The rise of hybrid car sales is providing an unexpected boost to the demand for platinum group metals (PGMs), such as platinum and palladium, despite the slowing growth in electric vehicle (EV) sales. This shift is reminiscent of the extended lifespan now predicted for coal, as industries once thought to be in terminal decline find new market opportunities. PGMs, which have long been used to clean auto exhausts in combustion engines, were previously forecasted to face a steep drop in demand with the global rise of EVs. However, the growing demand for hybrid vehicles has given the PGM market a new lease on life, potentially stabilizing prices and extending the lifespan of mines that produce these metals.
Hybrid Cars Offer a Lifeline for PGMs
In recent years, the outlook for PGMs was bleak, particularly for producers such as Anglo Platinum, Impala Platinum, and Sibanye Stillwater. As EV sales soared, the need for PGMs in catalytic converters was expected to diminish rapidly, leading to a structural decline in demand. However, a slowdown in the growth of EV sales and a surge in demand for hybrid vehicles, which still require catalytic converters to reduce emissions, has shifted the narrative. Hybrid vehicles, especially plug-in hybrid electric vehicles (PHEVs), have become increasingly popular, helping to sustain demand for PGMs in the auto industry.
Marcus Garvey, head of commodities strategy at Macquarie Bank in Singapore, commented on the evolving market dynamics: “You’re still facing an outright demand decline, but there’s not an immediate collapse, which could have been the projection in some (previous) scenarios.” The surge in hybrid sales is expected to create a buffer for PGM demand, preventing the sharp decline that was once anticipated.
EV Sales Slow, PHEVs Rise
Data from consultancy Rho Motion shows that global EV sales growth slowed to just 11% year-on-year in the first half of 2024, a significant drop from the 77% growth seen two years ago. Meanwhile, PHEV sales surged by 44% over the same period. Popular models like BYD’s Song and the BMW 3 Series have contributed to this shift, offering consumers an alternative to fully electric vehicles.
The demand for PGMs in hybrid vehicles is expected to remain strong until 2030 or beyond, according to industry analysts. “The shift to hybridization could be quite meaningful for the longer-term sustainability of the PGM industry,” said Wilma Swarts, director of PGMs at consultancy Metals Focus. Hybrid cars, particularly PHEVs, require more PGMs than traditional petrol vehicles, as their engines often start cold, producing higher levels of pollution that need to be mitigated by catalytic converters.
The Role of Hybrids in Sustaining PGM Demand
The shift towards hybrids has also been reflected in the broader auto market. Johnson Matthey, a catalyst manufacturer and PGM specialist, reported that combined sales of petrol and hybrid cars rose by 9% in 2023, defying earlier expectations that these sales would remain flat. This increase added an estimated 600,000 ounces to global automotive PGM demand, with total demand rising by 8% to 13.1 million ounces, the second-highest total on record.
China has been a significant driver of this trend, with PHEV sales in the country surging by 70% in the first half of 2024. According to consultancy Alix Partners, the global market share of PHEVs is now forecast to reach 12% by 2030, up from 5% just two years ago. Gerrit Reepmeyer of Alix Partners noted that the firm had “marked it up quite significantly because of the developments in the last couple of years.”
In a recent survey conducted by Alix, more than 80% of consumers in the world’s two largest car markets—the United States and China—indicated a preference for PHEVs over pure EVs. This shift could have significant implications for PGM demand, as PHEVs require 10-15% more platinum metals than conventional petrol vehicles.
Automakers Embrace Hybrid Technology
As EV production slows, many automakers are increasingly shifting resources toward hybrid vehicles, which offer higher profit margins and are more aligned with current consumer demand. Major car manufacturers, including Ford, Toyota, and Stellantis, have recently announced plans to expand their hybrid offerings. Toyota, the world’s largest automaker, has scaled back its EV production plans for 2026 by a third, while Volvo has scrapped its goal of going fully electric by 2030.
Automakers are balancing profitability, consumer preferences, and regulatory compliance as they navigate the transition to greener vehicles. “Automakers are trying to find that sweet spot in terms of profitability, consumer acceptance, and compliance with regulations,” Swarts explained. In the United States, new emissions regulations have further bolstered the outlook for hybrids by allowing automakers to meet EV mandates through increased production of gas-electric hybrids.
In North America, sales of conventional hybrids surged by 33% in the first half of 2024, with each additional million hybrid vehicles adding around 150,000 ounces of PGM demand, according to Swarts. Meanwhile, in China, where EVs are now priced similarly to petrol cars, many consumers are opting for extended-range PHEVs that use petrol engines primarily for charging the battery, offering longer driving distances without sacrificing convenience.
Implications for Battery Metals
While the rise of hybrid vehicles has been a boon for PGM demand, it poses challenges for the market for key battery materials such as nickel and cobalt. Hybrid batteries are significantly smaller than those used in fully electric vehicles, which means that demand for these metals is likely to decline in the coming years. According to consultancy CRU, the average battery size for PHEVs in the first half of 2024 was 23.3 kilowatt-hours (kWh), compared to 64.5 kWh for pure battery electric vehicles (BEVs).
“The shift towards PHEVs and the pullback of BEV targets is likely to be an overall negative to battery material demand growth over the next few years,” said Sam Adham, head of battery materials at CRU. This trend could have ripple effects across the battery supply chain, affecting mining operations and investments in nickel and cobalt production.
A Resilient Future for PGMs
The rise in hybrid car sales, particularly PHEVs, has provided an unexpected boost to the demand for platinum group metals, offering a lifeline to an industry that once faced a steep decline. As consumers increasingly turn to hybrids as a transitional technology between petrol cars and fully electric vehicles, the demand for PGMs is expected to remain strong for the foreseeable future.
