While the semiconductor chip shortage rages on, a second – and perhaps equally problematic – supply chain obstacle is emerging in certain electric motor markets.
You probably already knew the semiconductor shortage prevented the completion of 11.3 million electric vehicles as of January 2022. Now, manufacturers can add electric steel to the list.
If you’re not taking steel availability as seriously as the chip shortage, you should be. John Anton, director of pricing and purchasing at IHS Markit, recently gave a grim outlook:
“Producers have been notified that they will be on allocation, essentially rationing, for electrical steel for all of (2022), with most expecting to get only 80% to 90% of purchase requirements. The impact of the electrical steel shortage could potentially be as damaging to the global economy in 2022 and 2023 as the semiconductor shortage (was in 2021).”
This scarcity could certainly impact the ongoing “electrification” of transportation. Other products and industries are feeling the pinch of material shortages, too:
- Ceiling fans
- Household motors/appliances
- Power tools
- Lawn & garden equipment
What if you only make 8,000 of an order instead of the 10,000 your customer really wanted? Someone with the right technology or availability (such as alternative soft magnetic composite or sintered soft magnetic materials) might grab up the other 2,000.
Here’s why the steel shortage lingers in 2022, how it’s impacting EV production forecasts and numbers, and why you should consider these alternative solutions ASAP:
What’s the Deal With Electrical Steel? State of the Shortage in 2022
Electrical steel (often called silicon steel due to its content) has been at the heart of automotive and alternative vehicle electrification trends for many years. This iron alloy possesses strong magnetic properties, making it a solution for applications ranging from electric motors to transformers. Electric motor core material, of course, is key to converting electrical energy into mechanical energy.
Electric vehicle production statistics, however, are sagging because manufacturers lack sufficient raw material, and are unsure how to pivot.
The problem today with motor core stamping (making the rotor and stator) is that it relies on a specific electrical steel type – the non-grain-oriented electrical steel (NOES) market.
Unlike grain-oriented steel, non-oriented electrical steel sheets see use in motors and other machines that need multidirectional magnetization. Hybrid and electric motors, in particular, require a special “xEV” grade that’s especially constrained right now.
Data from Metals Technology Consulting indicates that capacity constraints will get serious by 2023. And from 2025 onward, it’ll be “highly unlikely” that mills can meet demand without adding significant investment in NOES.
The question is: Why?
Why Is the Electrical Steel Shortage Happening?
NOES steel supply is in rough shape due to several factors:
1. Expanding ‘Electrification’
The electrification of transportation worldwide has marched on, with no signs of stopping … as long as the necessary materials exist.
Government emissions regulations and consumer demand are driving the need for “electrified” solutions in automotive and other markets. To make these devices run efficiently (low core loss and high permeability), engineers use special magnetic materials like electric steel.
2. High Concentration in Asia
Mills that manufacture electrical steel exist primarily in China. The COVID-19 pandemic has hit Chinese exporters hard in the form of overwhelmed shipping ports and surging freight rates.
In part due to the ambitious vehicle electrification goals of the Biden administration, American OEMs are fighting over limited stateside sources of steel.
The U.S. and European auto industries already rely on Asia for rare-earth motor magnets and other products. Add in electrical steel, and that’s a lot of eggs in one basket.
3. High Barriers for Producers
It’s a long road for a company to break into or expand in the niche steel industry.
Mills aren’t created in a day – in the best of times, it takes 3 years to:
- Acquire permits
- Get construction equipment
With COVID’s impact on supply chains lingering, the truth may be closer to 4-5 years.
And that’s for an established supplier! A new vendor will probably need an extra 2-8 years before it’s ready to produce xEV-grade steel, according to IHS.
The saying “It’s hard to find good help” also extends to actually stamping the laminated silicon steel sheets that form a final part. Only 20 companies that specialize in motor core lamination stamping exist worldwide, and even fewer producers of the stamp press equipment itself.
4. Limited Alternatives(?)
Again, not just any slab of metal will do for intricate applications that require high magnetic performance. A silicon steel lamination core helps produce and maintain magnetic fields, among other benefits.
Note that “laminations, or nothing at all” is largely a perceived limitation. Viable alternatives exist, even if some engineers don’t realize it … yet. More on that in a bit.
