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Heraeus Precious Appraisal

  • Edition 04 - 10 February 2020

Petrol hybrids to win near-term emissions race, supporting Pd & Rh

New CO2 emissions targets for new cars and light commercial vehicles came into force on 1 January 2020. The fleet-wide average emission target is now 95g CO2/km. For each g CO2/km of target exceedance for each car registered by the end of the year, manufacturers will be fined €95. Slow uptake of low-emission vehicles, strong demand for SUVs coupled with an increase in engine size and weight, and a shrinking diesel market have meant the reduction of CO2 emissions has been slower than anticipated; most automakers now have significant ground to make up in order to avoid penalties this year.

Automakers are betting on hybrids and BEVs to reduce CO2 emissions, not diesel vehicles. Diesel cars have previously been a reliable tool for reducing CO2 levels as they emit roughly a fifth less CO2 than petrol, but their European market share has declined by 20% since 2015 to 30.5% over concerns about NOx emissions (source: ACEA). Western Europe’s automotive industry is the largest market for platinum, but demand has declined by nearly 500 koz since 2015 (-27%).

European automakers’ portfolios are expected to change this year, removing higher polluting models in favour of more petrol hybrid, plug-in hybrid and mild-hybrid options in order to reach the new CO2 emissions target. The Toyota Prius, a popular hybrid electric vehicle (HEV) model in Europe, claims a CO2 output of 84g/km, compared to around 120g/km for a conventional petrol car.

Palladium and rhodium will continue to benefit from growth in petrol hybrid demand. Most alternatively powered vehicles in the EU are HEVs, accounting for 5.9% of all sales in 2019, up from a 4% market share in 2018 (source: ACEA). This supports palladium and rhodium demand as the majority of HEVs have petrol engines. Global autocatalyst demand for both palladium and rhodium is expected to increase by 6-7% this year, owing to stricter emissions standards in many of the world’s largest markets.

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Heraeus Precious Metals - Setting the PGM agenda for the years ahead

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