Key Takeaways:
POSCO is leading a national R&D push to solve one of the toughest problems in EV engineering: manufacturing ultra-high-silicon electrical steel at scale.
POSCO has launched a 10-organization consortium with Hyundai Motor to develop 6.5% silicon-content electrical steel sheets, a material that reduces iron loss in EV drive motors during high-speed operation and could extend driving range by as much as 5% to 8%, according to industry estimates.
"This collaboration represents an important turning point where the steel and future mobility industries join forces to usher in the era of electrification," Cho Myung-jong, Head of Future Steel R&D Center at POSCO, said.
The project, backed by South Korea's Ministry of Trade, Industry and Energy, targets mass-production technology for wide electrical steel sheets with 6.5% silicon content. Standard electrical steel used in most EV motors today contains about 3% silicon. The higher silicon content reduces iron loss — energy dissipated as heat during rotation — but makes the steel brittle and difficult to roll into thin, wide sheets. The consortium includes SL Corporation, Polepair Electric, three national research institutes — RIST, KITECH and KATECH — and two universities, with a multilateral agreement covering the full value chain from material development to real-vehicle validation.
POSCO shares have gained 36.7% over the past year, compared with a 3.6% decline for the broader industry. The project strengthens POSCO's position in the EV supply chain as global automakers race to improve driving range and efficiency. If commercialized, the technology could give POSCO a competitive edge over Japanese and European steelmakers pursuing similar high-silicon electrical steel.
The technical hurdle is significant. As silicon content rises above 4.5%, electrical steel becomes increasingly brittle, making conventional hot-rolling and cold-rolling processes difficult. Nippon Steel and ThyssenKrupp have both invested in high-silicon steel research, but no company has yet commercialized wide sheets at 6.5% silicon for mass-market EV production. POSCO's project aims to solve the brittleness problem through advanced manufacturing techniques developed at the Research Institute of Industrial Science & Technology in Pohang, where the kickoff meeting was held on June 11.
The consortium's integrated approach — spanning material development, core fabrication, drive motor assembly and real-vehicle efficiency testing — is designed to compress the typical 5-to-7-year timeline from lab to production. Hyundai Motor will validate the steel's performance in actual EV drive motors, providing a direct pathway to commercial adoption. The 10 parties signed a multilateral memorandum of understanding after the kickoff meeting to formalize the collaboration across the entire value chain.
The global electrical steel market was valued at about $35 billion in 2025, with demand driven by EV production and renewable energy infrastructure, according to industry data. POSCO is already one of the world's largest producers of electrical steel, with an annual capacity of about 1 million tons. Successfully commercializing 6.5% silicon sheets would allow the company to command premium pricing in a segment where margins are significantly higher than commodity-grade steel.
PKX carries a Zacks Rank #2 (Buy) rating. The collaboration deepens POSCO's ties with Hyundai, South Korea's largest automaker, and positions the steelmaker to capture more value from the EV supply chain. The project also aligns with South Korea's strategy to secure domestic supply chains for critical EV components, reducing reliance on imports from Japan and China. For investors, the key question is whether POSCO can solve the manufacturing challenge before competitors — a breakthrough that could add billions in revenue from high-margin automotive materials.
This article is for informational purposes only and does not constitute investment advice.
