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Don't bet on rapid EV adoption; platinum, palladium will still be needed - CPM Group

Kitco News

While electric vehicles (EVs) are gaining popularity, the rate at which EVs will gain market share will not be as fast as commonly expected, meaning that the auto industry will still need the platinum group metals (PGMs) for catalytic converters in the foreseeable future, said Jeff Christian, managing partner of CPM Group.

“There is a lot of optimism about the rate at which electric vehicles will take market share. Our expectation, looking at the auto industry and talking to the industry, is that it’s not going to happen as fast as a lot of people think,” Christian said, adding that he has a positive view on platinum prices over the next three to five years.

Currently, the auto industry remains the primary source of demand for PGMs.

“The investment market is going to re-adjust to that reality as the next decade progresses and they realize that the shift away from petroleum-based fuels to electric vehicles is going to be a lot slower than they thought,” Christian added.

There are three main reasons as to why the rate of electric vehicle adoption may not be as fast as some have expected, Christian said: there is a lack of electricity to power EVs, current electrical grids lack the capacity to deliver electricity en masse even if the supply were there, and the private manufacturers of auto components, including electric motors, currently don’t have the capacity or the commitment to build enough supply for the entire auto industry.

Christian noted that the auto industry will also be using more platinum, instead of palladium, in the coming years for catalytic converters.

“Our expectation is that you will see a shift away from palladium intensive catalysts to more platinum intensive catalysts,” he said.

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