Large U.S. steelmakers are ramping up production of a hard-to-make, paper-thin steel to capture a fast-growing market for a material critical to powering electric vehicles.

Cleveland-Cliffs Inc. CLF 0.39%increase; green up pointing triangle and U.S. Steel Corp. X 1.36%increase; green up pointing triangle are jockeying with a small group of foreign-based steelmakers that produce electrical steel, used to convert electricity into mechanical power for motors in products that include washing machines, air conditioners, power tools and more recently, electric vehicles.

Such electrical steel, which accounts for about 1% of all the steel produced annually in the world, already is in short supply for electric vehicles, executives said. Companies expect demand to accelerate faster than production as EV volumes expand in the coming years.