Market Reports

Learn more about all important trends in the precious metals markets in our market reports on a regular basis.

Bars

Heraeus Precious Appraisal

  • Edition 34 - 15 October 2018

EU will struggle to hit CO emissions targets without diesel

Auto manufacturers have been showing off their all-electric concept cars at the Paris Motor Show. Given the prominence of new battery electric vehicles (BEVs), it could seem as if internal combustion engines were no longer needed. However, when it comes to launching new model lines, manufacturers are not only introducing new gasoline models, but also diesel models feature just as prominently. In fact, for several models there are more diesel engine options than gasoline.

CO2 emissions targets are being tightened. The European Parliament, EU governments and the European Commission have proposed different targets for reducing light vehicle CO2 emissions. These vary from a 15% to a 20% reduction in 2025 and from 30% to 40% by 2030. Negotiations will continue to finalise the figure. Whichever is agreed, the expectation has to be that BEV sales will need to increase significantly to reach it. However, for many people BEVs still do not meet their needs in terms of costs and lifestyle compatibility, so BEV ownership is not a realistic option.

EU governments’ CO2 targets appear to be incompatible with cities’ local air quality issues. Manufacturers’ strategies for meeting CO2 targets were built around diesel vehicles (which produce less CO2 than an equivalent gasoline engine), sales of which are now dropping. The threats of banning diesels from cities and concern over second-hand values have discouraged people from buying diesels. This is happening just at the point that more sales are needed if the 2020 CO2 target is to be met. Diesels will most likely be needed in the medium term too, because BEV charging infrastructure in Europe would need to expand more than tenfold by 2025 to support the necessary increase in BEVs to reach the CO2 target.

If consumers buy the new diesel models, which meet current emissions standards, then this supports platinum demand in autocatalysts. However, if the trend towards gasoline vehicles continues, then palladium and rhodium will benefit at platinum’s expense.

This document is being supplied to the recipient only, on the basis that the recipient is reasonably believed to be a professional market participant in the precious metals market. It is directed exclusively at entrepreneurs and especially not intended for the use of consumers.

The material contained in this document has no regard to the specific investment objectives, financial situation or particular need of any specific recipient or organisation. It is not provided as part of a contractual relationship. It is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment or as advice on the merits of making any investment.

This report has been compiled using information obtained from sources that Heraeus and SFA (Oxford) Ltd (“SFA”) believe to be reliable but which they have not independently verified. Further, the analysis and opinions set out in this document, including any forward-looking statements, constitute a judgment as of the date of the document and are subject to change without notice.

There is no assurance that any forward-looking statements will materialize. Therefore, neither SFA nor Heraeus warrants the accuracy and completeness of the data and analysis contained in this document.

Heraeus and SFA assume no liability for any losses or damages of whatsoever kind, resulting from whatever cause, through the use of or reliance on any information contained in this document. However, in so far as a liability claim exists under German law, Heraeus and SFA shall have unlimited liability for willful or grossly negligent breach of duty.

Unless expressly permitted by law, no part of this document may be reproduced or distributed in any manner without written permission of Heraeus. Heraeus specifically prohibits the redistribution of this document, via the internet or otherwise, to non-professional or private investors and neither Heraeus nor SFA accepts any liability whatsoever for the actions of third parties in reliance on this document.

to top