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When a SCOA business group, or SCOA’s business groups can contribute to a sustainable society as a key member of the EV supply chain, everyone wins. SCOA Steel & Non-Ferrous Metals Group celebrated that contribution recently; on July 17, after months of negotiation, Sumitomo Canada Limited (SCL) successfully concluded a new $33 million agreement with current customer & EV vehicle manufacturer Tesla to become the steel supply partner for their new production plant in Austin, Texas — the city that will also serve as the new Tesla headquarters as they relocate from Palo Alto, California. SCL currently provides steel to the Fremont, California Tesla factory, and this new development nearly doubles the current steel shipment amount from Sumitomo to Tesla.
“This is a remarkably exciting opportunity because of its potential business growth and the collaboration among three different entities: SCL, SCOA and Servilamina Summit Mexicana (SSM),” said Daniel Suganuma, who manages this Tesla business from the SCOA Chicago Office, and applauds the cooperation among Sumitomo entities in North America. “It realizes our ‘Americas Integrated Operation’ strategy because in this integrated supply chain, SCL remains an account manager providing client services, with SSM responsible for the actual processing of steel until delivery and SCOA playing the role of project manager as well as overseeing overall strategy. This integrated operation leverages our strengths and capabilities in managing these complex supply chains using our collective knowledge and experience.”
SCL has supplied flat roll steel to Tesla for production since 2017, through its Tier1 chassis production supplier, according to Suganuma. The current order for the Tesla-Fremont factory weighs in at 35,000 MT of steel products per year, and the new business in Texas looks to ship an additional 33,000 MT per year for production of the new Tesla Model Y. Suganuma credits SCL/SCOA’s solid relationship with Tesla, reinforced by proven customer service and constant operational efficiency all throughout their business.
“The raw material in mother coils is sourced from several US mills and shipped to SSM. SCL is in charge of that procurement and SCOA Chicago sales serve as a central point of contact for Tesla not only in Canada, but throughout the entire North America region. SSM processes the mother coils and delivers this material just in time to the Tier1 chassis parts manufacturers involved in the supply chain. Both SCL and SSM are under SCOA-Chicago leadership, working closely together all the time under Mr. Shono as our leader in this business.”
Business with Tesla opened up a new era for SCOA Steel, in ways that are different from traditional auto manufacturers,” said SCOA Steel and Non-Ferrous Metals Group General Manager Akihiko Shono. “They implemented totally new concepts for our steel business which opened our eyes to new possibilities. By not sticking to what could be seen as traditional business common sense, their ideas may seem unorthodox, but they have their ears open and they listen. Their disruptive way of thinking will give us more opportunities now and future.
“SCL-Toronto established the initial business with Tesla several years ago,” noted Mike Nakawatase, Deputy General Manager and Vice President of SCOA Steel & Non-Ferrous Metals Group. “Now working together with SCOA-Chicago and SSM as a group, they are able to utilize their inherit strengths to capture this new business opportunity with this leading EV manufacturer.”
“Because the mass production of the Tesla Model Y vehicle will start near the end of this year, trial materials were sourced and already delivered to the Tier1 supplier. In January, the ramp-up of the mass production will start, using the material ordered and delivered on time.”
“We see potential future business growth and further opportunities for collaborating with Tesla down the road,” Suganuma added.
The current order for the Tesla-Fremont factory weighs in at 35,000 MT of steel products per year, and the new business in Texas looks to ship an additional 33,000 MT per year for production of the new Tesla Model Y shown below.