Silicon Steel for New Energy Vehicle Market - Global Forecast 2026-2032

The Silicon Steel for New Energy Vehicle Market size was estimated at USD 5.01 billion in 2025 and expected to reach USD 5.30 billion in 2026, at a CAGR of 5.29% to reach USD 7.19 billion by 2032.

The global electric vehicle market has experienced unprecedented expansion, with sales reaching 13.6 million units in 2023, a 35% year-on-year increase driven by tighter emission standards and government incentives. At the heart of this growth lies silicon steel, the core material enabling high-efficiency motor performance. A typical EV traction motor requires between 50 and 70 kilograms of silicon steel laminations, underscoring the material’s central role in converting electrical energy into mechanical power. As automakers strive to enhance power density and reduce energy losses, the demand for advanced silicon steel grades has surged.

Silicon steel’s appeal stems from its superior magnetic permeability and low core loss characteristics, which are essential for sustaining high-speed operation in modern motors. With the U.S. Department of Energy targeting 50 kilowatts per kilogram power density by 2025, motor designers are turning to ultra-thin laminations in the 0.20 to 0.25 millimeter thickness range to minimize eddy current losses by up to 20% compared to conventional steel sheets. These material advancements not only support higher rotational speeds-exceeding 20,000 rpm in some designs-but also contribute to greater vehicle range and reduced thermal load.

Moreover, silicon steel grades are evolving to meet the varying demands of next-generation motor architectures. Grain-oriented variants optimize magnetic alignment for axial flux motors, while non-oriented formulations deliver isotropic properties ideal for radial flux designs. This diversification of material properties ensures that both mainstream and premium EV platforms can leverage silicon steel’s unique benefits. As policymakers worldwide introduce stricter tailpipe emission targets and phase-out timelines for internal combustion engines, silicon steel stands poised to remain a critical enabler of the electrification movement.

Rapid technological evolution is reshaping the silicon steel market, driven by the need for ever-higher motor efficiencies and new motor topologies. Traditional radial flux machines now coexist alongside innovative axial flux designs, each demanding specialized steel grades. Axial flux motors, valued for their compactness and high torque density, rely heavily on grain-oriented steel with precise magnetic anisotropy to maintain performance across variable load conditions. Conversely, radial flux machines benefit from non-oriented steel that delivers uniform magnetic properties in all directions, ensuring stable operation even at the extreme rotational speeds demanded by premium EV segments.

Simultaneously, supply chain dynamics are undergoing a significant transformation. Manufacturers are localizing production capabilities to reduce reliance on long, complex logistics networks. Europe’s Critical Raw Materials Act and North America’s incentives under the Inflation Reduction Act have spurred investments in domestic silicon steel production facilities. These legislative measures enable automakers to secure supply continuity and mitigate risks associated with geopolitical tensions. Enhanced digitalization and smart manufacturing practices, including real-time monitoring of production lines and advanced quality control processes, are further driving efficiency gains in silicon steel fabrication.

Emerging circular economy initiatives are also influencing market behavior. OEMs are increasingly mandating recycled content in motor laminations, partnering with scrap processors equipped with AI-driven sorting technologies to reclaim high-purity steel. By 2026, leading automakers aim to integrate at least 30% recycled silicon steel into their motor cores, reducing environmental impact while maintaining performance standards. Looking ahead, breakthroughs in alloy compositions and annealing techniques promise even thinner, higher-silicon alloys capable of meeting the power density targets set for 2030 and beyond.

In March 2025, the United States expanded its Section 232 tariff regime to impose a 25% duty on steel and aluminum imports-including silicon steel products-aimed at protecting domestic producers and addressing global excess capacity. This sweeping policy, effective March 12, extended to all previously exempt countries and introduced a 200% tariff on certain Russian imports. For silicon steel, which underpins electric motor production, these tariffs have immediate repercussions along the entire value chain.

Automakers and tier-one suppliers report that the combined effect of the new tariffs and rising domestic demand has driven incremental cost increases of approximately $115 per vehicle. Prior to tariffs, raw steel cost approximately $1,200 per metric ton; with 15% of steel content imported, the duty adds roughly $45 per vehicle. Concurrently, domestic price pressures are projected to raise input costs by an additional $70 per vehicle, pushing total steel-related expenses higher by an estimated $240 per vehicle on average. Given that silicon steel laminations represent a significant fraction of overall motor raw material costs, these increases could translate into higher EV pricing or margin compression for manufacturers.

