We have had a theme here at the blog: Innovation does not happen by accident, it requires challenges. If the external environment does not generate the challenges on its own, R&D managers have to create those challenges. Here is some more evidence to support the thesis. Last year, China clamped down on the export of rare earths metals crucial for modern electronics and motors.
The industry has responded with innovation!  The first is a rare earth-free motor from Continental Corporation that provides better efficiency than rare earth magnets without the rare earths!

As for the drive unit, Continental has opted for an externally – excited synchronous motor. Compared with a permanent magnet electric motor, this technology offers an better overall level of efficiency across the whole of an electric vehicle’s operating range, and also enhances the safety of the electric drive system. In addition, no expensive rare earth metals are needed for magnets.”

The new motor would have been developed regardless of the shortage of rare earths.  However, the shortage is definitely driving innovation elsewhere. A Japanese group is focusing on developing novel materials that provide rare earth performance:

A Japanese research group succeeded in producing powder of iron nitride (Fe16N2) by the gram. The group, which consists of Migaku Takahashi and Tomoyuki Ogawa, professor and associate professor, respectively, at a graduate school of Tohoku University, and researchers at Toda Kogyo Corp, succeeded in generating Fe16N2 powder with a purity of 91% and a reproducibility for the first time in the world.

This technology will have repercussions beyond replacement of rare earths. Another technology being pursued is recycling of rare earths from old components:

Hitachi Ltd developed a technology to recover rare earth materials such as neodymium (Nd) and dysprosium (Dy) from rare-earth magnets used in the motors of hard disk drives (HDDs), the compressors of air conditioners and so forth.
The company developed equipment that separates rare-earth magnets from used products and succeeded in recovering rare earth materials from the magnets by using a new method.

In summary, three new (and hopefully innovative) approaches to address a challenge posted by lack of availability.  May be we need to pose more challenges….