Hybrid cars provide a boost to platinum metals' demand and usage

The rise of hybrid cars is significantly boosting the demand for platinum group metals, as these vehicles utilize platinum in catalytic converters to reduce emissions. This increased usage is providing a lifeline to platinum, which has seen declining demand from traditional markets. Hybrid technology's push towards eco-friendly transportation is enhancing the importance of platinum in sustainable automotive advancements.

As the pace of electric vehicle (EV) sales slows, the rise in hybrid car sales is expected to drive up demand for platinum group metals (PGMs), a boost similar to the extended life coal has seen. PGMs, especially platinum and palladium, have historically been used in catalytic converters to reduce emissions, a process not required for pure EVs. This surge in hybrid vehicles offers a reprieve for PGMs, delaying the steep decline predicted with the rise of EVs.

A few years ago, the outlook for PGMs and companies like Anglo Platinum, Impala Platinum, and Sibanye Stillwater seemed bleak as EV demand surged. However, with the EV growth slowing and hybrid car sales increasing, PGMs are seeing a renewed demand. This could stabilize prices and keep some mines operational longer.

While the overall demand for PGMs is still expected to decrease, the immediate drop-off anticipated in previous projections has been averted, according to Marcus Garvey from Macquarie Bank. For instance, pure EV sales globally slowed to an 11% growth in the first half of 2024, while plug-in hybrid (PHEV) sales soared by 44%, as noted by Rho Motion consultancy.

This trend mirrors that of coal, which is still needed despite being phased out by governments aiming to reduce carbon emissions. With weak PGM prices limiting investment, closures of mining operations could lead to price volatility if the market tightens.

Analysts predict the demand for hybrids will last until at least 2030, extending PGMs' relevance. The rise of hybrids is significant for the long-term sustainability of the PGM industry, with hybrid and petrol car sales rising 9% last year. Notably, plug-in hybrid sales have surged, especially in China, where demand grew by 70% in early 2024. As PHEVs use 10-15% more PGMs than conventional vehicles, this shift may keep demand higher for longer.

However, the shift toward hybrids may slow demand for battery materials like cobalt and nickel, as hybrid batteries are smaller than those in pure EVs. With PHEVs on the rise, battery material demand is expected to grow at a slower pace.

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Source: Reuters‍