A Honda Motor Co. researcher explains how the magnet that dispenses with dysprosium, a rare earth element, was developed for the drive motor used in hybrid vehicles. (Ken Sakakibara)

Honda Motor Co. and Daido Steel Co. have developed a magnet for hybrid vehicles that does not contain dysprosium, a feat that allows them to bypass China's near-monopoly on the rare earth element.

The technology, touted as a world first in terms of practical use, means the companies will be protected from a potential surge in rare earth element prices.

The Freed gas-electric hybrid minivan, which Honda will introduce by the end of the year following a revamp, will be the first to use the magnet.

Neodymium magnets, used in drive motors for hybrid vehicles, lose their magnetic force under high temperatures. A heavy rare earth element such as dysprosium is often added to compensate for a lack of heat resistance.

China has the lion's share of the world's heavy rare earth element resources. In 2011, Beijing tightened export controls, which caused dysprosium prices to soar more than 10-fold.

Car manufacturers were hit particularly hard. Toyota Motor Corp., for example, raised the price of its Prius hybrid vehicle by 100,000 yen ($942).

Honda and Daido Steel, one of the world's largest specialty steel manufacturers, embarked on joint development work in 2012.

They have produced a neodymium magnet that contains no heavy rare earth elements but still has sufficient heat resistance by developing a finer crystal structure.

Beijing has since relaxed its export controls on rare earth elements, and prices have remained stable in recent years. Still, automakers have been trying to reduce their dependence on China.

Nissan Motor Co. in 2012 cut the use of dysprosium in its Leaf electric vehicle by 40 percent. Toyota has also worked with its group companies to reduce the use of rare earth elements and diversify supply.

But the trend toward electric-powered vehicles means that demand for magnets for drive motors is bound to grow.

“Our efforts to reduce the use of rare earth elements will continue because anything can happen at any moment,” said Daido Steel President Takeshi Ishiguro.

(This article was written by Ken Sakakibara and Takehiro Tomoda.)