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Underperforming BEV sales in Europe may benefit palladium demand

27th January 2025

By: Darren Parker

Creamer Media Senior Contributing Editor Online

     

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According to technology group Heraeus, last year saw modest growth in car sales within the EU, while the market share of battery electric vehicles (BEVs) declined.

Heraeus reported on January 27 that new car registrations in the EU increased by just 0.8% year-on-year to 10.6-million units in 2024, as the three largest markets contracted.

Simultaneously, the EU’s BEV market share dropped to 13.6%, down from 14.6% in 2023, a decline largely driven by a 27% year-on-year drop in German BEV registrations after consumer subsidies were withdrawn in December 2023.

However, the company highlighted that full- and mild-hybrid sales outperformed, growing 21% from 2.7-million units in 2023 to 3.3-million units in 2024.

Heraeus stated that the EU's tighter fleet emissions standards, set in 2019, could drive BEV sales in 2025. These standards mandate a reduction in fleet-average CO2 emissions from 115.1 g/km between 2020 and 2024 to 93.6 g/km between 2025 and 2029.

Automakers exceeding these thresholds face fines of €95 for each excess gram of CO2/km per vehicle.

According to Heraeus, compliance relies heavily on BEV sales owing to their zero tailpipe emissions. Alternative pathways to compliance include promoting more efficient combustion engine vehicles and prioritising plug-in hybrid electric vehicles (PHEVs).

Heraeus said BEV sales may need to account for about 28% of the EU car market in 2025 to meet these regulations. Assuming a conservative 1% growth in total EU car sales to 11.7-million units this year, a 28% BEV market share would require that 3.26-million BEVs be sold, representing 125% growth year-on-year.

Heraeus noted that the highest yearly growth in BEV sales occurred in 2021, at 63%.

The average cost of BEVs remains 22% higher than that of internal combustion engine vehicles and Heraeus warned that, as EU countries faced scrutiny over budget deficits, consumer subsidies for BEVs could become a target for cost-saving measures.

The company suggested that increasing availability of lower-cost Chinese BEVs could help reduce prices but would not assist European original-equipment manufacturers in meeting emissions targets.

Even with supportive EU policies, Heraeus argued that it was unlikely consumers would double BEV purchases this year, compared with 2024.

The company further highlighted the potential for hybrid vehicles to bridge the gap if BEV market penetration fell short of the 28% target. Growth in hybrid vehicle sales could mitigate the impact on emissions compliance.

According to Heraeus, hybrids have grown in popularity, offering a middle ground for consumers hesitant to adopt fully electric vehicles.

In terms of metals demand, Heraeus projected a 7% year-on-year decline in Western European palladium autocatalyst demand in 2025, falling below one-million ounces for the first time since 2009 owing to expectations of strong BEV sales.

However, if BEVs underperform this year and hybrids gain traction, the company noted that the decline in palladium demand could be smaller than anticipated.

Meanwhile, Hereaus noted that the palladium price rallied last week, closing at $991/oz on January 24. This followed statements from the Trump administration suggesting a potential repeal of Biden-era green car subsidies, which could impact BEV adoption in the US.

US palladium autocatalyst demand totalled about one-million ounces in 2024.

Further, Heraeus noted that the EU diesel car market continued to decline, affecting platinum demand. Diesel vehicle registrations in Germany were stable year-on-year at about 480 000 units in 2024.

However, EU diesel car registrations fell by 11.4%, and diesel market shares were overtaken by BEVs. Western European platinum autocatalyst demand is forecast to shrink by 4% year-on-year in 2025, despite some substitution of platinum for palladium in autocatalysts.

Finally, Heraeus highlighted risks to ruthenium demand from technological advancements in hard disk drives (HDDs). While Seagate reported strong revenue growth and rising HDD shipments in the fourth quarter of 2024, the adoption of heat-assisted magnetic recording technology, which reduces ruthenium use, posed a downside risk.

Ruthenium prices rose last week to $535/oz, while rhodium and iridium experienced minor fluctuations.

GOLD & SILVER

Heraeus also observed significant developments in the gold market. Following a record high gold price of $2 790/oz on October 30 last year, total gold exchange-traded fund (ETF) holdings saw two months of net outflows, reducing holdings to just below 83-million ounces as investors took profits.

In the fourth quarter of 2024, ETF holdings closely mirrored movements in the gold price, and this trend continued into 2025.

Heraeus reported that gold ETF holdings saw net inflows exceeding 450 000 oz since the start of January, but a 250 000-oz drop last week coincided with gold testing resistance at $2 720/oz.

On January 21, gold broke through this resistance level, and Heraeus noted that the next target was the previous all-time high of $2 790/oz, which was just 1% above the recent peak.

The company reported that gold shipments into COMEX inventories had surged owing to high exchange-for-physical premiums. COMEX gold inventories increased by nearly 2.5-million ounces a week ago, with more than 1-million ounces added on two separate days.

Elevated implied lease rates for short-term gold lending reflect a liquidity squeeze for deliveries of less than one month.

Heraeus noted that gold finished last week’s trading at $2 772/oz, and with this week’s Federal Open Market Committee meeting expected to hold interest rates steady, the gold price may struggle to reach a new all-time high in the short term.

Silver markets also exhibited notable trends, according to Heraeus. The Perth Mint saw December bullion sales rise by 55% year-on-year to just over 1-million ounces, but cumulative full-year bullion sales fell by over 30% to just below 10-million ounces in 2024.

The company attributed this decline to persistently high silver prices, which curbed demand. The US Mint reported a slight 0.4% year-on-year growth in Silver American Eagle coin sales, driven by a 150% surge in December purchases.

Heraeus noted that without a significant drop in silver prices, bar and coin sales may continue to struggle. The silver price ended last week steady at $30.69/oz, after testing support at $30/oz earlier in the week.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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