China's vice-like grip on world rare earths supply is forcing next generation carmakers to look for alternative technologies that don’t rely on these metals. At the forefront of such efforts is world's largest carmaker Toyota Motor Corporation (NYSE:TM), according to ETF Database.

Most next generation plug-in hybrid cars like the Nissan Leaf, the Chevy Volt, Honda Insight, and Toyota Prius depend on rare earth metals while lithium, whose production is controlled by Andean nations, is also highly in demand as these cars rely on lithium-ion batteries to store power for their propulsion systems.

The report says recent disruptions in supply of rare earths to Japan, Europe and the United States have caused panic in the industry, with many carmakers beginning their search for alternatives to rare earths. One company that is at the forefront of this development is Toyota, the world’s largest seller of hybrids, thanks in large part to the popularity of its Prius vehicle, says the report.

It says Toyota is sinking vast sums into research and development of new technologies which seek to limit the needs for rare earth metals. Toyota is especially more vulnerable owing to the tenuous nature of Sino-Japan ties and high chances of political crises.

Toyota would hate to fall prey in the future because of this scenario, and as a result is rapidly developing alternatives to the current system. Recently announced plans call for Toyota to completely phase-out rare earth metals from its increasingly popular alternative-power cars, ETDB says.

The report quotes Jana Hartline, Toyota’s environmental communication manager: “This is something that we have to address as more manufacturing of electric vehicles and hybrids come on line.”

“Does that mean next week? No. It becomes a legitimate thing to consider when you talk about production in the order of millions over several years,” he adds.