Automakers Oppose Steel Merger: Major automakers have voiced strong opposition to steelmaker Cleveland-Cliffs’ proposed acquisition of U.S. Steel, citing concerns that the deal would increase costs for the auto industry and potentially slow down the growth of electric vehicle (EV) sales.
The Alliance for Automotive Innovation, representing automotive giants like General Motors, Toyota, Volkswagen, and Hyundai, conveyed their concerns in a letter to Congress and U.S. regulators. The primary issue raised was the substantial market share that the combined steel companies would have in critical areas of the automotive supply chain, such as vehicle structural frames, automotive surface panels (including doors, hoods, and fenders), and steel used in EV motors.
According to the CEO of the Alliance for Automotive Innovation, John Bozzella, the merger would lead to increased costs for materials and finished vehicles throughout the industry. Of particular concern is the fact that 100% of the metal required for EV motors, known as e-steel, would be concentrated within the combined company.
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The letter emphasized the need for competition in the U.S. for the production of e-steel. The fear is that without such competition, automakers would face rising material costs, which could ultimately result in higher prices for EVs, thus impacting consumers’ willingness to embrace electric vehicles.
The Alliance’s letter to lawmakers also called for government scrutiny of the potential for anti-competitive pricing of materials used by steel-dependent automakers. The same concerns were conveyed to Federal Trade Commission Chair Lina Khan and Justice Department Antitrust Chief Jonathan Kanter.
As of now, neither steel company has issued an immediate response to these concerns. In August, U.S. Steel rejected Cleveland-Cliffs’ $7.25 billion acquisition proposal. Cleveland-Cliffs’ CEO Lourenco Goncalves has refrained from discussing the matter, citing restrictions.
In response, U.S. Steel has indicated that it has been reviewing multiple unsolicited proposals, ranging from partial acquisitions to a complete buyout, after entering confidentiality agreements with various third parties.