When Tesla Inc. released its first mass market model last year, it sent a message through the aluminum industry by heavily shifting to steel and apart from the lighter weight metal it had utilized in its first two luxury models.
The switch by Elon Musk’s Tesla to the heavier but cheaper metal highlights that steel is fighting back against aluminum, which had largely been expected to be the bigger beneficiary of the electric vehicle revolution.
Aluminum had been observed as the key to offsetting the weight of batteries in order to extend the variety of electric vehicles, important to higher consumer acceptance.
But as makers of battery-powered vehicles seek to tap into bigger markets with cheaper vehicles – and use technological developments in batteries and components – many are progressively looking to steel to cut expenses. The cost of Tesla’s mass-market orientated Model 3 is around fifty-percent of the £70,000 luxury Model S.
“Before the motive was ‘Let’s get the [electric vehicles] developed’, now it’s ‘Let’s get them developed at the right price point,'” stated Mauro Erriquez, a partner at McKinsey & Company in Germany who is expert in the auto sector.
It is the recent tussle in a decades-long fight between steel and aluminum for market share for automakers, looking to cut the weight of vehicles to help cut emissions and meet strict government pollution standards.
Steel is also winning back some market share for gasoline vehicles, including the Audi A8. The latest model abandoned its heavy utilization of aluminum and moved to a mix of steel, aluminum, magnesium and carbon fiber.
The competition between the metals has escalated amid rapidly rising demand for battery-powered vehicles.
Sales of electric and hybrid vehicles are due to increase to 30 percent of the worldwide auto market by 2030, according to metal consultants CRU, up from 4 percent of the 86 million vehicles sold in 2017.
In China, the world’s largest auto market, purchases of new energy vehicles are going to increase by 40 percent this year to top 1 million vehicles, according to the China Association of Automobile Manufacturers.
Tesla refused to comment, but in a filing with the U.S. Securities and Exchange Commission earlier month it stated it designed the Model 3 “with a combination of materials to be lightweight and safe while also boosting cost-effectiveness for this mass-market vehicle”.
Other makers of mass market electric vehicles that have also selected steel over aluminum consist of Nissan Motor’s Leaf, the world’s best-selling all-electric vehicle, and Volkswagen’s e-Golf.
The e-Golf has 129 kg of aluminum and the Leaf uses 171 kg while Tesla’s luxury Model S includes 661 kg of the metal, as per the A2mac1 Automotive Benchmarking. A detailed breakdown was not there for the Tesla Model 3.