Electric Vehicles Reshape China’s Powder Metallurgy Landscape
As the global automotive industry accelerates toward electrification, traditional manufacturing sectors are being forced to adapt or risk obsolescence. Among them, China’s powder metallurgy (PM) components industry—long a cornerstone of automotive supply chains—is undergoing a pivotal transformation. Once heavily reliant on internal combustion engine (ICE) vehicles, the sector now faces both disruption and opportunity as new energy vehicles (NEVs), including battery electric vehicles (BEVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell electric vehicles (FCEVs), gain dominance in the world’s largest auto market.
China has emerged over the past three decades as a global powerhouse in PM parts production. With more than 660 PM component manufacturers operating across the country, the domestic industry has matured into a competitive force capable of rivaling international leaders. According to data from the Powder Metallurgy Branch of the China Machinery General Parts Industry Association (CMPMA), total sales of PM parts by member companies reached 9.71 billion RMB in 2023, with PM components alone accounting for over 7.66 billion RMB—a year-on-year increase of 5.7%. This growth was largely driven by a surge in automotive demand, which rose more than 15.4% in the same period.
Despite the overall positive trend, the composition of that demand is shifting dramatically. In 2023, automotive applications still represented the largest segment of China’s PM market at 55.4%, followed by home appliances (19.5%), construction machinery (7.7%), and power tools (6.4%). However, within the automotive sector itself, the nature of component requirements is evolving. The rise of electric vehicles is reducing the need for traditional engine and transmission parts—core products for PM manufacturers—while simultaneously opening doors to new applications in motors, power electronics, and structural components.
The shift is evident in China’s broader automotive trends. In 2023, the country sold 30.09 million vehicles, marking a 12.0% increase and the first time sales surpassed previous peaks since 2017. Of these, 9.495 million were new energy vehicles, representing 31.6% of total vehicle sales. Notably, BEVs accounted for 70.4% of NEV sales, totaling 6.685 million units. While this share reflects a 7.5 percentage point decline from the previous year—indicating growing popularity of PHEVs—the sheer volume of electric vehicle adoption is reshaping supply chains across the board.
For the PM industry, this transition presents a dual challenge: maintaining relevance in a shrinking ICE market while innovating fast enough to capture emerging opportunities in electrified platforms. Historically, PM components have been indispensable in ICE vehicles, particularly in engines and transmissions, where their ability to produce complex, net-shape parts with high material efficiency and reduced machining makes them ideal for gears, sprockets, connecting rods, and valve train components. These parts benefit from the inherent advantages of powder metallurgy—material savings, energy efficiency, and scalability in mass production.
However, electric drivetrains require far fewer moving parts. A typical BEV powertrain contains approximately 20 moving components, compared to over 2,000 in a conventional ICE. This stark difference translates into a significant reduction in demand for traditional PM parts. As automakers phase out ICE production, PM suppliers face the prospect of declining orders unless they can pivot effectively.
Yet, as Cao Yang, Professor at NBTM New Materials Group Co., Ltd., and Qiu Yaohong, Ph.D., from You Need Enterprise Consulting Co., Ltd., point out in their recent analysis, the story is not one of decline but of transformation. While electrification reduces demand in some areas, it also creates new avenues for growth. The key lies in innovation and diversification—two strategies already being embraced by leading Chinese PM companies.
One of the most promising opportunities lies in the motor systems of electric vehicles. Permanent magnet synchronous motors (PMSMs), widely used in BEVs, require soft magnetic composite (SMC) materials that can be efficiently produced using powder metallurgy techniques. Unlike traditional laminated steel cores, SMCs offer three-dimensional magnetic flux capabilities, reduced eddy current losses, and design flexibility—advantages that are increasingly valued in high-efficiency electric motors.
Recognizing this trend, NBTM New Materials Group, China’s largest PM parts manufacturer, has strategically expanded beyond conventional “press-and-sinter” components. The company, which reported 1.975 billion RMB in PM parts sales in 2023, has also achieved 826 million RMB in soft magnetic materials and 1.022 billion RMB in metal injection molding (MIM) parts. This diversified portfolio reflects a deliberate shift toward high-growth, technology-intensive segments aligned with NEV development.
NBTM’s journey into SMC began in 2010 with internal research and was accelerated through the acquisition of a specialized SMC company in 2014. Its entry into MIM came in 2019 via the acquisition of Shanghai Future Hi-Tech Co., Ltd. These moves have enabled the company to supply advanced components for electric vehicle motors, sensors, and electronic control units—areas where traditional PM alone would not suffice.
Other major players are following similar paths. Yangzhou BLD, Jiangsu Yingqiu Group, and Chongqing Huafu have established strong positions in oil-impregnated bearings, power tools, and automotive components. Meanwhile, emerging firms like Yangzhou Haichang New Materials have grown rapidly by focusing on niche markets—its 2023 sales of 225 million RMB were primarily driven by demand from the power tool sector, which continues to adopt PM components for durability and precision.
