South Korea’s POSCO, one of the biggest steel-making company in the world, has reportedly signed an important memorandum of understanding (MOU) to supply Tesla’s Model 3 program with steel for the upcoming vehicle’s A pillars, which support both sides of the front windshield. and potentially more parts to come.
Update: Tesla denies having signed a MOU. A spokesperson said: “We have not signed an MOU with POSCO”.
Update 2: POSCO now also denies an MOU agreement with Tesla.
While Tesla’s two current vehicles, the Model S and Model X, are both primarily made of aluminum, the automaker confirmed that the Model 3’s body will have more steel in order to cut cost and achieve margins on the $35,000 vehicle.
The reports come from the Korea Business magazine (Paywall) and cites sources within Korea’s auto and steel business claiming that an agreement was signed earlier this month between Tesla and POSCO.
The publication cites a steel industry official:
“The supply of parts to Tesla’s EV models holds symbolic meanings, rather than short-term performance like profits and sales. It means that POSCO’s technology in producing automotive steel products, which are lightweight, easy to form and has high strength, is being recognized.”
For Tesla enthusiasts and Model 3 reservations holders, it offers some insights into the level of steel versus aluminum present in the Model 3. Admittedly, information is still scarce at this stage.
Steel is both cheaper to produce and less expensive to repair, but aluminum is lighter and therefore, you can use fewer batteries to get more range. Though Tesla is aiming for batteries to stop being a limiting factor with its third generation platform and the Gigafactory.
We asked Tesla representatives for a comment on Korea Business’ report and the MOU. We will update if we get an answer.