| ▲ | mullingitover 15 hours ago |
| I'm convinced that the Japanese government is terrified of EVs because all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts. That, and Japan is deeply screwed if they go all-in on EVs and then China decides they shouldn't be allowed access to any more rare earths. |
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| ▲ | jasonwatkinspdx 15 hours ago | parent | next [-] |
| > China decides they shouldn't be allowed access to any more rare earths This is a common misunderstanding. There are plenty of alternative locations to mine rare earth minerals, particularly Australia. China cornered the market because it's a high pollution low margin business. If geopolitical concerns cut off access to Chinese sources, alternatives will be developed. |
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| ▲ | putlake 15 hours ago | parent | next [-] | | Mining isn't the only bottleneck with rare earths. There also the processing, which is an industry China has monopolized through sustained investments over decades. They have also improved processing efficiency through investments in technology. It's going to take a while for anyone else to catch up. | | |
| ▲ | seanmcdirmid 15 hours ago | parent | next [-] | | > There also the processing, which is an industry China has monopolized through sustained investments over decades. I don't think this is the right way to characterize it. China invested when other countries didn't, but they didn't monopolize the market, they have no moat beyond expertise and some tech advancement that could be replicated easily enough. The only moat they have is related perseverance and other countries simply not wanting to put the work in. | | |
| ▲ | hangonhn 15 hours ago | parent | next [-] | | I think they do have a moat because they dominate the supply chain not just in the raw material and processing but also in some of the actual technical experience, i.e. the experience of running such processing facilities, and also a monopoly on making the equipment that you need to build such a facility. They put export controls on those equipment and restricted their citizens who work in the rare earths industry from traveling aboard. Basically, if we want to replicate what they did, we will have to do it mostly from scratch -- Japan and Australia has done some of the work already so it's not totally from scratch. It's obviously not impossible but it could take almost a decade for us to do that. That said, I don't think this should be enough for Japan to stop investing in EVs. If Japanese car makers are really worried about this then they can build their plants in the US and leverage any deal the US has with China on real earths. They've already starting importing Japanese cars made in India and the US back to Japan so that's an established practice. Then once they've secured their own supplies they can make the EVs in Japan too. I think OP's point about the suppliers have more merit as a reason why Japan might not want to develop EVs. | | |
| ▲ | fakedang 14 hours ago | parent [-] | | I have worked with the Chinese REE industry, and we've often bumped heads and shared ideas together with them and I can confidently tell you, the Chinese don't use anything novel that has not been established in Western science already. What they do have is executing rarely-used techniques confidently at scale, but all of that is already often published in the West. The only reason the West hasn't done it is because these techniques are less profitable, and, surprise, the CCP actually forces processors to minimize ecological damage, which further bumps up the costs to the point only large-scale players can exist making such lower profits. You'll often find them using some obscure process alteration that was published minutely in the West. As an addendum, companies in the REE Sinosphere are often encouraged by the CCP to exchange ideas with each other quite often, while Western companies often lock them behind proprietary patents and competition. While both systems have their pros and cons, the former allows for faster process proliferation (and a lower profit incentive for the innovator). | | |
| ▲ | youarentrightjr 14 hours ago | parent | next [-] | | > the Chinese don't use anything novel that has not been established in Western science already Like they say: in theory, theory and practice are the same; in practice, they aren't. It's all well and good to have knowledge of the techniques, or to even have published or created them. But applying them successfully, working out all the kinks, and streamlining everything to become profitable doesn't happen overnight. I have no doubt alternate sources can exist, but not without significant time and effort. | | |
| ▲ | rTX5CMRXIfFG 13 hours ago | parent [-] | | I’m not sure that that aphorism is helpful, my experience with theory is that it includes time and effort considerations | | |
| ▲ | youarentrightjr 7 hours ago | parent [-] | | > my experience with theory is that it includes time and effort considerations I would never disagree with you here. But the point is that the time and effort you spend on theory doesn't translate to time and effort spent on practice. |
