With hybrid vehicles often combining gasoline engines with electric powertrains, demand for PGMs (platinum group metals) is expected to increase significantly, with automakers now reassessing their range of electric vehicles (EVs), some of which had already announced an all-electric portfolio for the coming years, but have since decided to delay this strategy.
By Pablo De Andrade Garcia, Cross-Asset Structurer
“We will not launch a second generation product unless it is profitable in the first year and we get a return on the capital we invest,” said John Lawler, Ford CFO. The company announced plans in April for an electric truck in 2026 and a three-row SUV in 2027, postponed from 2025.
A recent consumer study by McKinsey found that 46% of EV owners in the United States were likely to switch back to a gasoline-powered vehicle, compared to a global average of 29% of EV owners who said they would likely switch back to an internal combustion engine. Actually, the EV market is growing at a much slower pace than expected. Globally, sales of plug-in hybrid vehicles (PHEV) increased 43% last year, according to data from BloombergNEFsurpassing the 28% increase in battery electric vehicle sales.
The shift to stricter emissions regulations across the world is pushing automakers to produce cleaner vehicles, further increasing reliance on these metals. Hybrid vehicles are a crucial step in this transition, ensuring sustained demand for PGMs. In this context, palladium and platinum are key materials in the automotive industryparticularly in the production of catalysts, essential for reducing harmful emissions from internal combustion engines (palladium is mainly used in gasoline engines, while platinum is favored in diesel engines).
Moreover, these metals are also used in jewelry as well as for various other industrial applicationssuch as chemistry, electricity, petroleum, glass, including liquid crystal displays and storage density on hard drives for computers and servers.
Another element that may contribute to the rise in PGM prices is the high geographic concentration of mining sites: South Africa is responsible for the majority of the world’s platinum supply and Russia is the main producer of palladium.
However, unlike gold and silver, high maintenance costs, labor conflicts, logistical bottlenecks, political sanctions and other economic risks are expected to play a role in the impact on price.
Key factors to consider:
- Many subsidies or incentive policies for the electric vehicle industry may be reconsidered or even eliminated, which could have a positive impact on the hybrid vehicle industry.
- Bet combustion cars won’t disappear anytime soon; hybrid vehicles will gain market share.
- Car rental companies have been hit hard by the high maintenance costs and low resale value of electric vehicles.
- Scarcity/limited supply of these metals.
- The increased demand for gold helps with the mining of PGMs, as they can be found together.
- The United States Department of Energy (DoE) included PGMs in the list of critical minerals (the price of uranium jumped when it was included in this list after sanctions were approved by Congress ).
Product Overview
