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  • No. 12 | 25th March 2024

Palladium demand supported for longer after new US emissions law changes

The US has announced less severe emissions targets that will effectively allow for more catalysed car sales.Last week the Biden administration finalised stronger emissions targets for the US, though they were less stringent than the proposal made by the US Environmental Protection Agency (EPA) in April 2023.

New targets will encourage sales of electrified vehicles over the next six years, but now allow targets to be met with a higher proportion of catalysed vehicles (plug-in hybrids). Targets can be met with 56-69% catalysed vehicle market share by 2030 (source: EPA) – higher than previous targets, and positive for extending the longevity of the combustion engine market. In 2023, PHEVs showed better year-on-year growth than BEVs, suggesting they are becoming more popular with consumers as PHEVs are less reliant on charging infrastructure. Last year, US BEV market penetration reached 7.1%, while PHEV sales were lower at 2% of total sales.

The EPA’s three proposed scenarios for meeting the new targets include different levels of BEV market penetration. The highest-BEV case proposes 44% BEV penetration by 2030, while the scenario with the lowest BEV penetration reaches only 31% BEVs by then. By taking the lower-BEV route, the US could see more than 5 million additional catalysed vehicles sold, with a resulting increase of 1 moz of 3E PGM demand cumulatively from 2025-2030.

Meanwhile in Europe, Euro 7 passed into law last week. The Euro 7 emissions legislation will be the final new emissions standard introduced before all new cars are required to be zero-emission, and does not tighten tailpipe emissions any further. This means there will be little to no impact on PGM demand in European autocatalysts.

In the shorter term, automotive PGM demand is still expected to feel pressure from BEV sales in both markets. North American 3E PGM demand is forecast to remain stable this year at 2.5 moz. In Europe, where BEVs are expected to gain proportionally higher market share, 3E PGM demand is forecast to decline 4% year-on-year to 2.1 moz.

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