If you want to understand NovaTorque's electric motor, think of french bread.

The Sunnyvale, Calif.-based company has devised a highly efficient electric motor that, as an added bonus, is cheaper to produce than conventional motors because it doesn't rely on magnets composed of rare earth elements like neodymium. 

"We can use low-cost ferrite magnets," Dan Mertens, vice president of marketing at the company during a recent meeting at the Emerging Technologies Summit in Sacramento. "Neodymium is 15 to 17 times more expensive."

NovaTorque released its first products, two and three 1800 RPM motors, at the end of October. The company, which has received funds from NEA, has been in relative stealth mode for a while. 

The timing couldn't be better. In October, reports began to surface that the Chinese government would curb exports of these materials to help its own industries. In response, Mitsubishi and others kicked off programs to recycle rare earths from discarded electronics. (The University of Tokyo also announced a technology to selectively separate and collect rare earth materials from used neodymium-iron-boron (Nd-Fe-B) magnets.) Meanwhile, Toyota and Sumitomo announced a plan to recycle nickel for hybrid batteries: nickel isn't a rare earth, but you can probably guess where it gets mined.

"We could face serious shortages in three years," Dave Goldstein of the Electric Vehicle Association told me yesterday in the hallway at The Networked EV conference in San Francisco.

The fears have pushed the stock of Molycorp from $12 to $13 in August to the $34 to $36 range, making it the best performing green IPO of the year -- at least for the moment.

So how does NovaTorque do it? Take a look at the photo. The motor (foreground) consists of conical hubs (background) containing magnets separated by a tapered motor shaft (left). The hub is the component that looks like a space capsule and the shaft has the band of copper. The key here is that the interface between the magnetic surface of the hub and the shaft is diagonal, not flat like in most motors. A diagonal interface dramatically increases the surface area between the two, thereby increasing magnetic flux transmission (good) and reducing materials (also good). The magnets are the raised surfaces on the side of the conical hub.

Think of how baguettes get cut in restaurants: you can put more butter on diagonally cut bread than slices lopped off the top. The expanded surface area permits NovaTorque to switch to ferrite magnets.

NovaTorque also manages to reduce the amount of copper needed for the coils in the motor. Less copper, less cost.

Efficiency in the motor is greater than average due to the fact that the magnetic field is axial, i.e., it runs in an oval around the axle, instead of being radial, i.e., circumnavigating it. One advantage: the axial field means NovaTorque can use gain-oriented transformer-grade sette, which lowers eddy current losses and boosts efficiency. Higher efficiency should also result in fewer breakdowns: a large percentage of mechanical failures can be traced to ambient waste heat generated by motor inefficiencies.

The motor also pairs well with variable drives, and variable speed air conditioners are one of the top priorities in data center retrofits.

The company's Premium Plus+ motors are currently spec'd for refrigerators, HVAC systems, vacuum pumps and industrial equipment. But if the technology scales well to larger motors, other markets could open. Wind turbines rely heavily on rare earth magnets and turbine makers will have to wonder whether companies like China's Goldwing will be first in line at the mine.