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How will the Growth of Self-Driving Electric Cars Affect Demand for Palladium and Platinum?

The Short Answer

Fuel cell self-driving cars generate electricity by creating a chemical reaction between hydrogen fuel and oxygen from the air, using Platinum or Palladium as a catalyst. Currently, this type of automobile makes up only a fraction of the market. However, if this technology catches on, it could mean a growth in demand for both of these Precious Metals.

Traditionally, Palladium and Platinum have had market values that fluctuate in patterns closely tied to that of Gold. However, these Precious Metals are also impacted by industrial demands and changes in the automotive industry. As the world slowly begins to embrace the idea of autonomously operated transportation, the need for the materials used in the industry could potentially grow. If developed countries do move to a landscape filled with self-driving electric cars, the demand for Palladium and Platinum will most certainly be affected.

The Future of Self-Driving Cars

Many automobile manufacturers are looking toward autonomous driving as the next big money-maker for the industry. Traditional car makers have invested money for years and now big-name tech brands such as Google and Uber are doing their own research. Self-driving car technology is advancing rapidly, with real-world tests already underway. Many experts agree as we see growth in the adoption of self-driving cars, the shift toward electric car technologies will coincide.

Battery Powered Electric Cars

The automotive industry accounts for roughly 40 percent of the demand for Platinum. Important in the catalytic converters of diesel-powered vehicles, a trend toward low-emission engines is a signal that demand could go down. Many gasoline-fueled vehicles use Palladium as a component, as well. Emissions-control devices used by a number of Chinese car makers incorporate Palladium and history has shown when the demand for cars made in China increases, Palladium typically goes up in value. Industry experts have claimed that in 20 years, more than 35 million electric cars will be in use. Self-driving electric cars that are battery charged do not currently incorporate Platinum or Palladium among their components. If consumers begin the rapid adoption of battery-powered electric cars, it could mark a sharp decline in demand for both of these Precious Metals.

Fuel Cell Electric Cars

Another burgeoning car technology centers around hydrogen-powered fuel cells. This technology is currently one of the most expensive, partially because the catalysts in these vehicles require Platinum as one of the components. Platinum nanoparticles are used within a thin layer of carbon on the surface of the catalytic converter. While testing has shown that Platinum is the best choice for this component, Palladium has been similarly efficient and is typically less expensive. Because of this lower cost, automakers currently utilize Palladium in their catalysts as a lower-cost way to make their current gasoline-powered cars meet emission standards. Work on new types of catalysts for hydrogen cars that are free of Precious Metals is underway, but none have proven to be as effective yet.

The Future Demand for Industrial Palladium and Platinum

While battery-powered electric cars seem to have the edge at the moment, it is important to note technology cannot always be predicted. Hydrogen fuel-cell cars can be refueled more quickly than battery-powered cars and many of the current models can go further before refueling. The relatively short range currently available from a battery may slow adoption and if hydrogen fuel-cell technology expands first, most self-driving car manufacturers would likely adopt the latter. Several countries do have plans to expand infrastructure of hydrogen refueling stations. If fuel cell self-driving car technology takes the lead in the marketplace, Palladium and Platinum will likely continue to grow in demand and have value both as currencies and as industrial commodities.

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