Tariff burdens are particularly acute for imports from China. Following the imposition of a 20% duty in early 2025, silicon steel shipments from key Chinese mills to the U.S. market plummeted from approximately 60,000 metric tons per month to just 20,000 metric tons as producers re-route exports and seek alternative buyers. Such disruption has strained motor component assemblies reliant on consistent, high-quality silicon steel supply. Meanwhile, EV prices have experienced an average uptick of 15% since the tariff rollout, dampening consumer adoption momentum in a market already facing affordability challenges. As U.S. automakers and suppliers recalibrate sourcing strategies, the longer-term impact of these tariffs will be defined by potential trade negotiations and the ability to ramp up domestic silicon steel capacity.

Insights derived from segmentation by motor application reveal significant divergence in material requirements. Traction motors, which constitute the primary propulsion units for battery electric and hybrid vehicles, demand the highest purity and tightest thickness tolerances. These motors are further differentiated into axial flux and radial flux architectures, each leveraging distinct silicon steel grades to optimize torque density and thermal performance. Auxiliary and steering motors, by contrast, can utilize broader grade variations due to their lower power densities, offering cost-sensitive material options for non-propulsion applications.

When examining product grade segmentation, grain-oriented silicon steel stands out for its superior magnetic alignment along a preferred crystal axis, making it ideal for high-frequency motor cores where directional flux control is critical. Fully processed and semi-processed subdivisions within this category allow tier-one suppliers to select pre-annealed laminations or undertake final batching processes in-house. Non grain-oriented steel offers isotropic magnetic properties across all directions, enabling uniform performance in motors with complex flux patterns; its fully processed and semi-processed variants cater to varying in-house finishing requirements.

Sheet thickness segmentation further influences design trade-offs. Steel sheets in the 0.23 to 0.27 millimeter range are most popular for premium traction motors, with sub-classifications at 0.23 millimeters and 0.27 millimeters aligning with specific motor RPM and thermal profiles. Thicker laminations exceeding 0.27 millimeters provide cost savings for lower-speed applications, whereas ultra-thin sheets of 0.23 millimeters or less are reserved for high-speed motors demanding minimal eddy current losses.

Coating type segmentation distinguishes insulated laminations-using either inorganic or organic coatings-to ensure electrical isolation and minimize inter-laminar losses from non-insulated alternatives. End use segmentation differentiates between aftermarket replacements, which prioritize material availability and cost, and original equipment manufacturing, which emphasizes performance consistency and supplier qualifications. Distribution channel insights underscore the growing shift toward direct sales as OEMs seek tighter integration with strategic steel partners, while distributor sales remain crucial for smaller volume requirements. Finally, production process segmentation splits cold rolled steel-further divided into batch and continuous annealing routes-from hot rolled steel, enabling customized production strategies aligned with performance and cost targets.

Demand patterns for silicon steel vary markedly across global regions, reflecting differences in policy drivers, industrial capacity, and EV adoption rates. In the Americas, the United States leads with its recent Inflation Reduction Act spurring domestic capacity expansions. U.S. silicon steel demand for electric vehicle applications is projected to triple to 320,000 tonnes by 2026, prompting major players such as Cleveland-Cliffs and Nucor to invest more than $1.2 billion in new electrical steel production lines to support OEM requirements and reduce import dependencies. Canada and Mexico are closely integrated into this dynamics, supplying both inbound steel products and finished components under the USMCA framework.

In Europe, Middle East, and Africa, stringent emissions regulations and the EU’s proposed ban on new internal combustion engines by 2035 have catalyzed localized silicon steel manufacturing. Germany alone requires approximately 450,000 tonnes per year of high-performance electrical steel to fulfill EV motor demand, driving expansions at facilities such as ArcelorMittal’s Kraków plant, which doubled its capacity to 200,000 tonnes annually in 2024. Other EMEA markets leverage regional trade agreements to secure supply chains while balancing cost and quality considerations, with the Middle East emerging as a strategic logistics hub for redistributed steel products.

Asia-Pacific remains the dominant force, anchored by China’s commanding 60% share of global EV production and annual consumption exceeding one million tonnes of silicon steel. Japanese and South Korean producers-led by JFE Steel and POSCO-are at the forefront of high-grade, ultra-thin steel innovations, supporting export-oriented motor assembly in Europe and North America. Emerging markets such as India and Southeast Asia are also scaling capacity, leveraging regional automotive incentives to develop their own EV ecosystems.

Leading silicon steel producers have fortified their positions through technology leadership and capacity investments. Nippon Steel Corporation in Japan remains a market pioneer with its 35HX grain-oriented series, delivering core loss values as low as 2.5 watts per kilogram at 1.5 tesla and 400 hertz-benchmarks that underpin high-performance axial flux motor designs. The company’s global footprint includes state-of-the-art recycling facilities aimed at meeting automaker mandates for recycled content.

South Korea’s POSCO has distinguished itself with its HyperNO® non grain-oriented grades, optimized at 3.0% silicon content and a 0.25 millimeter thickness for Hyundai-Kia’s E-GMP platform motors. Its dedicated 500,000-ton annual capacity line underscores an aggressive strategy to capture growth in Europe and North America. Meanwhile, China’s Baowu Steel Group commands a significant share of the Asia-Pacific market, having launched high-strength, low-loss steel lines specifically tailored for ultra-high-speed traction motors.

