Slowdown in EV Transition Boosts Optimism in Platinum Markets

The market for platinum group metals has gained a dose of optimism as the transition to electric mobility slows down. The auto industry consumes up to half of all the platinum produced annually while 80-90% of palladium is used within the auto industry. Switching to EVs therefore removes a large share of the market for these metals and would depress demand.

These two PGMs are used to make catalytic converters in ICE vehicles, so a rapid transition to EVs would exert downward pressure on demand and the prices of these metals would fall.

Analysts say recent developments have helped to inject optimism into the PGM market. For starters, the U.S. ended a key incentive that had helped to make electric vehicles more affordable to buyers in the country. When the tax incentive was removed, electric vehicle sales plummeted and the pace at which the EV transition is happening in the country has slowed down to a crawl.

In the EU, a notable policy shift has also taken place. Previously, the bloc had mandated that ICE vehicles be phased out by 2035. This has since been revised to require automakers to slash their emissions by 90%.

This policy shift is important because it gives room for hybrids to form a bigger share of powertrains leaving auto production lines. Hybrids also require PGMs, and some even utilize more platinum and palladium in their catalytic converters than the quantity needed in a traditional ICE vehicle.

Additionally, hybrids are turning out to be more popular than had initially been thought. Years ago, it was projected that hybrids would serve as a transition between ICE vehicles and EVs before they fade out as motorists get used to electrified transport. However, recent industry trends show that more people are preferring hybrids and they could account for 28% of auto sales in 2026. This is a stark difference from earlier projections that had forecast a 4% market share for this year.

In China, EV uptake is also slowing down as a result of policy changes, such as removing some incentives that previously helped the new energy vehicle segment to grow explosively.

When all these factors are combined, ICE vehicles still have a long runway, and that is helping to support the market for PGMs. The rising popularity of hybrids gives the platinum and palladium market an optimistic outlook that could boost prices alongside other demand factors like the use of these PGMs as precious metals, in jewelry, specialized industrial and medical equipment, electronics and other uses.

Mining firms like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) can therefore have reason to expect that the price surge seen last year in PGMs is likely to mark a major turn in the fortunes of these metals.

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