Hybrid Car Boom Revives Platinum Metals as EV Growth Slows

The rise in hybrid car sales, driven by a slowdown in electric vehicle (EV) adoption, is breathing new life into the demand for platinum group metals (PGMs). These metals, particularly platinum and palladium, have traditionally been used in catalytic converters to reduce emissions in gasoline-powered cars. With pure EVs not requiring catalytic converters, the demand for PGMs was projected to decline sharply. However, the recent surge in plug-in hybrid electric vehicles (PHEVs) is an unexpected boost to the PGM market, as these vehicles still rely on catalytic converters to control emissions.

This shift is a significant development for PGM producers like Anglo Platinum and Impala Platinum, whose prospects seemed bleak as EV sales grew. Recent data shows that while global EV sales grew by just 11% in the first half of 2024, PHEV sales soared by 44%. This surge, particularly notable in markets like China, suggests that hybrids could extend the demand for PGMs well into the next decade. Marcus Garvey of Macquarie Bank compares the situation to coal, which is still needed even as renewable energy expands. Although a structural decline in PGM demand is inevitable, the hybrid boom could prevent an immediate market collapse.

The impact of PHEVs on PGM demand is significant. According to industry experts, PHEVs require 10-15% more platinum than standard gasoline cars because of the frequent cold starts in hybrid engines, which generate higher emissions. For instance, Johnson Matthey, a leading catalyst manufacturer, noted that the increased demand for petrol and hybrid cars in 2023 added 600,000 ounces of PGM to their automotive estimates. This demand increase contributed to an 8% rise in overall automotive PGM demand, marking the second-highest total in history.

The trend towards hybridization will likely continue until EVs become more affordable and charging infrastructure improves. Many automakers, including Toyota and Ford, are recalibrating their strategies, prioritizing hybrids over pure EVs to balance profitability and consumer demand. While this shift benefits PGMs, it challenges the battery materials sector. Smaller batteries in PHEVs will likely reduce the demand for critical components like nickel and cobalt, signaling a slowdown in growth for the battery industry in the near term.