The global precious metals market for automotive applications was valued at USD 42.71 billion in 2022. It is estimated to reach USD 80.36 billion by 2031, growing at a CAGR of 7.0% during the forecast period (2023–2031).
Precious metals are scarce, naturally produced metallic chemical constituents with considerable economic worth. Chemically, precious metals are less volatile than many other metals, are generally malleable, and have a high luster. Automakers widely utilize precious metals for manufacturing various components such as catalytic converters, engine control units, circuit boards, sensors, switches, and others. In addition, Platinum and palladium are increasingly being implemented in automobile catalytic converters to minimize toxic emissions from petroleum-powered vehicles. High melting points and ease of recycling are the benefits of the precious metals industry for automotive applications. Precious metals for automotive application manufacturers ensure the sustainable impact and dependability of components such as catalytic converters and engine sensors.
The precious metals used in electric vehicle (EV) batteries vary based on the model. Still, a few precious metals, such as silver, gold, platinum, and palladium, are typically utilized in manufacturing electric vehicles. Silver is employed in various electrical components, from navigation systems to battery elements. Palladium and platinum are yet other significant precious metals for electric vehicles as they are utilized to manufacture batteries. Palladium enhances battery quality and reliability, making it an integral component of electric cars. Palladium is gaining popularity in electric vehicles due to its metal properties, making it an excellent conductor of electricity. Palladium batteries have a longer life expectancy and hence may carry higher energy. For instance, in 2019, two major precious metals companies, Anglo Platinum and Platinum Group Metals Ltd, established Lion Battery Technologies.
The precious metals for automotive application companies seek to accelerate the creation of PGM-based next-generation battery technology, notably palladium, which is anticipated to boost battery storage by 30%. PGMs include platinum and palladium. This new development has the potential to expand the demand for precious metals in novel applications and electric vehicles by enhancing their endurance and making them economically effective. As a result of these breakthroughs and the exceptional qualities of precious metals, the demand for these metals for manufacturing electric vehicles is increasing.
A catalytic converter is a component installed in the front area of a vehicle's exhaust system adjacent to the engine. Catalytic converters are used in internal combustion engines that operate on petrol or diesel. Approximately 50% of all platinum produced and the majority of palladium and rhodium are used to manufacture automotive catalytic converters. Catalytic converters have a honeycomb-like structure covered with precious metals such as platinum, palladium, and rhodium, which minimizes and purifies hazardous pollutants from automobiles' exhaust systems.
Furthermore, the contaminated exhaust is separated into two sections. Platinum and rhodium are used in the first compartment's reductive catalyst to minimize the hazardous nitrogen oxide (NO). This releases only harmless nitrogen and oxygen. The exhaust is routed to the second compartment containing platinum and palladium. The purified exhaust then departs the vehicle through the exhaust pipe. Demand and distribution of automobiles, notably in Europe and Asia-Pacific countries, are expected to be the main factors propelling the market for precious group metals.
The increased usage of platinum group metals (PGMs) in automotive catalytic converters results in PGM emissions into the atmosphere. These metals are organically present at low concentrations beneath the earth, but their deliberately increased usage threatens living life and ecosystems. Much research has been done on the rising levels of PGM in the fluids and tissues of people working in industrial settings. However, these metals' metallic form is considered neutral to biological responses. Several platinum solutions, such as hexachloro platinate and tetrachloro platinate, have been among the most effective allergens and stimulators. PGMs have also been implicated in bronchitis, dizziness, excessive loss of hair, sudden miscarriage, acne, and other major health issues in people.
Governments are concentrating on reducing car emissions to address the severe problem of declining air quality in the world's expanding urban regions. For example, the United Kingdom government announced in November 2020 a ban on petrol and diesel cars and vans sold in the country beginning in 2040. To overcome these bans, automotive manufacturers focus on electrification and developing and launching various light and heavy-duty electric vehicles. Precious metal manufacturers find the opportunity to supply these companies, as precious metals are increasingly being used in the manufacturing of electric vehicles. For instance, gold and silver can be used in circuits for contacting and bonding purposes.
