Extracted from World Platinum Investment Council:
An overview of the report:
This article tackles investors’ concern on the negative impact that powertrain electrification would have on platinum demand. Recently, an announcement was made for the Ultra Low Emission Zone in London. This is a plan set to ban sales of new diesel and petrol cars by 2040 to reduce air pollution.
Excerpt from Platinum Perspectives July 2017:
We believe the market is overestimating the negative impact of powertrain electrification (moving to EVs) on platinum demand. We explain why EVs represent only a limited risk to platinum demand (even excluding potential demand upside from Fuel Cell Electric Vehicles, or FCEVs).
Market assumption:EVs don’t contain platinum. Some market participants confuse EVs and Battery Electric Vehicles (BEVs). For example, Volvo’s announcement that it would be producing only ‘electric’ cars post 2019 was significantly misinterpreted by many press sources.
Our view: In fact; Volvo committed to producing only cars that have an electric motor. This will include five new BEVs, the balance being hybrids, which can have gasoline or diesel internal combustion engines, and require platinum group metals (PGMs). Given mild hybrids are expected to gain significant market share, it is likely that most of Volvo’s cars will contain PGMs, post 2019 and in the foreseeable years to come. Different types of EVs have significantly different effects on platinum demand.
Conclusion – most EVs contain PGMs. “Electrification” (e.g. as defined by Volvo) may not have a negative effect on platinum demand. Diesel share is more important; our June 2017 Platinum Perspectives explains why we believe diesel share may be higher for longer.
Full credits to World Platinum Investment Council for the Platinum Perspective July 2017 Report.
