The electrical steel market for electric vehicles was valued at approximately $5 billion in 2025 and is projected to grow at a compound annual rate of 15% through 2033, reaching an estimated $15 billion.
That trajectory reflects a single underlying pressure: as EV drivetrains push toward higher rotational speeds to extract more power from smaller motor packages, the magnetic core losses in conventional electrical steel become an increasingly significant constraint on system efficiency. POSCO’s decision to lead a ten-organisation research consortium targeting 6.5% silicon electrical steel for EV drive motors, announced on June 11, addresses that constraint directly, though the technical barriers that have limited this material’s commercial availability for decades remain very much in play.
Conventional non-grain-oriented electrical steel used in EV motors typically contains around 3% silicon. The physics of the 6.5% variant are well established in the literature: compared to 3% silicon steel, the higher-silicon alloy offers greater electrical resistivity, good saturation magnetisation, and near-zero magnetostriction. Greater electrical resistivity suppresses eddy current losses, which scale with the square of operating frequency. In high-speed EV motors operating at frequencies well above the 50 or 60 Hz of grid applications, this property becomes decisive. Near-zero magnetostriction simultaneously reduces vibration and audible noise in the motor core, a secondary but commercially relevant benefit as EV manufacturers compete on NVH characteristics.
The Brittleness Problem
The obstacle that has prevented 6.5% silicon steel from displacing the 3% variant in mass production is well understood and has resisted straightforward solutions. As silicon content in steel increases beyond approximately 3.2%, the material forms ordered intermetallic phases that make it severely brittle at room temperature. Conventional cold rolling, the standard industrial process for producing the thin-gauge sheets used in motor laminations, becomes impractical. The material fractures rather than deforms.
Current commercial supply of 6.5% silicon steel relies primarily on chemical vapour deposition, a process in which a 3% silicon steel strip is exposed to silicon tetrachloride at elevated temperatures, diffusing additional silicon into the surface layers. JFE Steel in Japan has commercialised this route under the trade designation JNEX, producing sheets at 0.1 mm gauge. The process works, but it is slow, energy-intensive, and limited in the sheet widths it can produce economically. POSCO’s project explicitly targets wide sheet manufacturing, which signals that the consortium is working on production-scale solutions to width constraints that have kept 6.5% silicon steel largely confined to specialised, lower-volume applications.
What POSCO Is Trying to Prove
The project, supported by South Korea’s Ministry of Trade, Industry and Energy and evaluated by the Korea Evaluation Institute of Industrial Technology, runs from material development through to core fabrication and drive motor manufacturing. The inclusion of Hyundai Motor as a primary partner, alongside component manufacturer SL and magnetic core specialist Polfair Electric, structures the research around an integrated value chain rather than isolating the materials science question from its end-use context.
This matters because the efficiency gains from 6.5% silicon steel can only be fully captured if the downstream processing, stamping of laminations, stacking, and motor assembly, is adapted to the material’s different mechanical characteristics. A steel that reduces iron loss by a meaningful margin at the material level but introduces manufacturing yield losses or dimensional tolerance problems at the lamination stage does not translate its theoretical advantage into system-level gains. The MOU signed across all ten organisations formalises a commitment to address the full process chain, which is the correct framing for a material where the bottleneck is not the magnetic physics but the manufacturing economics.
The Competitive Context
POSCO already holds a position among the five largest electrical steel producers globally, alongside China Baowu, ArcelorMittal, Nippon Steel, and JFE, a group that collectively held roughly 44% of the global electrical steel market in 2025. The EV-oriented segment of that market is the highest-growth portion, with Asia-Pacific accounting for over 60% of revenue share. For POSCO, securing a manufacturing capability in 6.5% silicon wide sheet would represent a differentiated position in a market where most volume competition is currently concentrated in the 3% silicon grades used in standard motor laminations.
The competitive pressure from Japanese producers is relevant here. JFE’s JNEX product line and Nippon Steel’s work on ultra-thin high-silicon grades represent a significant body of commercial and process knowledge that POSCO’s consortium will need to match or improve upon. Nippon Steel’s March 2025 launch of its Ultra-Loss-Core grain-oriented product, targeting a 12% reduction in energy loss for transformer applications, illustrates the pace of incremental advancement being made by incumbent leaders. POSCO’s project is more ambitious in scope, targeting a novel wide-sheet manufacturing route rather than incremental refinement of existing products, which raises the technical risk but also the potential differentiation if the processing challenges are resolved.
What Resolution Would Mean for EV Efficiency
The system-level stakes are worth quantifying. Iron loss in an EV traction motor contributes to the total energy consumed per kilometre driven, reducing range for a given battery capacity. The magnitude of that contribution depends on motor design, operating speed range, and duty cycle, but in high-speed permanent magnet synchronous motors typical of current EV architectures, iron loss constitutes a meaningful fraction of total motor losses at highway speeds. Reducing iron loss through improved core materials is one of several levers available to motor designers alongside thin-gauge laminations, improved winding geometries, and optimised flux paths, but it is a lever that operates at the material supply level and can therefore be applied across many motor designs without requiring platform-specific engineering changes.
The global electrical steel market as a whole is forecast to reach between $67 billion and $99 billion by the early to mid 2030s, depending on the source, with the EV application segment growing substantially faster than the market average. Within that market, premium grades capable of supporting higher-efficiency motors command price premiums that offset the additional manufacturing cost. Whether 6.5% silicon wide sheet can be produced at a cost that preserves a net efficiency benefit after accounting for the premium over standard grades is the economic question that POSCO’s consortium will need to answer, and the answer will determine whether this project results in a commercially deployable technology or remains a well-characterised but economically marginal option.