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| ▲ | hangonhn 14 hours ago | parent | prev [-] | | What I mean is that since the peak of American REE in the 1970s and 1980s(?) a lot of the engineers who have working knowledge are retired. There's nothing theoretical we can't dig up but I think there will need to be a number of years for the US to catch up in terms of craft knowledge or "metis" (as Dan Wang likes to call it) and processing equipment and plants. Maybe I'm wrong. I gained my knowledge second-hand/third-hand from books and podcasts so I would defer to you to your actual experience and observations about Chinese REE. What is your estimate on how long it would take the West to catch to at least supply some of the rare earth components and what the real barriers might be? Would love to hear your take on this. Thanks for sharing your observations. I had no idea about the minutiae of that industry, i.e. the ecological control and its effects on the industry. | | |
| ▲ | fakedang 13 hours ago | parent [-] | | No, you're right. China, and even India and Russia, also do not have the same talent problem of the West, in that there is an undersupply of engineers, especially in the geological, processing and chemical sectors. In the US, the average age of the chemical process engineer was touching 50 a few years back. The average age of a process safety engineer is well past 50. While Russia and India lose their technical talent to brain drain, the Chinese govt has done quite a lot in trying to reverse that. The real barriers are talent and the regulation vs profit motive balance. What I mentioned in my previous comment was effectively an effect of the intersection of the two - you can't find novel ways of processing harmful substances without having the technical talent to find these out in the first place, nor without giving them a free reign after deprioritizing profit. Let's take arsenic for instance, a substance that's a harmful byproduct arising out of most mining operations. We already have the technology in the West to lock away arsenic into glass, but a.) apart from the big ones, most companies are unaware of them, and b.) even if they were aware of it, the tech is a significant line item that shies investors and companies away from investing into it. > What is your estimate on how long it would take the West to catch to at least supply some of the rare earth components and what the real barriers might be? Never. Yes, there are a few companies still engaged in trying to secure REE supply (Glencore being the most notable), but due to Western regulatory and policy limbo, the answer is never. For this to change, you need regulators open to experimentations and a concerted effort by the government in trying to reestablish REE independence, both in extraction and in processing, but I have yet to see either happening. It's telling when frankly the US is the country in the West most likely to catch up still, but the gap is deeper than the Darien Gap . |
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| ▲ | maxglute 5 hours ago | parent | prev | next [-] | | >they have no moat beyond expertise and some tech advancement that could be replicated easily enough Moat is decades of process / tactic knowledge built by disproportionate amount of talent on geologic formations others didn't invest in. Right now they generate 15x mining graduates, university of mining tech alone enrolls more than all US mining programs combined. Then you throw all that into a mining city like Batou with 3 million people running vertically integrated operation. That's ecosystem scale with compounded advantages beyond "wanting" to put work in, it maybe scale on PRC has demonstrated ability to produce. Between shallow kiddy pool and Mariana Trencth in terms of ease of replication, I wouldn't lean towards kiddy pool. I don't think "right way to characterize" their lead is "no moat" beyond... all the things that are actually, in fact very deep moats, as if any country can persevere their way to replicate decades of work and execute industrial policy of a 3 million large city dedicated to mining/rees. I surmise, PRC will build out EUV (technical problem) and produce them at scale before west+co meaningfully tackles HREEs supply chain (technical and regulatory and industrial problem). | |
| ▲ | eunos 2 hours ago | parent | prev | next [-] | | > they have no moat beyond expertise and some tech advancement that could be replicated easily enough Incorrect, de facto, the only firms invested heavily in the rare earth refineries technology are Chinese for the last 20-30 years. Their moats are as deep as TSMC moats so to say. | |
| ▲ | tmnvix 14 hours ago | parent | prev | next [-] | | > they have no moat beyond expertise and some tech advancement See my sibling comment. Their moat is the scale and structure of their industry. Some parts of rare earth processing are dependent on that. | |
| ▲ | 14 hours ago | parent | prev [-] | | [deleted] |
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| ▲ | fyrn_ 5 hours ago | parent | prev | next [-] | | Processing is the thing china does, you don't really mine rare earths, they are in many areas. Sure there are substrates it's easier to extract from, but the massive pollution of the processing that china was willing to accept when others were not that allowed them to corner the market. It can be done more cleanly, the US has some processing for strategic reasons (not enough though), but doing it clean is _very_ expensive.
