TOKYO – Toyota Motor will buy part of its electric metal plate from China’s Baowu Steel Group, China’s largest metals supplier, from a move that could bring an era in which Japanese metal manufacturers will have to compete for value and quality, Nikkei has known.
Steel sheet is a high-performance product and a curtain essential for electric vehicles, whose production requires complicated technology. Because superior quality is a must, Toyota basically comes from Japan’s leading metals manufacturers.
The agreement is seen as a sign that Chinese steel manufacturers, reliable suppliers of large quantities of general purpose products, are catching up with their Japanese rivals in terms of quality.
Toyota has only approved the quality of China Baowu’s metal plate for use in hybrid and electric cars manufactured in Japan, but is already receiving the product.
This is believed to be the first case in which a major Japanese car manufacturer uses metal foils manufactured through a Chinese company in passenger cars built in Japan.
The electric metal sheet is magnetized by a special process. Its production requires technologies, such as the removal of impurities. The product enters the fundamental parts of electric vehicles, adding engines.
Curtains are essential for motors to run efficiently. As such, it directly affects the mileage that a vehicle can reach. High quality is the key to the product, only a handful of metal manufacturers, who added Nippon Steel, have supplied it to corporations like Toyota.
China Baowu will supply a limited amount of metal to Toyota, however, a Toyota executive said the Chinese product “is as smart as its Japanese counterparts. Arrangement… We will diversify the suppliers of curtains, electric vehicles. It is expected to grow.”
China Baowu has also begun supplying its products to the leading U.S. electric car manufacturer Tesla, according to the Japanese Iron and Steel Federation.
The agreement shows that the metal industry is entering a new phase. China, which produces 60% of the world’s raw metal, had basically focused on the decrease in the quality of the metal used in structural fabrics and other general purpose products. Its access to high-end production means that it invades one of the few major revenue source resources that Japanese players have left.
China, the world’s largest distributor of electric vehicles, plans to increase its electric vehicle sales target to 25% of new car sales by 2025. In 2018, the figure was 4%.
The electric vehicle market is expected to grow and China is expected to produce more than 10 million cars by 2035, 13.7 times the amount it produced in 2018. Europe will also be a major player, and the region is expected to produce 6.7 million electric vehicles, 32 times more than in 2018.
China Baowu, which was created when the Baometal Group absorbed Wuhan’s smallest company Iron and Steel Corp. in 2016, it intends to capitalize on the growing demand for electric metal plates.
According to the World Steel Association, Baowu is the largest manufacturer of raw metals in 2019, after ArcelorMittal Europe.
The company owns 60% of the Chinese metal plate market and plans to invest more than 2 billion yuan ($285.7 million) in its Shanghai plant to increase its capacity for the product.
China has consolidated its metallurgical industry, creating larger players who can take duplication and divert more resources for studies and investments.
In 2019, Jiangsu Shagang Group, China’s third largest metals supplier, also began implementing projects to increase capacity.
Opposing Japanese numbers are attentive to the rise of Chinese metallurgical corporations supplying high value-added products to the automotive industry and other key industries.
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