How the Electrical Steel Shortage Hurts Manufacturers
In America, the struggle of local silicon steel suppliers to react to the government’s EV goals will drive up motor costs. North American and European automakers could, in turn, fall behind foreign competitors with better access to raw materials (and therefore shorter lead times).
The domino effect is easy to see.
Prototyping and launch plans become a nightmare when you’re stuck waiting for materials. There’s less time to figure out what worked and didn’t work, and less time to return to the drawing board.
How Can Manufacturers Handle the Electrical Steel Shortage?
Maybe a more urgent question is: What if that “2026” capacity-crisis projection later evolves into “2024?” You’d better start planning now. Your options include:
- Wait to steel mills to figure it out
- Reshore your electrical steel supply
- Consider alternative electric motor designs
- Integrate & partner for new material solutions (i.e. SMCs)
Wait for Steel Mills to Figure It Out?
Several major steel producers have announced millions in investments each in capacity for the next 3-5 years. Will this be enough to satisfy global EV production?
Another idea steel manufacturers may be considering is manufacturing slightly thicker steel sheets. This has its own drawback for motor makers, as thicker sheets produce more heat; this reduced magnetic efficiency could require a redesign of your laminated steel stator/rotor core.
It’s not the quick trade-off you might think.
Reshoring Electrical Steel?
Generally speaking, the lead-time challenges of sourcing from Asia has led many U.S. companies to at least consider reshoring their supply chain. However, there’s limited ability to reshore electrical steel sourcing in America because there simply aren’t many companies making it.
Alternative Electric Motor Designs?
Necessity breeds innovation.
OEMs and Tier 1 suppliers could look for design loopholes that allow them to spend less on motor-grade steel. Changing the planar geometry of a rotor or stator could reduce scrap material by more than you might realize.
The axial flux motor is one such alternative design that’s growing in popularity due to its superior torque and cooling ability. Even better, it allows you to avoid electrical steel altogether …
Integrating & Partnering for New Materials?
Again – necessity breeds innovation. Let’s rethink how you approach the entire motor manufacturing process, from design to production.
The equipment and materials available today in the powder metallurgy (PM) industry are capable of meeting demand where magnetic steel lamination can’t. From a materials standpoint, the top emerging alternative is soft magnetic composite (SMC), an iron-based powder with an electrically insulating coating.
The powder metallurgy materials industry has plenty of capacity to take on new applications.
Much of the development and processing happens in the United States and Europe. And unlike a steel mill, a powder metallurgy facility doesn’t need a ton of expensive equipment to produce parts.
By directly partnering with a parts manufacturer with materials and processing expertise, you can improve your current motor design and stabilize your supply chain.
Other Advantages of Powder Metallurgy Materials
Availability isn’t the only quality that might make powder metallurgy a contender for your next motor design:
- Higher magnetic performance – Reduced core loss is possible, even as part size and frequency increases.
- Shape flexibility – Because you can design from scratch, PM frees you to design complex, unique geometries. It’s the perfect entry point into axial & other alternative motor configurations.
- Green technology – A rotor or stator lamination creates 30-75% of scrap waste, depending on the design. Not to mention electric steel mills are huge polluters, which kind of contradicts the EV goal of using green technology.
- Growth potential – SMCs have only been around for a few decades, but are already competitive with laminations in performance & cost in many applications. Imagine the possibilities in a few years!
Soft magnetic composites are an AC-specific material, while sintered powder metal can excel in DC applications. Sintered soft magnetic materials often step in when a project requires additional permeability and strength beyond what SMC offers. With some advanced cooling solutions, these sintered options can still provide impressive magnetic properties, even at extremely low frequencies.
The question then becomes: Could your motor concept overcome any potential shortcomings of switching to PM vs. laminations, while remaining cost-effective? Since powder metal material is highly customizable in the right hands, these are discussions best had with an experienced PM vendor.
Plan Now or Pay Later
The only long-term solution to the EV steel material shortage is either for mills to increase production, or for auto engineers to reimagine their designs.
Only one of those options puts you in the driver’s seat.
Think again of the semiconductor shortage. OEMs are either stuck waiting, or actively seek alternative solutions.
If you’re a motor designer hoping to stay ahead of the looming steel crisis, take the proactive approach – rethink your design. A different motor core material might be the key.
The powder metallurgy industry – and SMC – is ready today to meet those demands. To learn more about AC electric motor materials and SMC, download this free e-book: