ArcelorMittal Targets Auto Market With New Fuel-Efficient Car Door Solutions
ArcelorMittal‘s (NYSE:MT) has introduced new lightweight car steel door solutions, which it claims will generate 34% greater weight savings than existing solutions. The new doors are claimed to be 27% lighter than the ones being currently used. In view of tightening fuel efficiency and tailpipe emission regulations, we expect the automotive industry to respond positively to the new product. [1]
ArcelorMittal had successfully defended its patent on the Usibor steel earlier this year in the U.S. Court of Appeals for the Federal Circuit in Washington. Usibor is a grade of ultra high strength steel (UHSS), which is a key element in ArcelorMittal’s light steel car door strategy. ((ArcelorMittal’s Key High Strength Steel Patent is Confirmed, WebWire))
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Is There A Market Demand For Lightweight Steel?
Regulations in the automotive industry are evolving. There is an increasing focus on fuel efficiency and enhancement of passenger safety. This poses the contrasting challenge of using strong material for the body of the vehicle while making it lighter. With the advent of electric and hybrid vehicles, the requirement for lighter materials is expected to increase all the more.
ArcelorMittal has a sizable presence in both Europe and the USA, which have introduced tough regulations related to fuel efficiency and emissions from tailpipes of cars. Regulations related to tailpipe emissions will come into full force in Europe in 2015, while tailpipe emissions and fuel economy regulations in the USA are expected to be enforced in 2021. For automobile manufacturers, this means that they would have to lower the weight of cars to reduce fuel consumption and tailpipe emissions to meet regulatory requirements. Not just that, tougher regulations are expected by 2025 in both these regions. Thus, manufacturers are studying every part of the car closely to reduce weight. According to company estimates, reducing the weight of a vehicle by around 12 kg reduces CO2-equivalent emissions by one gram per kilometer.
What Has ArcelorMittal Achieved?
ArcelorMittal has short term, medium term and long term plans for its lightweight steel solutions strategy. Right now, it is the short term solutions the company is focusing on. In this, using a combination of advanced high strength steels (AHSS) and ultra high strength steels (UHSS), it has managed to reduce the weight of the baseline C-segment door from 18.3 kg to 13.3 kg, while adhering to structural and safety requirements. This is impressive because generally weight reductions in this industry tend to be small enough to be measured in grams rather than kilos. ((ArcelorMittal Investor Day Presentation, ArcelorMittal Website))
The company’s medium term solutions are expected to be rolled out by 2017.
The continuous innovation in automotive steel space has resulted in solutions that result in 30% lower costs than use of aluminum for doors. With further innovation, we expect the cost differential to increase even more. We think automakers would be keen to avail of every opportunity to reduce their costs and meet regulatory standards, thus ensuring robust demand for ArcelorMittal’s solutions. Looking far out into the future, we believe that sooner or later China will have to introduce similar stringent regulations to control environmental pollution and ArcelorMittal would be well-placed to capitalize on the opportunity in this huge market. It has already entered the Chinese automotive market as a joint venture partner with Chinese companies.
We have a price estimate for ArcelorMittal of $16.
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