Lets hope the people modifying plants to concentrate elements make work. | |
| ▲ | rbanffy an hour ago | parent | prev | next [-] | | > an industry China has monopolized through sustained investments over decades. Well, well, well, if it isn't the consequences of everyone's own inaction... | |
| ▲ | tmnvix 14 hours ago | parent | prev [-] | | As I understand it, some of these processes also require a sufficiently large industrial base to be even remotely economical due to a reliance on industrial 'byproduct' (for want of a better word). Because of this, some of these processes are not something that can be quickly stood up in isolation over a few years. It would take concerted large scale planning over a long time period - something the Chinese system of government is almost uniquely capable of. |
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| ▲ | hangonhn 15 hours ago | parent | prev | next [-] | | Japan is also particularly well positioned because China had used rare earths against them first in 2014. Since then they've created basically a strategic rare earths reserve and done research on how to build some components without them. It's not an absolute solution but between this and future development in friendlier nations, I don't think the rare earth risk is as acute for Japanese automakers. I do think the original point about lower complexity vehicles being a threat to the suppliers has some merits though. Germany faces a very similar dilemma and made similar decisions. | |
| ▲ | observationist 14 hours ago | parent | prev [-] | | There are also non rare earth magnets being explored. Niron - Iron nitride - magnets and ultrasonic compaction and other tech that wasn't feasible a while back are now becoming very practical. Japan could probably get to a dominant place with a solid research program, it'd give them a huge advantage for EVs and other motors. | | |
| ▲ | wisplike 14 hours ago | parent [-] | | Dont forget about good old externally excited motors like what Renault uses, no rare earths needed. | | |
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| ▲ | bko 15 hours ago | parent | prev | next [-] |
| Or they're unprofitable and highly competitive. Ford: It recorded a loss of $1.2 billion in EBIT in the third quarter on its EVs, bringing its losses on the segment for the first three quarters of 2024 to $3.7 billion Honda: Honda to Write Off $15.7 Billion as EV Winter Arrives. https://www.reuters.com/business/autos-transportation/ford-r... https://www.barrons.com/articles/gm-stock-general-motors-inv... https://www.barrons.com/articles/honda-to-write-off-15-7-bil... |
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| ▲ | manoDev 13 hours ago | parent [-] | | That projection won't last in a world where Brent Oil @ $100. That was only true while the petrodollars kept flowing. | | |
| ▲ | grumbelbart2 2 hours ago | parent [-] | | It's also not representative for the whole industry. BMW is profitable with their electric cars, and 18% of their sales are fully electric. |
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| ▲ | rbanffy an hour ago | parent | prev | next [-] |
| > all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts. EVs have lots of the same parts as an ICEV - the differences are engine and power systems, fuel tank, transmission... Most of the car is still there. There is a lot of churn - lead-acid is out, fuel injection, sensors are different and sense different things, and so on, but it's still a car. |
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| ▲ | parl_match 14 hours ago | parent | prev | next [-] |
| > I'm convinced that the Japanese government is terrified of EVs because all the small and medium-sized businesses which support the Japanese auto industry will be absolutely gutted when vehicles contain drastically fewer parts. For what it's worth, this theory is blown up by hydrogen based vehicles, which Japan has gone heavily in on. Yes, slightly more parts than an EV, but not a ton. And the drivetrain is electric. |
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| ▲ | SenHeng 12 hours ago | parent | next [-] | | It really shows the bias in Honda’s management here. They’ve also spent years trying to develop and promote their hydrogen fuel cell cars and it’s just as much of a failure as their EV division yet they aren’t axing that golden child. | | |
| ▲ | parl_match 10 hours ago | parent [-] | | That's a fundamental misunderstanding of why they're going in on hydrogen so hard - it's something they can generate domestically and without geopolitical implications. If there is a war with china or in the middle east, hydrogen vehicles are somewhat immune to oil or rare earth spikes. They will likely never roll out hydrogen power in any large capacity but the capability will be there if they need it | | |
