is working on a method of making electric-drive powertrains without using magnets that require pricey rare-earth metals such as neodymium and dysprosium, and may start integrating that process into vehicle production within two years, Reuters reported, citing Japan's Kyodo News.

The world's biggest maker of hybrid-electric vehicles is trying to find ways to cut costs by reducing dependency on rare earth metals, which are expensive and which are primarily produced in China, the wire service said. The Japanese automaker is one of the reasons why Japan accounts for about a third of the world's rare earth consumption.

Finding a way to produce electric motors without magnets that require rare earth metals has become increasingly important, since production and demand of electric-drive vehicles are expected to surge during the next few years. Last year, government officials in China reportedly ordered three rare earth mines in Jiangxi, a province in southern China, to halt extraction. Jiangxi province extracts nearly 40 percent of the country's rare earths. China accounts for more than 90 percent of the world's rare earth production, though its reserves may account for about a third of the world's total, meaning that any reduction in China's rare earth production would likely result in nothing more than a temporary shortage while mines are opened or reopened elsewhere.

Last September, UK-based Sevcon said it would work with Cummins Generator Technologies and Newcastle University's Power Electronics and Drives Research Group at developing next-generation electric-drive systems that do not require rare earth metals. The group is developing a technology that uses steel instead of the contested materials.

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