While the long-term trajectory of the PGM market will ultimately depend on the pace of EV adoption and advancements in battery technology, the current surge in hybrid sales has extended the horizon for PGM producers. For now, the industry can find comfort in the knowledge that its products will continue to play a vital role in the global transition to cleaner, more efficient transportation technologies.
(Sourec:www.usnews.com)
Hybrid Cars Offer a Lifeline for PGMs
In recent years, the outlook for PGMs was bleak, particularly for producers such as Anglo Platinum, Impala Platinum, and Sibanye Stillwater. As EV sales soared, the need for PGMs in catalytic converters was expected to diminish rapidly, leading to a structural decline in demand. However, a slowdown in the growth of EV sales and a surge in demand for hybrid vehicles, which still require catalytic converters to reduce emissions, has shifted the narrative. Hybrid vehicles, especially plug-in hybrid electric vehicles (PHEVs), have become increasingly popular, helping to sustain demand for PGMs in the auto industry.
Marcus Garvey, head of commodities strategy at Macquarie Bank in Singapore, commented on the evolving market dynamics: “You’re still facing an outright demand decline, but there’s not an immediate collapse, which could have been the projection in some (previous) scenarios.” The surge in hybrid sales is expected to create a buffer for PGM demand, preventing the sharp decline that was once anticipated.
EV Sales Slow, PHEVs Rise
Data from consultancy Rho Motion shows that global EV sales growth slowed to just 11% year-on-year in the first half of 2024, a significant drop from the 77% growth seen two years ago. Meanwhile, PHEV sales surged by 44% over the same period. Popular models like BYD’s Song and the BMW 3 Series have contributed to this shift, offering consumers an alternative to fully electric vehicles.
The demand for PGMs in hybrid vehicles is expected to remain strong until 2030 or beyond, according to industry analysts. “The shift to hybridization could be quite meaningful for the longer-term sustainability of the PGM industry,” said Wilma Swarts, director of PGMs at consultancy Metals Focus. Hybrid cars, particularly PHEVs, require more PGMs than traditional petrol vehicles, as their engines often start cold, producing higher levels of pollution that need to be mitigated by catalytic converters.
The Role of Hybrids in Sustaining PGM Demand
The shift towards hybrids has also been reflected in the broader auto market. Johnson Matthey, a catalyst manufacturer and PGM specialist, reported that combined sales of petrol and hybrid cars rose by 9% in 2023, defying earlier expectations that these sales would remain flat. This increase added an estimated 600,000 ounces to global automotive PGM demand, with total demand rising by 8% to 13.1 million ounces, the second-highest total on record.
China has been a significant driver of this trend, with PHEV sales in the country surging by 70% in the first half of 2024. According to consultancy Alix Partners, the global market share of PHEVs is now forecast to reach 12% by 2030, up from 5% just two years ago. Gerrit Reepmeyer of Alix Partners noted that the firm had “marked it up quite significantly because of the developments in the last couple of years.”
In a recent survey conducted by Alix, more than 80% of consumers in the world’s two largest car markets—the United States and China—indicated a preference for PHEVs over pure EVs. This shift could have significant implications for PGM demand, as PHEVs require 10-15% more platinum metals than conventional petrol vehicles.
Automakers Embrace Hybrid Technology
As EV production slows, many automakers are increasingly shifting resources toward hybrid vehicles, which offer higher profit margins and are more aligned with current consumer demand. Major car manufacturers, including Ford, Toyota, and Stellantis, have recently announced plans to expand their hybrid offerings. Toyota, the world’s largest automaker, has scaled back its EV production plans for 2026 by a third, while Volvo has scrapped its goal of going fully electric by 2030.
Automakers are balancing profitability, consumer preferences, and regulatory compliance as they navigate the transition to greener vehicles. “Automakers are trying to find that sweet spot in terms of profitability, consumer acceptance, and compliance with regulations,” Swarts explained. In the United States, new emissions regulations have further bolstered the outlook for hybrids by allowing automakers to meet EV mandates through increased production of gas-electric hybrids.
In North America, sales of conventional hybrids surged by 33% in the first half of 2024, with each additional million hybrid vehicles adding around 150,000 ounces of PGM demand, according to Swarts. Meanwhile, in China, where EVs are now priced similarly to petrol cars, many consumers are opting for extended-range PHEVs that use petrol engines primarily for charging the battery, offering longer driving distances without sacrificing convenience.
Implications for Battery Metals
While the rise of hybrid vehicles has been a boon for PGM demand, it poses challenges for the market for key battery materials such as nickel and cobalt. Hybrid batteries are significantly smaller than those used in fully electric vehicles, which means that demand for these metals is likely to decline in the coming years. According to consultancy CRU, the average battery size for PHEVs in the first half of 2024 was 23.3 kilowatt-hours (kWh), compared to 64.5 kWh for pure battery electric vehicles (BEVs).
“The shift towards PHEVs and the pullback of BEV targets is likely to be an overall negative to battery material demand growth over the next few years,” said Sam Adham, head of battery materials at CRU. This trend could have ripple effects across the battery supply chain, affecting mining operations and investments in nickel and cobalt production.
A Resilient Future for PGMs
The rise in hybrid car sales, particularly PHEVs, has provided an unexpected boost to the demand for platinum group metals, offering a lifeline to an industry that once faced a steep decline. As consumers increasingly turn to hybrids as a transitional technology between petrol cars and fully electric vehicles, the demand for PGMs is expected to remain strong for the foreseeable future.
While the long-term trajectory of the PGM market will ultimately depend on the pace of EV adoption and advancements in battery technology, the current surge in hybrid sales has extended the horizon for PGM producers. For now, the industry can find comfort in the knowledge that its products will continue to play a vital role in the global transition to cleaner, more efficient transportation technologies.
(Sourec:www.usnews.com)
