Toyota will buy critical rolled metal from China's Baowu

Toyota Motor will buy some of its electrical sheet from China Baowu Steel Group, China's largest steel supplier, which may herald an era when Japanese steelmakers will be forced to compete in both price and quality.

Steel sheet is a highly efficient product and an essential material for electric vehicles, requiring sophisticated manufacturing techniques. Because high quality is critical, Toyota sourced primarily from leading steelmakers in Japan.

The deal is seen as a sign that Chinese steelmakers, reliable suppliers of large quantities of general products, are catching up with Japanese competitors in quality.


Toyota has not only approved the quality of China Baowu steel sheet for use in Japanese-made hybrid and electric vehicles, but is already accepting delivery of the product.

This is believed to be the first time that a major Japanese automaker has used electrical steel sheet made by a Chinese company in Japanese-made passenger cars.

The electrical steel sheet is magnetized using a special process. Its production requires sophisticated technologies such as removing impurities. The product is included in the main components of electric vehicles, including motors.

The material is essential for efficient operation of engines. Thus, it directly affects the mileage that the vehicle can achieve. Since high quality is the key to the product, only a few steelmakers, including Nippon Steel, have been able to supply companies like Toyota.

China Baowu will supply Toyota with a limited amount of steel, but a Toyota executive said the Chinese product "is as good as its Japanese counterparts. ... We are looking to diversify our material suppliers as well as the use of electric vehicles." is expected to grow. "

China Baowu has also begun shipping its products to Tesla, the largest US electric vehicle manufacturer, according to a study by the Japan Iron and Steel Federation.

The deal shows that the steel industry is entering a new phase. China, which produces 60% of the world's crude steel, has mainly focused on low-quality steel used in building materials and other general products. His entry into the upscale side of production means he is encroaching on one of the few major revenue streams left for Japanese players.

China, the world's largest trader of electric vehicles, plans to raise its target for electric vehicle sales to 25% of new car sales by 2025. In 2018, this figure was 4%.

Electric Vehicle Market Expected To Grow As China Forecasts