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A Startup Tries to Crack the Code to Lighter, Stronger Steel for Cars

June 15, 2016, 4:36 PM UTC
Photo courtesy of NanoSteel

Twenty years ago, a government lab in Idaho started exploring what would happen to steel if it was made using ultra tiny particles.

Today a startup called NanoSteel is using this early research combined with decades of chemistry work and product development, to produce stronger, lighter steel for vehicles.

Two months ago, the venture capital-backed, 30-person company sent its first steel sample to partner General Motors (GM) for testing so that the auto giant could see if it wants to potentially use it as a core metal in its cars, NanoSteel CEO David Paratore told Fortune. GM confirmed that it is testing NanoSteel’s steel, but declined further comment because testing is ongoing.

If the material—which is made using nanotechnology, or the practice of engineering materials at a tiny scale—works as advertised it could enable a large car company like GM to reduce the weight of its vehicles, creating lighter but still sturdy cars that are more fuel efficient.

In contrast with efforts by auto makers to build electric cars using batteries or fuel cells, traditional gas-consuming cars can be made to be more environmentally friendly by simply reducing their weight, or size, which lowers fuel use. Car companies worldwide are looking at new cost-effective ways to make cars lighter and smaller to meet increasingly strict regulations to cut fuel consumption.

For more on how companies are finding value in materials innovation watch our video.

But there haven’t been many breakthroughs in new metal materials, and in particular, steel, for decades. Paratore thinks that what NanoSteel has developed is so important that he says the company is “reinventing steel.”

NanoSteel’s nano-structured steel is both high strength, and also able to be formed into complex shapes. Having steel that does one or the other isn’t so unusual, but having both in one material “is quite rare,” says Paratore. The company’s steel has a tensile strength of 1200 MPa (megapascal), and 50% elongation. Standard steel materials more commonly have tensile strengths of several hundred MPa.

Having stronger steel that can be shaped into new designs could also enable car designers to think up unique ways to shape cars to make them more efficient. Steel is commonly used as the core skeleton for a car, because of its sturdiness, and other lighter metals like aluminum are used for the additional car body parts.

NanoSteel’s steel is currently more expensive than the traditional steel used by automakers. But Paratore predicts that its steel will eventually be cost competitive with traditional steel.

It took the company two decades to get to the point where GM can now test the material. The technology was originally funded by the Department of Energy at the Idaho National Lab starting in 1996, and it wasn’t until 2007 that the team decided to focus specifically on sheet steel for cars.

In 2010, the company first met with GM, which soon became an investor as well as a partner. Other investors in NanoSteel include venture capitalists EnerTech Capital, Chrysalix Energy Venture Capital, Arsenal Venture Partners, Cycad Group, Fairhaven, Capital Partners and Octane Venture Partners.

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By 2011, NanoSteel had been able to create its car steel in the lab. It’s now taken another five years to get to the point where the company is ready to start moving into commercial production of the steel. The company, which has raised “less a hundred million dollars,” says Paratore, is looking to raise more funding to help it move into commercial sales.

NanoSteel is a new type of cleantech startup that appears to be quite happy as a research and development shop. The company licenses its steel production technology to steel makers like AK Steel, which has manufactured the steel that was sent to GM. In contrast, many other cleantech startups have stumbled while trying to build huge factories to produce their own products.

NanoSteel also seems to have made peace with how long it’s taken to get to market. It’s unusual for most venture capitalists to be supportive of a company that’s been built over decades, instead of years. Paratore describes the company’s investors as “patient,” but adds that the company will start generating revenue in the next two to three years.

International steel conglomerates like NanoSteels’ partner AK Steel—as well as Posco, Tata Steel, Arcelor Mittal, Baoshan, Hyundai and others—no doubt are working on their own high strength steel options. So NanoSteel’s tech will end up competing with many global giants.