The drive towards greener cars will provide growth opportunities for the steel industry, as electrification of transport creates new markets for suppliers whose fortunes are heavily dependent on conventional cars.
Research from Tata laying out how it expects steel makers to respond to the electric revolution suggests that rather than turning away from steel, car companies are likely to use more of it to try to keep the price of cars down.
Tata’s research indicates that electric vehicles will drive an increase of 4.2m tons a year in demand for steel in Europe between 2015 and 2050 to almost 22.5m tons a year.
About 1.6m tons of this is expected to come from expensive electrical steels used in batteries and electric motors, with the rest being used in structural parts of cars.
Aluminium is already used by some manufacturers because of its lightweight properties to counteract the weight of batteries in electric cars. However, it is expensive and manufacturers could look for cheaper alternatives as electric cars become mainstream to prevent cars rising in price.
Electric cars currently command a premium which early adopters are ready to pay. But, with new regulations being imposed in parts of Europe banning the sale of new cars with petrol or diesel engines by 2040, electric cars will become the norm and cost effective solutions need to be found.
