German automotive major Mercedes-Benz has used green hydrogen-based steel in a demonstration vehicle as it explores future supplies.
The company used direct reduced iron (DRI) produced by the HyIron pilot project in Namibia in an unspecified component for its Mercedes EQS saloon vehicle demonstrator.
HyIron began producing hydrogen-based DRI in 2025, using a 12MW electrolyser to produce green hydrogen to supply a rotary kiln to process iron ore.
Backed by €13.7m ($15.1m) in German government funding and a further €12m ($13.3m) in EU-Dutch grants, the project claims to achieve emissions of just 10kg per tonne of DRI.
Mercedes said the component pilot validates the feasibility of hydrogen-based steel “across the entire value chain,” and signalled intentions to develop integration toward industrial scale.
The company also said it signed a letter of intent with HyIron to “further develop the technical validation towards industrial scaling and potential next steps.”
That’s despite concerns surrounding the cost of green hydrogen-based steel. Analysis by the Oxford Institute of Energy Studies found that green steel premiums of around €200 per tonne could reduce carmakers’ annual profits by over €10m, despite having a relatively small impact on final vehicle price.
Mercedes, however, said the use of low-carbon and circular materials is part of its strategy to navigate “volatile market conditions and increasing geopolitical uncertainty, taking into account customer demand and infrastructure development.”
It comes as European lawmakers back new incentives aimed at encouraging carmakers to use EU-made low-carbon steel, potentially driving demand for hydrogen-based steelmaking in the bloc.
Mercedes said it aims to reduce carbon dioxide (CO2) emissions by 90% by 2039 compared to 2019 in its own production.
