Posted: 21 Jul. 2020 4 min. read

Steel’s role in the future of mobility

By Dr. Andrew Zoryk, Deloitte

Amidst the continued global economic turmoil experienced by steel producers during recent years – driven by global overcapacity, regulatory challenges and more recently tariffs – the automotive industry remains a critical market for many steelmakers, consuming around 12% of steel produced,[1] with an average of 900kg of steel contained within each of the more than 97 million cars produced globally in 2017.[2] The automotive sector continues to play a key role in shaping the market pressures experienced by steel suppliers. Recent declining car sales in the Chinese market, for example, has resulted in automotive original equipment manufacturers (OEMs) operating their plants at levels significantly lower than their potential output. Similar declines in other key markets such as Europe are compounding the problem.[3]

Additionally, the automotive industry itself is facing further dimensions of disruption with knock-on impacts for all participants in the automotive value chain. The speed of these impacts is also changing, driven by social change, technology advancement, as well as environmental trends and political developments. Consumers have started to evaluate the new world of vehicle technologies and decide if they are willing to pay for them. It remains unclear, however, how close we are to the utopian vision of future mobility systems and the role that automotive technologies will play, which puts OEMs in the difficult position of needing to invest in expensive R&D programs with few guarantees of a return on investment.

Clearly, one of the key driving influences for the future of the automotive industry is consumer preference and behavior driven, for example, by changes in urbanization and the future of work.

For the past 10 years, the Global Automotive Consumer Study[4] by Deloitte has surveyed consumers around the world to identify trends in the automotive industry across countries and generations. The studies have shown how consumer thinking has changed over the past decade. Already in 2009, vehicle safety ranked as the top priority for consumers, by 2012 interest in hybrids driven by cost and convenience led the way, and in 2017 interest in autonomy was growing together with a need for a track record in safety.

The latest 2019 study is based on more than 25,000 consumer responses across 20 global markets. The findings provide important insights for steelmakers (as well as automotive companies) as they think about how the market for automotive steels may develop during the next years and the likely consequences such developments will have on steel’s role in future mobility.

Key findings of the study include:

Consumer trust in autonomous vehicles (AVs) appears to be stalling. In the United States, 50% of survey respondents do not believe AVs will be safe – nearly the same as last year’s 47% but drastically different from 2017, when 74% voiced safety concerns. Consumer confidence in AV safety also plateaued in China, Japan, South Korea, India, and Germany. Coupled with this, the survey showed that more than 50% of respondents in Europe said that reports of accidents involving AVs had a significant impact on their view of the technology.

  • Electric vehicles (EVs) have captured worldwide consumer interest. While 29% of US survey respondents would prefer a hybrid, battery, or another alternative to traditional drivetrains for their next vehicle – up from 20% last year – low fuel prices, relaxed emissions standards, and fewer rebates could dampen US EV adoption. Comparably, interest in EVs is strong in Asia, with China in the lead, where 65% of people surveyed would prefer an alternative powertrain in their next vehicle, followed by Japan at 59%. Consumers in many countries remain concerned about battery electric vehicle range, charging time, and safety. As a result, people are looking to hybrid electric vehicles as the interim answer. Interest in HEVs in Japan, for instance, grew from 38% of consumers in 2018 to 46% in 2019.
  • Consumers want strong regulation for new technology. As consumers look to the automotive future, they may not always associate emerging technology with traditional car manufacturers. In the United States, the number of surveyed consumers who said they trust traditional OEMs to bring AV technology to market continues to fall, from 47% in 2018 to 39% in 2019. Even in Germany, where trust in OEMs has traditionally been quite stable, this proportion has dropped rapidly from 51% in 2017 to 33% in 2019 – likely in part as a consequence of the recent “dieselgate” scandal.  With an ongoing lack of trust in the private sector, consumers are looking to governments to increase regulation. An overwhelming percentage of consumers in most countries indicated they wanted “significant oversight,” including 56 percent of US consumers.

So, what are some of the implications these findings have for steelmakers involved in the automotive steels sector?

