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Tesla's 'Beast' To Contribute To Downfall Of Platinum And Palladium Markets

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Tesla’s ‘Beast’ To Contribute To Downfall Of Platinum And Palladium Markets

(Kitco News) - As Tesla rolls out its all-electric semi-truck, one bank forecasts that electric vehicles will contribute to a massive drop in demand within platinum and palladium markets by 2040.

Tesla’s CEO Elon Musk unveils an electric semi-truck nicknamed “the beast” on Thursday, with a promise that it will drive like a sports car.

“This will blow your mind clear out of your skull and into an alternate dimension,” he wrote on Twitter this week.

The truck is a Class 8 semi prototype and is powered by at least two electric motors.

The release of the electric semi-truck is just one of the first steps toward an all-electric auto future, according to the Dutch bank ABN Amro, which projects negative consequences for platinum and palladium prices.

“The electrification of transport will have a big impact on specific industries and commodity markets during the next couple of decades,” Georgette Boele, senior precious metals and diamonds analyst at ABN Amro wrote in a report.

The most significant takeaway from the analysis is that electric vehicles do not contain platinum or palladium, which presents a problem for both markets as the number of electric vehicles on the roads will only increase over time.

ABN Amro estimated that by 2040 at least 60% of all new car sales will be electric.

Examining this scenario, the bank said there will be a “dramatic impact” on platinum demand for autocatalysts.

“We expect platinum demand from car catalysts to drop by 65% by 2040 compared to today. If other demand (such as demand from jewelry, glass electronics, petroleum, other industrial and chemical) remains close to its long-term average, it is possible that total demand for platinum will decrease by 30% by 2040,” Boele said on Thursday.

The bank also warned that platinum prices could drop to $500 per ounce, which is close to a decline of 45%.

On top of that, such increase in electric vehicles would hit palladium demand as well and “translate to roughly a 40% decline in global palladium demand by 2040.”

“All in all, in our base scenario we expect palladium prices to drop because of lower autocatalyst demand and higher scrap supply. We expect prices to drop to $400 per ounce over time, which is around -60%,” Boele said.

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