Material Insights · Understanding the Material World

Steel and Vehicles, ships, rail, aircraft

Steel makes up most of a car's body and chassis and the hulls of ships and bogies of trains, so vehicle makers are among the largest buyers of flat and plate steel. The contest is now over grade and carbon: thinner high-strength steel against aluminium, and low-carbon steel at a premium.

Steel (commodity) and Vehicles, ships, rail, aircraft (industry): 4 relationships.

How they are linked

1. Industry input

Physical flow · Strong · Steel to vehicles, ships, rail, aircraft

Steel is cheap, strong, easy to press and weld and fully recyclable, so it forms car bodies and chassis, ship hulls, rail bogies and the dies that press body panels; the site rates it 5 of 5 on criticality for ship and rolling-stock builders.

  • half to two-thirds steel's share of the mass of most passenger cars
  • about 1 tonne steel per car
  • about 209 Mt steel used by the automotive industry worldwide, the third-largest using sector

Four enterprise types in this industry depend on steel: aircraft, ship and rolling-stock builders (hulls and bogies, 5 of 5), car, two-wheeler and commercial-vehicle makers (bodies, 4 of 5), flat-steel and other metal producers supplying body and chassis material, and tooling suppliers (tool-steel dies). Together they make the industry a core customer for flat and heavy plate steel.

Enterprise types that depend on it:

  • Aircraft, ship and rolling-stock builders: hulls and bogies (criticality 5 of 5)
  • Car, two-wheeler and commercial-vehicle makers: body (criticality 4 of 5)
  • Flat-steel, aluminium and titanium producers: body and chassis (criticality 3 of 5)
  • Press, robot, paint-shop and tooling suppliers: tool steel dies (criticality 3 of 5)

Sources: Material Insights; IDOM

2. Aluminium lightweighting

Substitution · Medium · Aluminium replaces some steel in vehicles

Heavy battery packs push carmakers to save weight elsewhere, and aluminium closures, castings and battery housings take some of the mass that conventional steel once held.

  • 283 vs 169 kg average aluminium in an electric SUV vs a petrol car, 2022
  • 310 kg projected average aluminium per EV by 2026

Steelmakers have answered with advanced high-strength steels that allow thinner, lighter parts, first in chassis, suspension, frames and body parts, so the substitution has been gradual rather than wholesale. Steel still makes up half or more of a typical car's mass, while aluminium gains most in electric models.

Sources: IDOM

3. Low-carbon steel premium

Transition · Rising · Carmakers' climate targets pull demand for green steel

Steel makes up most of a vehicle's mass, so carmakers with supply-chain carbon targets are natural early buyers of low-carbon steel, and its price premium passes into vehicle cost.

  • about 42% estimated price premium of green steel over conventional steel
  • $167 added cost per car from green steel, 2024 estimate; $206 per SUV

Because a car holds about a tonne of steel, even a large percentage premium on steel adds a small amount to the vehicle's cost, which makes carmakers a natural first market for low-carbon steel. The 2024 estimate for trucks was about $124.

Sources: IDOM

4. India's specialty steel gap

Policy · High in India · India's auto industry still imports some high-grade steel

Indian mills supply most steel by weight but not all coated and high-strength grades, so carmakers import the rest, and the government uses production-linked incentives to localise them.

  • more than 80% share of steel in Indian-made vehicles sourced from domestic mills, 2026
  • ₹236 crore incentive paid under the specialty steel PLI against a ₹6,322 crore outlay, after five years

India spent an estimated $8 to 10 billion on specialty steel grades in FY26, with South Korea the largest single supplier. Committed investment across the three PLI rounds is about ₹55,761 crore, but the small payout so far suggests that new capacity for high grades is slow to reach eligible output.

Sources: Swarajya

For investors

Key learnings

  1. Vehicle demand moves flat steel, especially coated and high-strength sheet, so carmaker output is a direct demand signal for flat-steel producers.
  2. Aluminium is taking share in electric and premium models, but high-strength steel limits the loss in mass-market cars.
  3. Carmakers are among the first large buyers willing to pay for low-carbon steel, because a premium of about 42% on steel added only about $167 to the cost of a car in 2024 estimates.

What to track

  • Light-vehicle production by region: Rising output lifts demand for automotive flat steel (Monthly · OICA and national auto associations (SIAM in India))
  • Hot-rolled coil price: Sets the base cost of body and chassis steel in supply contracts (Weekly · price reporting agencies; monthly · Joint Plant Committee (India))
  • Green steel offtake deals with carmakers: More contracts signal a durable premium for low-carbon steel (As announced · company releases)

For policymakers

Key learnings

  1. India makes most of the steel in its vehicles but still imports specialty grades, so localising those grades protects a large export-oriented industry.
  2. The specialty steel PLI has drawn large commitments but paid out little after five years, which suggests that building and qualifying high-grade lines, not capital alone, is the bottleneck.
  3. Low-carbon steel standards for public vehicle fleets, buses and rail could create early domestic demand for green steel.

What to track

  • Imports of coated and alloy flat steel: Falling imports show progress in localising auto grades (Monthly · Ministry of Commerce trade data)
  • Specialty steel PLI disbursements and output: Rising payouts show plants qualifying and producing (Annual · Ministry of Steel)

India

More than 80% of the steel in vehicles made in India comes from domestic mills, but some specialty grades are still imported, with South Korea the largest supplier; the specialty steel PLI aims to close that gap.

Sources

  1. Vehicles, ships, rail, aircraft: materials, Material Insights (2026)
  2. Steel and automotive industry: strategic opportunities in a transforming ecosystem, IDOM (2026)
  3. The world's second biggest steelmaker still can't make the steel its factories need, Swarajya (2026)