The continuing growth in automotive platinum demand is being achieved despite rising battery electric vehicle (BEV) market share and a reduction in internal combustion engine (ICE) vehicle production, industry organisation the World Platinum Investment Council (WPIC) points out.
It explains that automotive demand is the single largest demand driver for platinum, accounting for about 40% of yearly platinum demand.
According to the WPIC, this growth it supported by factors including stricter emissions legislation, increased demand for hybrid vehicles and platinum-for-palladium substitution in the autocatalysts manufactured for ICE vehicles.
Platinum, palladium and rhodium are used in the manufacture of autocatalysts.
However, investor sentiment towards platinum group metals (PGMs) has been affected by concerns over the loss of ICE automotive demand that will, in due course, come from the ongoing electrification of the vehicle fleet as automakers look to achieve CO2 reduction targets, the WPIC indicates.
The WPIC cites its recent research, positing that this indicates that these concerns are “overplayed”, as erosion in demand for PGMs from declining ICE vehicle production will occur gradually, with only a very muted tapering of automotive demand over the next five years.
The organisation avers that considerable BEV growth has slowed and is being easily outpaced by PGM-containing hybrids and extended-range electric vehicles (EREVs) that support a ‘higher-for-longer’ automotive PGM demand outlook.
An EREV is a BEV with an on-board combustion engine that is used as a generator to recharge the batteries (unlike a plug-in hybrid electric vehicle where the engine drives the vehicle if the batteries are flat), the WPIC explains.
It highlights that PGM-containing EREVs are growing fast.
EREVs are indicated to be China’s fastest growing new energy vehicle category, on-track to exceed sales of one-million units this year, which the WPIC avers offers the ability to mitigate BEV range and charging concerns.
It adds that elsewhere, EREV models are on the rise.
In the US, truck and van maker Ram is scheduled to launch a range-extended electric truck next year.
The WPIC adds that more than a third of the cabs in London are EREVs.