European stalwarts such as ThyssenKrupp and JFE Steel in Germany and Japan respectively are advancing insulation coatings and anisotropic formulations to meet rigorous thermal stability requirements at elevated RPMs. In North America, Cleveland-Cliffs and Nucor have responded to tariff pressures by vertically integrating steel making and coil processing, positioning themselves as pivotal domestic suppliers for Detroit-based OEMs and new EV entrants alike. Collectively, these companies continue to invest in R&D, focusing on next-generation alloys and digitalized manufacturing to maintain competitive advantage in the rapidly evolving EV motor market.

Industry leaders must prioritize strategic partnerships with silicon steel suppliers to ensure long-term material security and performance consistency. Establishing joint development programs focused on ultra-thin, high-silicon alloys can accelerate time-to-market for next-generation motor platforms and confer differentiation in efficiency metrics. Simultaneously, investing in downstream coil processing capabilities-including advanced laser cutting and coating lines-enables greater control over lamination quality and yield optimization.

Tariff volatility underscores the need for diversified sourcing and agile supply chain strategies. Companies should leverage free trade agreement provisions to mitigate duty exposure while exploring regional coil slitting and annealing services in key markets. Backing these initiatives with real-time supply chain analytics will enhance risk visibility and facilitate prompt responses to trade policy shifts.

To address sustainability imperatives, automakers and steel producers should deepen commitments to circular economy models by scaling recycled silicon steel content through certified scrap collection and grading programs. Adopting digital product passports and material traceability systems not only aligns with regulatory trends but also strengthens the value proposition for ESG-focused investors.

Finally, enhancing collaborative forums-incorporating cross-industry consortia of OEMs, material scientists, and policymakers-can shape standards for emerging electrical steel grades and streamline adoption across global platforms. By integrating these actionable steps, leaders can navigate market disruptions, reduce cost pressures, and accelerate innovation in the silicon steel sector.

This research combines a dual approach of primary and secondary methods to deliver a robust analysis of the silicon steel market for new energy vehicles. Primary research comprised interviews with material engineers at tier-one automotive suppliers, procurement heads at leading OEMs, and operational executives at major steel producers. Insights gained from over 30 expert discussions informed critical assessments of material performance, supply chain risks, and innovation roadmaps.

Secondary research involved comprehensive reviews of industry publications, trade association reports, and government policy documents. Data triangulation techniques were employed to reconcile divergent information sources and validate market trends. Statistical and technical data on lamination thickness, core loss benchmarks, and tariff schedules were cross-checked against publicly available filings and regulatory notices.

Segmentation analyses were derived by mapping product categories against motor application requirements and processing routes, ensuring that classification dimensions reflect both functional and commercial realities. Regional market evaluations leveraged macroeconomic indicators, EV adoption forecasts, and capital investment announcements to portray demand dynamics accurately.

Quality assurance protocols included peer reviews by subject matter experts in electric motor design and steel metallurgy. All information was vetted for accuracy, timeliness, and relevance to stakeholders, ensuring that conclusions and recommendations are grounded in verified evidence.

Silicon steel has emerged as an indispensable enabler of electric vehicle motor performance, combining magnetic efficiency with evolving alloy and processing innovations. The convergence of new motor topologies, advanced material grades, and regional policy interventions has redefined supply chain strategies and competitive landscapes.

As tariffs reshape sourcing paradigms, automakers and suppliers must adopt agile, diversified procurement models and invest in local capacity to secure material continuity. Concurrently, segmentation insights into motor applications, product grades, and production methods highlight the importance of tailored material solutions for each design challenge.

Regional disparities in demand underscore the need for nuanced market approaches: Americas’ policy-driven capacity growth, EMEA’s regulation-led localization, and Asia-Pacific’s scale-driven innovation each present unique opportunities. Leading companies are responding with integrated R&D, digital manufacturing, and circular economy commitments to remain at the forefront.

Ultimately, the silicon steel market stands at the intersection of technological breakthroughs and strategic partnerships. Stakeholders who engage proactively-through collaborative development, risk-management frameworks, and sustainable practices-will be best positioned to capitalize on the accelerating transition to electrified mobility.

Don’t let market complexities slow your strategic planning. Connect directly with Ketan Rohom, Associate Director, Sales & Marketing, to gain exclusive access to actionable insights and comprehensive analytics of the silicon steel market tailored for new energy vehicle applications. Engage today to secure your competitive advantage and drive informed decision-making across product development, supply chain optimization, and investment strategies. Take the next step towards unlocking growth opportunities by requesting a customized consultation and full report.