December 22, 2017 / 11:46 AM / a year ago

Nippon Steel aims to be ready for electric vehicles era

TOKYO (Reuters) - Nippon Steel & Sumitomo Metal Corp is preparing for an era of electric vehicles (EV) which require lighter materials by seeking advances in technology and possibly joining forces with makers of other materials.

FILE PHOTO: A logo of Nippon Steel & Sumitomo Metal Corp is pictured outside its headquarters in Tokyo November 9, 2012. REUTERS/Yuriko Nakao/File Photo

“I think the auto industry is at a turning point in terms of technology,” Kosei Shindo, president of Nippon Steel, Japan’s biggest steelmaker, told Reuters in an interview.

“We need to advance our technology to meet this mega trend toward EVs,” he said, adding that its strategy to cope with automakers’ shift will be a key item in its new three-year business plan which will start in April.

Tighter global emissions regulations are forcing automakers worldwide to shift to EVs, including all-battery EVs that will require capacity to deliver longer ranges.

Reducing the weight of a vehicle will be critical. Batteries are an expensive but vital component, so a reduction in car weight will mean fewer batteries will be needed to power the vehicle, saving on costs.

Industry experts anticipate plug-in hybrid petrol-electric vehicles and all-battery EVs will account for as much as 26 percent of global car sales by 2030, versus just over 1 percent last year, data from the International Energy Agency shows.

“I don’t expect to see sudden switches to EVs in one or two years as automakers face issues to overcome such as electric infrastructure,” Shindo said, adding that steel will remain the mainstay material for vehicles as it offers the cheapest cost in relation to strength.

“But we want to map out and begin our strategy in the next three years to cope with technological innovation in an auto industry,” Shindo said.

Steelmakers already face competition from aluminum, carbon fiber and other light materials producers seeking to cash in on demand in the auto sector going through the biggest change in its history.

“We have options to either become a department store of various materials on our own or to stay focused on steel,” Shindo said, adding that alliances with suppliers of competing materials would be an option.

“We’ll take steps to reflect demand from our customers and technological development in an auto industry,” he said.

Shindo also said that his company renewed its 5-year alliance contract with Kobe Steel Ltd in November, after the smaller peer disclosed that about of its 500 customers had received products with falsified specifications, throwing global supply chains into turmoil.

Nippon Steel owns a 2.95 percent stake in Kobe Steel, which has been at the center of a data-falsification scandal that has shaken Japan’s manufacturing industry.

“Our alliance will not change,” Shindo said, but ruled out raising its stake in Kobe Steel or sending its executives to the company.

Reporting by Yuka Obayashi; Editing by Tom Hogue

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