Automotive original equipment manufacturers (OEMs) are shifting away from battery electric vehicles (BEV) and toward hybrid vehicles, top executives at Worthington Steel said at the company’s third-quarter earnings call on Thursday March 26.
The pivot is due to multiple factors, Geoffrey Gilmore, chief executive officer, president and director, said on Thursday, citing the removal of the fuel economy mandate and of the $7,500 federal tax credit.
In December 2025, President Donald Trump’s administration proposed rolling back the Biden-era Corporate Average Fuel Economy (CAFE) standards, a move that has the potential to reduce compliance pressure on automakers to raise fleet-wide miles-per-gallon and could lessen incentives to deploy fuel-saving technologies or electrification to meet federal targets.
Months before that, the Trump administration reduced government support for EV purchases by signing the “One, Big, Beautiful Bill Act” into law on July 4, 2025, which eliminated eligibility for a tax incentive of up to $7,500, effective September 30, 2025.
“The market is clearly pivoting away from a government-driven BEV mandate to a consumer-led demand for hybrids. The data is quite clear,” Gilmore said, highlighting increased consumer interest in hybrid and full EVs due to rising oil prices and geopolitical tensions.
Regular gasoline prices in the US had risen to $3.96 per gallon by March 23, an increase of $0.46 per gallon, or 13.14%, from $3.50 per gallon on March 9, data from the US Energy Information Administration showed.
Worthington Steel’s outlook for the automotive market in 2026 was “cautiously optimistic”, the CEO said.
“Conditions appear to be moving toward a more robust market later in the year. That view is supported by growing confidence that a [US-Mexico-Canada Agreement] will be completed in 2026, removing a significant amount of market uncertainty,” Gilmore said.
USMCA renegotiation discussions between the US and its two trading partners began in March.
Electrical steel expansions in Canada, Mexico
Worthington Steel shared the firm’s progress on its electrical steel expansion projects in Mexico and Canada.
“We are excited by the growth in hybrids as we have the opportunity to produce the electrical steel laminations for a hybrid traction motor, as well as the specialty cold-rolled steel used in the powertrain for the hybrid internal combustion engine,” Gilmore said.
The company has shifted some production to their new facility in Burlington, Ontario, the CEO said.
“We will finish moving the existing equipment and production to the new facility over the next few months. We have more than 60% of the increased capacity sold for the facility,” Gilmore told investors.
Meanwhile, the firm’s traction motor lamination facility expansion in Apodaca, Mexico, is “on track and will begin shipping production parts this quarter”, Gilmore said.
The building expansion has been completed and the facility’s five initial electrical presses for electrical steel lamination have been installed, with five remaining presses still expected to be installed, according to the company’s investor presentation.
The project, announced in October 2023, will expand electrical steel operations to a 185,000-square-foot facility adjacent to the existing facility, making the Apodaca facility Tempel’s largest laminated electrical steel production site for the motor and transformer sector. Once online, the facility will produce traction motor lamination cores for electric vehicles.
“Almost all the OEMs tied to the expansion are experiencing some type of OEM delays,” Gilmore said. “Previously, we expected to reach full production levels in fiscal 2028. But the OEMs have pushed out a number of the programs for a variety of reasons.”
Gilmore added: “While timing is shifting on production starts for some of our new programs, when these platforms reach full production volumes in fiscal 2029, we will be at 75% capacity based upon the current contracts. These delays are not surprising, as many automotive OEMs are rethinking their electrification strategy.”
Fastmarkets’ weekly price assessment for electrical steel, non-grain oriented, ex-whs Eastern China was $609-631 per tonne on March 20, down by 0.16% from $609-633 per tonne on March 13.
Meanwhile, Fastmarkets’ weekly price assessment for electrical steel, non-grain oriented, cfr India was $660-680 per tonne on March 20, up by 4.69% from $640 per tonne on March 13.
