Losing the only electrical steels plant in the UK would be a "grave error", a trade union has said, following the announcement Tata's Orb plant in Newport is to close.
Community's Matt Ball called on the UK government to invest in the plant to ensure a reliable supply chain for electric car production.
The product is used in electric motors and recharging points.
The UK government said it remained in contact with those involved.
Tata said it would cost £50m to upgrade the Orb site to make it competitive and up to 380 jobs could go, although Tata hopes to offer jobs elsewhere in Wales.
The Orb site makes electrical steel used in generators, transformers, motors and magnetic products, including for the car industry.
The sector has been suffering from over-capacity over the last 10 years, and struggling to compete in particular with big volume producers in China.
But Mr Ball said: "It's far more reliable to have local supply chains especially after Brexit when we don't know what import tariffs will be in place, how supply chains may be disrupted.
"For the sake of what would be to the government a fairly small amount of cash, it makes sense to invest in the Orb to keep it open and make sure it's an integral part of the supply chain for electric vehicles."
Gavin Harper, a research fellow at Birmingham University whose specialties include renewable energy, told BBC Radio Wales the Tata Orb plant would need investment to give it the capability to produce the steels needed for electric car production.
"Two materials will be key in the UK if we want a supply chain in place for electrical vehicle production - one of those is electrical steels," he said.
Neil Lewis from social enterprise Carmarthenshire Energy said: "If Wales has any ambition to be a car-producing or car component-producing nation, we need to produce the raw materials or the batteries and the electrical steel, because there's no way we'll be producing cars in Swansea if we've got to import all the components from China.
"If Wales has any ambitions to match what the Midlands are doing, in Warwickshire, University of Warwick, Coventry, then Wales needs to get on board with investing into the future of the car industry."
A UK government official said: "While this is a commercial decision for Tata Steel Europe, we remain in regular contact with the company, unions and other partners throughout this process."