Adoption of EVs will likely play out differently depending upon regional differences. In China, stronger policies are being introduced to address domestic pollution concerns and to reduce dependence on foreign oil, which may encourage faster EV adoption. European countries including Norway, Britain, France, and the Netherlands have announced plans to ban the sale of conventional gas- and diesel-fueled vehicles over the next two or three decades, with the share of diesel in the European Union falling already. While both regions may be poised for increased EV adoption, change will not be immediate. With an estimated 1.2 billion traditional fossil-fueled vehicles currently on the road,[5] that have a life expectancy of more than 10 years, such traditional vehicles will dominate for some time to come. This effect will be further reinforced through the continued use of more advanced, high quality steels that have the potential to extend the useful service life of vehicles.

The recent survey continues to highlight safety concerns as a key issue. An ongoing challenge for steelmakers is how to marry the requirements for material strength with those for formability and thus provide OEMs with greater options towards lightweighting of vehicles. Combining strength and formability to allow a steel structure to absorb the energy of a crash by wrinkling requires steels with multi-phase microstructures, as found in the latest advanced and ultra high strength steels (AHSS/UHSS). Furthermore, OEMs require that such UHSS can be easily formed into the sometimes complex shapes needed in modern design vehicles. It is clear that consumer concerns around safety mean that the usage of AHSS and UHSS steels in vehicles is not likely to decline any time soon. Having said this, steelmakers must continue to invest in developing new lighter, stronger steels with the needed mechanical properties that allows OEMs to develop strategic options for vehicles of the future.

In addition to the lightweight aspects of steel development, the trend towards electrification of vehicles will also influence other niche steel segments such as non-grain orientated electrical steels. Non-grain oriented electrical steel is widely used in the motors of automotive & hybrid vehicles owing to their multidirectional magnetic properties – a purely electric vehicle is expected to use 40-100kg of such material.[6] On top of this, an increase in the trend from hybrid vehicles to battery powered electric vehicles will accelerate an even greater emphasis on the future investments needed in AHHS/UHSS steel performance characteristics, as additional issues such as fire risks need to be factored into design.

The trends being set by the automotive OEMs also have broader strategic consequences for steelmakers. From a core strategic viewpoint, steelmakers need to consider questions such as:

  • Can we expect sufficient growth and profitability in our current automotive product portfolio and which parts are likely to become obsolete or commoditized in the future?
  • Should we diversify into new products with higher automotive relevance and attractive profits?
  • What will be the impact of reduced steel intensity in automotive due to lightweighting on demand volumes and production facilities?
  • What impact does this have on needed investments in our manufacturing footprint?
  • How do we manage future scenarios around value-based pricing of our products, where weight (steel intensity) is no longer the dominant factor?

Already today, the production of high quality automotive steels is complicated, often with significant challenges in achieving first-pass quality and high prime material yields. The foreseen changes in car design will significantly influence and further challenge steel producers (as well as others in the value chain) to think more holistically around design and their role in advising other value chain partners. For example, understanding how new combinations of different materials with new shapes and properties can be joined, glued and welded as part of an overall design. This implies a continued evolution of both internally focused and externally facing strategies. Internally, a greater focus on manufacturing excellence, where new digital technology (such as advanced analytics, IOT, artificial intelligence, etc.) can help drive the incremental manufacturing performance and product quality improvements needed to be considered a reliable supplier in an increasingly competitive market. From an external perspective, steel providers need to continue strategic investments in providing relevant value-added services and co-development. Here again, companies need to consider how “digitalization” can be used as a lever to accelerate data and knowledge exchange and to improve collaborative processes. The future needs to be centered around end-to-end co-engineering between steel producers and other players in the steel value chain.

Consumers will continue to play an important future role in shaping the demand for steel in the automotive sector. The current visions of integrated mobility and transportation will evolve over time based on changes in consumer attitudes and behavior. As part of this transition, automotive OEMs and in turn steel suppliers will play a key role. Understanding and knowledge of these trends will help steel producers prioritize and better positon their business strategies and investments.

[1] World Steel Association,

[2] World Steel Association,

[3] Financial Times,

[4] 2019 Global Automotive Consumer Study, Deloitte,

[5] Statista, “Number of passenger cars and commercial vehicles in use worldwide from 2006 to 2015 in (1,000 units),” 2018.


Key contact

Dr. Andrew Zoryk

Dr. Andrew Zoryk

Metals Leader, Deloitte Germany

Dr. Andrew Zoryk is a Deloitte Metals Leader based in Munich, Germany. Andrew's professional experience includes more than 30 years working within steel, metals and mill products industries in the areas of enterprise and supply chain management, manufacturing and business operations.