Ford says its third-generation hybrid system could reduce its use of expensive rare-earth metals up to 500,000 lbs. (226,796 kg) per year.

The new system, offered on the ’13 Fusion midsize sedan and C-Max cross/utility vehicle, features lithium-ion batteries, which replace less energy-dense nickel-metal-hydride packs on older generation hybrids.

Reducing the amount of rare-earth metals in the battery pack has both financial and performance benefits. Ford was able to slash the cost of the battery pack 30% vs. the outgoing unit, and the Li-ion batteries are 50% lighter and 25%-30% smaller than the NiMH batteries they replace.

Ford says the weight reduction allowed the Fusion and C-Max hybrids to achieve 45 mpg (5.2L 100/km) and 47 mpg (5.0L 100/km), respectively, in combined city/highway driving.

Among the rare-earth metals used in NiMH batteries are neodymium, cerium, lanthanum and praseodymium, none of which are required in the new Li-ion packs.

“The main mass of rare-earth (savings) comes from changing from NiMH,” Chuck Gray, chief engineer-global core engineering, hybrid and electric vehicles, tells WardsAuto in an interview. “It’s almost 20% of the cost advantage we eventually realized with Li-ion.”

Additionally, Ford has reduced its use of dysprosium by about 50% in magnets employed in the hybrid system’s motors.

Dysprosium, the most expensive rare-earth metal used in Ford hybrids, improves temperature resistance of the magnets, but the new Ford-engineered hybrid transmission featured on the new Fusion and C-Max was designed with a better cooling system that helps keeps the magnets from overheating.

“We worked with (supplier partner) Toshiba and figured out a way to reduce the (use of) dysprosium in the magnets to take advantage of the cooler temperatures,” Gray says, noting the rare-earth metal can cost up to $1,000-$2,000 per kilogram.

The overall reduction of rare-earth metals lowers vehicle costs, which Ford says is critical to its plans to triple production of its electric vehicles by 2013. There currently is no shortage of the metals needed for the advanced powertrains, Gray says, but as more auto makers launch electrified vehicles demand and prices are increasing.

Some 90% of rare-earth metals currently are sourced from China, but Gray says new mines are opening up all over the world, including the reinvigorated The Mountain Pass open-pit mine near Mountain Pass, CA.

The mine, owned by Molycorp, once supplied most of the world's rare-earth elements. It is undergoing expansion and modernization and is returning to full production.

“It’s good to see the North American supply base come back online,” Gray says. “The hope is competition (among rare-earth suppliers) and high supply will be good for costs.”

Gray says Ford is working on ways to further reduce the amount of rare-earth metals in its hybrids, including experimenting with potential replacement elements.

“We have quite a few ideas we’ll be putting into action before the fourth-generation hybrid to improve costs,” he says. “It’s a never-ending drive.”

bpope@wardsauto.com