A Wall Street Journal article (January 14,2011) describes imminent breakthroughs announced by Toyota in eliminating use of rare earth metals in electric motors for hybrids.  This is a response to earlier reports claiming decreased exports of rare earths by China in the future – to reserve the material for domestic manfacturers. The materials listed include neodymium and lithium – China is a world source for both metals.  This impact on demand may well solve the supply demand problem – while decreasing costs at the same time.  Should we expect innovation to resolve the current 400 % increase in prices ?  Will such potential adjustments deter unilateral attempts to starve supplies ?