Future of Platinum in Electric Vehicles
Apart from being the material of choice in some of the most expensive jewellery pieces, the rarest of all precious metals, and some of the most collectible accessories, platinum, interestingly plays a very important part in industries such as automotive and pharmaceutical.
In fact, the use of platinum-heavy fuel cell technology in the electric vehicle market is growing rapidly to offset the reducing auto catalyst demand.
With an increased worldwide focus on achieving net-zero carbon emissions, the shift from fuel-based vehicles to sustainable technologies brings significant sales and financing opportunities for precious metals such as platinum.
This shift was prominently experienced in the regions such as North America, Europe, and South Africa, along with some Asian countries.
Global Need for Platinum-Group Metals (PGMs) in Electric Vehicles
With the increasing environmental awareness, in addition to the government-imposed mandates on reducing vehicular pollution, the automobile industry is experiencing growth due to the increasing demand for catalytic converters.
Next-generation cars such as electric vehicles (EVs) and fuel cell vehicles (FCVs) have been widely pushed over the past few years, resulting in media reports claiming that the switch from combustion engines to electric vehicles will take place soon.
If one looks into the global aspect, China, by far, is the most aggressive electric vehicle-pushing country relaxing its limitations on combustion engine cars to prevent an economic slowdown.
Alongside, the U.K. has also been deploying its government subsidies, while the U.S. has been charging EV drivers higher registration fees to cover infrastructure maintenance costs.
Furthermore, precious metals have a moderate to high impact on automotive applications; however, in the future, with increased production of automotive applications, the impact is anticipated to increase.
According to a report by BIS Research on the precious metals market for automotive applications, increasing utilization of platinum in electric vehicles is another factor fuelling the demand for the precious metals market for automotive applications during the forecast period 2022–2031. However, the high costs of platinum group metals are anticipated to hinder market growth in the near future.
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Growing Demand for Catalytic Converters and PGMs
A catalytic converter is a device found in most car engines that help turn pollutants such as carbon monoxide and nitrogen oxides in the exhaust into benign gases such as nitrogen, carbon dioxide, and water vapours that can be released into the air.
The PGMs in catalytic converters (platinum, palladium, and rhodium) have a broad range of applications. For instance, palladium plays a key role in fuel-cell technology, while rhodium is an alloying agent for hardening and improving the corrosion resistance of platinum and palladium.
The manufacturers of automotive vehicles are expected to lead the precious metals market for automotive applications and are expected to enter the market using silver metal in the long term, which captured around 81% of the market by volume as of 2021.
Manufacturers utilizing other metals, including platinum, accounted for around 3.4%, palladium and rhodium accounted for around 13%, gold accounted for approximately 2%, and other precious metals accounted for less than 1% of the total demand in 2021 in terms of volume.
The intrinsic value of platinum is higher than that of gold and palladium, including its rarity, industrial application demand, and jewellery demand. The current situation of platinum being traded for much less money than palladium and gold is simply due to the demand from gasoline engine catalysts for palladium and overwhelming investor interest in gold.
Future Demand Fundamentals of Platinum in Electric Vehicles
The demand landscape for platinum as of today is relatively balanced and is expected to change drastically in the coming years.
Platinum supply has been declining for the last few years in response to lower platinum prices. Moreover, the value of the metal has declined precipitously in the last few years. However, the future of the new technology related to platinum usage in electric vehicles is difficult to predict, but electric cars still have a long way to go before their large-scale adoption can be achieved.
The precious metals market for automotive applications has witnessed major developments, such as business expansions, partnerships, collaborations, mergers and acquisitions, and joint ventures. Increased investment and research and development activities are expected to boost the market for platinum for automotive applications, especially for electric vehicles.
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