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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.

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