Oil Isn’t the Only Commodity Threatened by Rise of Electric Cars

Published: 9 May, 2016 10:56

The rise of electric cars and fall of diesel technology threatens an industry from South Africa to Siberia.

The bold plan by Tesla owner Elon Musk to produce 500,000 electric cars every year starting in 2018, promise to disrupt yet another market – platinum.

But it’s not just Tesla. More or less every car manufacturer is rushing to introduce electric cars to end use of petrol and diesel.

As consumers switch, demand for the metal – essential to stripping toxic emissions from tailpipe exhausts – declines. With diesel already suffering from the Volkswagen emissions scandal, the future looks increasingly bleak and even Saudi Arabia is preparing for a life after oil with a $2 trillion project.

‘Battery-electric cars most likely to take over’

“It’s a long-term risk to platinum, electric battery vehicles don’t need any platinum at all,” Marc Elliott, an analyst at Investec Plc, said last week. While he sees a decade-long transition through hybrid vehicles, which may use platinum, he says battery-electric cars are most likely to take over. Last year, almost one of every two ounces of platinum used worldwide was sold to the auto industry, from mines primarily in South Africa and Russia.

‘It’s not all about Tesla anymore’

Governments are offering subsidies for drivers to switch, and carmakers are introducing models that cost less and travel further than ever. Customers queued up to order when Musk in March unveiled a $35,000 Model 3, while Chevrolet this year will sell the Bolt, a $37,500 electric car that can cover 200 miles on one charge.

Germany, Europe’s biggest auto market, last month announced 1.2 billion euros ($1.4 billion) in incentives, with one-quarter of that money going toward a nationwide high-speed charging network, meanwhile U.S. consumers get a $7,500 government tax credit.

“It’s not all about Tesla anymore,” according to Andrew Miller, an analyst at Benchmark Mineral Intelligence Ltd. in London. “There’s a whole load of battery-manufacturing expansion happening in China, Korea and Japan.” He said hybrid and full electric vehicles may make up around 5 percent of the car market by 2020.

Demise not certain

That said, the industry’s demise is neither imminent nor certain. Producers and carmakers are researching platinum-consuming hydrogen-fuel cell alternatives, which may challenge the supremacy of current electric cars. The metal may remain part of the energy mix beyond 2050, with uses in hybrid technologies, according to the International Energy Agency.

Related news topics

Leave a Reply