Toyota breakthrough on magnets illustrates need for EU state aid reform

A breakthrough for next generation motors, with far-reaching implications for sustainability. Toyota´s press release this week regarding “the world’s first neodymium-reduced, heat-resistant magnet” will facilitate the mass introduction of electric vehicles and new applications in for example robotics. The magnet does not use terbium or dysprosium, and the amount of neodymium needed has been substantially reduced. All these three rare earth elements have been designated as critical materials with only a few suppliers world-wide.

Japan is a world leader in material science. The government has since many years funded research into new types of magnets. When China restricted the export of heavy rare-earths in 2010, decision-makers in Tokyo increased funding for research and innovation aiming at reduced dependency of substances such as neodymium, dysprosium and terbium. This included both basic science at universities and applied research in institutes and companies.

Toyota is an impressive company with massive R&D investments. The governmental agency NEDO has also played an important role for the present breakthrough. As in other fields, NEDO has promoted new types of magnets by coordinating and partly financing efforts by the private sector. In this case, the program “Development of Magnetic Material Technology for High-efficiency Motors for Next-Generation Automobiles” has had a significant effect. The foundation in 2012 of the Motor and Magnetic Materials R&D Center (MagHEM), with the participation of government funded research institute AIST, has also been important.

The breakthrough illustrates a wider point. Japan allows for a greater amount of state aid to applied research and demonstration projects in companies than the European Union. NEDO plays an important role in this regard and has historically contributed to the commercialisation of green innovations such as the blue LED lights. The same applies to South Korea, not to mention China.

European researchers have pointed out the restrictive EU state aid rules as an obstacle to green innovations. For example, Måns Nilsson at the Stockholm Environment Institute together with co-writers makes this point in an excellent article on electric vehicles.

Reforming the EU state aid rules could be an important factor in making Europe greener and at the same time promoting competitiveness.

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