approximately 25 pounds of rare earth elements (REEs). Rare earth minerals such as neodymium and dysprosium are used in motor magnets in Nissan Motor Co.'s (TSE: 7201) all-electric Leaf car, General Motors' (NYSE: GM) plug-in Volt, and the Prius. China sent shock waves through the market in 2010 when it imposed export quotas on all REEs. The announcement resulted in increased concern throughout the manufacturing sector, and led to capital being channelled into non-Chinese companies with REEs as a primary focus. Not a lot of choice Some market speculators believe that aside from Molycorp (NYSE: MCP) and Lynas Corp. (ASX: LYC), a steady supply of non-Chinese rare earths for manufacturers will not be coming online in the short term. This point is significant as China produces more than 95 percent of the world's rare earth metals, and Japan accounts for over a third of global demand.