| ▲ | SenHeng 9 hours ago | parent | next [-] | | If we get into an actual shooting war with China, I don't think there's enough hydrogen generating facilities to make much of a difference. If maybe 20% of vehicles on the road were using hydrogen, maybe? Considering how much money and effort both Toyota and Honda have poured into trying to kick start a hydrogen economy over the past decade and a half, and how much EV technology was evolved over the same time span, would it not make more sense to switch to the technology that actually is proven and actually has consumer demand for? It's not like they're switching all that military hardware to hydrogen too. Japan can't solve all of its energy woes, but it can ease it a lot by restarting all the nuclear reactors they shut down after Fukushima, and to be fair, they've been trying [0], but stuff breaks after not having been used in over a decade. [0]: https://www.bbc.com/news/articles/cq6v0v32rg1o | |
| ▲ | NewJazz 9 hours ago | parent | prev [-] | | The drivetrain is still electric with hydrogen vehicles. |
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| ▲ | mjcarden 13 hours ago | parent | prev [-] | | Is there a place somewhere in the world where Hydrogen powered passenger vehicles are a success? I know that the one Hydrogen filling station here in Australia's Capital City has shut down after opening with great fanfare a few years ago. And the approximately 20 or so Hydrogen cars it supplied are no longer being used. | | |
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| ▲ | UncleOxidant 15 hours ago | parent | prev | next [-] |
| But isn't Japan deeply screwed if they can't drastically cut their dependence on oil imports? |
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| ▲ | piva00 15 hours ago | parent [-] | | Also going to suffer a demographic crunch, having fewer jobs in more advanced technology would suit well with a shrunk labour force. | | |
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| ▲ | TexanFeller 13 hours ago | parent | prev | next [-] |
| Toyota just had three large EV announcements and they are putting large incentives on some of them. Feels like they're serious about it and with so many others exiting the EV market lately they may have timed it well. |
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| ▲ | jacquesm 15 hours ago | parent | prev | next [-] |
| Japan is the only other country besides China and Korea that produces magnets of high quality (higher in fact than the Chinese), they just don't do the volume. But there is absolutely no doubt that they could scale up if they wanted to. They're just more expensive, but not even that much. |
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| ▲ | mullingitover 13 hours ago | parent | next [-] | | They manufacture the magnets, but they don't produce the rare earths themselves. They're still getting something like 60-70% of their supply from China. | | | |
| ▲ | dyauspitr 14 hours ago | parent | prev [-] | | India is looking to produce 6000 tonnes of NdFeB magnets per year with the first batch coming out in mid 2026. This is great news because India has large rare earth reserves and are producing using the full supply chain of ore to oxide to magnets. 6000 tonnes is like 3% of the global supply but that’s not bad for year one. | | |
| ▲ | jacquesm 14 hours ago | parent [-] | | That's super good news, do you have any info on the name of the manufacturer? | | |
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| ▲ | 8ytecoder 13 hours ago | parent | prev | next [-] |
| China already did, in 2010, against Japan. Japan has been preparing alternatives for a decade and a half now. https://www.economist.com/asia/2025/12/04/lessons-from-japan... |
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| ▲ | pezezin 11 hours ago | parent | prev | next [-] |
| I live in Japan and IMHO the problem is that it is an extremely conservative and risk averse country, "if it ain't broke don't fix it" taken to the extreme. They had a period of innovation after WW2 out of necessity, but after the bubble crash of 1990 they reverted back to their old selves. |
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| ▲ | manoDev 13 hours ago | parent | prev [-] |
| Japan is just being the usual USA vassal. Since now China absolutely dominates EV and batteries, they rather align themselves with the oil-thirsty war monger. |
