The rise of the electric vehicle market over the next decade or two will impact the platinum market significantly, according to a new report from Bloomberg.
As the auto industry is the largest user of platinum worldwide — owing to its inclusion in vehicle exhaust systems (used to strip emissions of certain compounds) — the move towards electric vehicles (EVs), and away from vehicles that feature exhaust systems at all, will presumably put a big dent in demand. As it stands, roughly half of the platinum sold annually around the world is sold to the auto industry.
“It’s a long term risk to platinum, electric battery vehicles don’t need any platinum at all,” stated Marc Elliott, an analyst at Investec Plc, in an interview with Bloomberg.
Bloomberg provides more:
While he sees a decade-long transition through hybrid vehicles, which may use platinum, he says battery-electric cars are most likely to take over. Last year, almost one of every two ounces of platinum used worldwide was sold to the auto industry, from mines primarily in South Africa and Russia.
EV adoption is set to grow rapidly over the next few years — partly as a result of improving battery tech and increasingly attractive consumer offerings (Tesla Model 3, Chevy Bolt, etc), but also partly as a result of increasing government support in some regions (EV bus systems, etc).
“It’s not all about Tesla anymore,” stated Andrew Miller, an analyst at Benchmark Mineral Intelligence Ltd in London. “There’s a whole load of battery-manufacturing expansion happening in China, Korea and Japan.”
Miller predicts that hybrids and EVs will make up 5% of the overall auto market by 2020. While that figure wouldn’t result in huge losses for the platinum industry, it could serve as a forerunner of a harsher market future for platinum miners.
Image by Tesla Motors