Beyond motors, PM technologies are finding applications in thermal management systems, onboard chargers, and even structural battery enclosures. Metal injection molding, for instance, is being used to produce intricate sensor housings and connector components that require high dimensional accuracy and corrosion resistance. Additive manufacturing (AM), though still in early stages, is being explored for prototyping and low-volume, high-complexity parts in next-generation EV platforms.
The push for higher performance is also driving technical innovation within traditional PM processes. Chinese manufacturers are investing in advanced densification techniques to improve mechanical properties and expand application boundaries. Mold wall lubrication technology, for example, has enabled iron-based components to achieve densities exceeding 7.5 g/cm³—approaching the performance levels of forged steels. Surface densification processes are being applied to gear teeth and bearing surfaces to enhance wear resistance and fatigue life, making PM parts viable for more demanding applications.
These advancements are not limited to the automotive sector. The same technologies are being leveraged in home appliances, particularly in refrigeration compressors, where PM balance weights and valve plates are critical for efficiency and noise reduction. In construction and agricultural machinery, high-pressure PM hydraulic components are replacing cast or machined parts due to their superior strength-to-weight ratios and leak resistance. Even in renewable energy systems—such as wind turbines and solar tracking mechanisms—PM components are playing an increasingly important role.
What sets China apart is the speed and scale at which its PM industry is adapting. Unlike in Europe or North America, where PM development has been incremental over decades, China’s industry has matured rapidly in just 30 years. This recent growth has instilled a culture of agility among Chinese manufacturers, who are accustomed to navigating volatile markets and shifting customer demands.
The country’s robust domestic market, extensive supply chain infrastructure, and access to capital markets further enhance its ability to respond to change. Venture funding, strategic acquisitions, and government support for advanced manufacturing have created an ecosystem where innovation can be quickly commercialized. This dynamic environment enables companies to experiment with new materials, processes, and business models—turning challenges into opportunities.
Still, the road ahead is not without obstacles. The transition to electric mobility requires more than just new products; it demands a fundamental rethinking of value propositions. PM suppliers must move beyond being mere component providers to becoming engineering partners capable of co-developing solutions with automakers and Tier 1 suppliers. This shift requires deeper technical expertise, stronger R&D capabilities, and greater investment in digital tools such as simulation, predictive modeling, and process automation.
Moreover, global competition remains intense. While Chinese companies have made significant strides, international PM leaders continue to hold advantages in certain high-end applications, particularly in aerospace, medical devices, and premium automotive segments. To compete globally, Chinese firms must not only match technical performance but also demonstrate reliability, consistency, and sustainability in their operations.
Sustainability, in fact, is becoming a critical differentiator. Powder metallurgy, by nature, is a resource-efficient process with minimal material waste—typically less than 5% compared to up to 50% in machining. This inherent advantage aligns well with the environmental goals of the EV revolution. However, to fully capitalize on this, PM companies must also address the carbon footprint of their raw materials, energy sources, and logistics.
Some forward-thinking firms are already adopting circular economy principles—recycling scrap powder, optimizing furnace energy use, and sourcing green electricity. Others are exploring alternative materials, such as recycled steel powders or lightweight aluminum-based composites, to meet the weight reduction demands of electric vehicles.
Looking ahead, the future of China’s PM industry will likely be defined by its ability to balance specialization with diversification. While automotive will remain a core market, its composition will continue to evolve. The most successful companies will be those that can serve multiple high-growth industries—from electric mobility and renewable energy to consumer electronics and industrial automation.
Collaboration will also play a crucial role. As highlighted by Cao and Qiu, maintaining open international exchange and cooperation in technology development is essential for sustained progress. Isolationist tendencies or protectionist policies could hinder access to cutting-edge research and global best practices. Instead, a collaborative approach—combining China’s manufacturing scale with global innovation—offers the best path forward.
In conclusion, the electrification of transportation is not the end of the powder metallurgy industry in China; it is a catalyst for reinvention. The decline of the internal combustion engine does not spell doom for PM—it signals a shift in focus. The industry’s response so far has been proactive, innovative, and strategically diversified. With a strong foundation in manufacturing excellence, a culture of adaptability, and a clear vision for the future, China’s PM sector is well-positioned to not only survive the automotive transition but to thrive within it.
As new energy vehicles redefine mobility, powder metallurgy is quietly redefining itself—proving once again that in the world of advanced materials, resilience is forged not just in heat and pressure, but in vision and foresight.
Cao Yang, NBTM New Materials Group Co., Ltd.; Qiu Yaohong, You Need Enterprise Consulting Co., Ltd. Published in Powder Metallurgy Technology, DOI: 10.19591/j.cnki.cn11-1974/tf.2023060007