Platinum Group Metals See Revival as Hybrid Vehicle Sales Surge
Platinum group metals (PGMs), including platinum and palladium, are experiencing a renewed surge in demand, driven by the rising sales of hybrid vehicles. The shift in the automotive industry toward plug-in hybrids, as opposed to pure electric vehicles (EVs), is reversing the decline in PGM usage seen over the past few years. PGMs, which are essential for catalytic converters used to reduce emissions in combustion engines, are facing an extended demand cycle as hybrid vehicle sales increase.
Electric vehicle sales growth has slowed significantly, increasing just 11% year-on-year in the first half of 2024, compared to a 77% surge two years ago. Meanwhile, global plug-in hybrid vehicle (PHEV) sales jumped by 44% during the same period, with China seeing the most rapid growth at 70%. This shift comes as consumers favor plug-in hybrids for their longer driving range, and new U.S. emissions regulations encourage automakers to produce more hybrids to meet electric vehicle mandates.
As a result, hybrid vehicles are expected to represent more than 12% of the global market share by 2030, up from 5% just two years ago, according to estimates from Alix Partners. Automakers like Toyota, Ford, and Volvo are scaling back their EV production plans and focusing more on hybrids, given the higher profitability of these models.
The rise in hybrid vehicles, which require 10 to 15% more PGMs than traditional gasoline vehicles due to the frequent cold starts of their engines, is driving increased demand for these metals. Analysts expect that the demand for PGMs could rise significantly through 2030, as hybrids continue to dominate until battery technology and charging infrastructure for EVs become more widespread.
In 2023, demand for automotive PGMs rose by 8% year-on-year to 13.1 million ounces, one of the highest figures on record. Johnson Matthey, a catalyst maker and platinum group metals specialist, noted that this surge in demand could add 600,000 ounces of PGM demand in the near future. For every million vehicles requiring catalytic converters, the demand for PGMs increases by approximately 150,000 ounces.
However, the trend toward hybrids could also impact demand for key battery materials like cobalt and nickel, as hybrids require smaller batteries than pure EVs. The global average battery capacity for plug-in hybrids in the first half of 2024 was 23.3 kilowatt-hours (kWh), compared to 64.5 kWh for pure electric vehicles, according to CRU.
The shift in the automotive market presents mixed implications for the metals industry, as demand for PGMs rises while demand for certain battery materials may decline in the coming years.