Furthermore, to mitigate the actions taken by the government, petrol and diesel car manufacturers are focusing on optimizing the efficiency and reduction of emissions. Currently, the rising price of fuel and increasing pollution are two major concerns in the automotive industry. Thus, various petrol and diesel engine manufacturers are conducting studies to optimize the performance of the engines to achieve lower NOx emissions and higher fuel economy. Platinum and palladium are essential components of catalytic converters that cut emissions, opening up a market for producers of precious metals.
The global precious metals market for automotive applications is segmented by end-user, metal type, and component.
By end-user, the global precious metals market for automotive applications is segmented into light commercial vehicles, heavy commercial vehicles, passenger cars, and electric vehicles.
The passenger cars segment is the highest contributor to the market and is expected to grow at a CAGR of 8.11% during the forecast period. The automotive industry employs precious metals extensively in catalytic converters, engine control units, sensors, circuit boards, and other interior and exterior passenger car parts. Manufacturers of diesel- and petroleum-powered vehicles have mainly used platinum as an element in catalytic converters. Another critical factor in increasing the use of precious metals in passenger cars is government regulations. Cars add to various issues, such as energy resource depletion, environmental degradation, rising temperatures, and road accidents. Governments need more environment-friendly methods to prevent pollution problems. As a result, vehicle manufacturers' demand for precious metals is expanding, propelling the precious metals market for automotive applications.
An electric vehicle runs on electricity rather than an internal-combustion engine, which generates power by combusting a mixture of fuel and chemicals. The precious metals used in electric vehicle batteries vary depending on the vehicle, although only a few are utilized in manufacturing electric vehicles. Gold and silver are among the most common precious earth metals used in electric cars. The use of silver in electric vehicles is essential due to its conductance and high corrosion resistance properties.
By metal type, the global precious metals market for automotive applications is divided into palladium, platinum, rhodium, gold, silver, and others.
The palladium segment owns the highest market share and is expected to grow at a CAGR of 6.5% during the forecast period. Palladium is widely used in catalytic converters to clean the exhaust fumes from petrol and hybrid vehicles and prevent releasing harmful gases into the environment. About 70% of the global palladium supply is used in catalytic converters. Palladium is one of the best converters of unburnt hydrocarbons. It is, therefore, mainly used in petrol and hybrid vehicles to convert the harmful gases in automobile exhaust fumes into less toxic substances. At room temperature, palladium can absorb 600 to 900 times its volume of hydrogen, depending on its physical state on the back of forming a solid solution between the metal and its hydride, Pd2H. As hydrogen is absorbed, the metal expands, and under slight pressure, hydrogen diffuses into the palladium and is purified of any accompanying gases.
Platinum is an attractive silver-white metal that is malleable, ductile, and heavy. It is usually hardened by alloying with iridium. The metal has a high melting point, corrosion resistance, weldability, and excellent catalytic properties. Platinum tends to be recycled readily owing to its high value. Most recycled platinum comes from spent automotive catalysts, followed by the jewelry and electronics sectors. The most extensive application for platinum is in car catalysts, where platinum combines with palladium or rhodium. Platinum has been used in auto-catalysts for over forty years and accounts for around 40% of the annual platinum demand. It is also used in manufacturing components such as sensors and spark plugs; however, spark plugs consume comparatively less platinum in their use as a catalyst.
By component, the global precious metals market for automotive applications is divided into catalytic converters, engine control units, circuit boards, sensors, switches, windshield defoggers, and others.
The catalytic converter segment is the highest contributor to the market and is expected to grow at a CAGR of 6.55% during the forecast period. A catalytic converter is a component that utilizes a catalyst to transform hazardous substances into nontoxic alternatives. Catalytic converters contain a ceramic tool structured like a honeycomb and covered with PGMs such as platinum, palladium, and rhodium to initiate a chemical reaction that transforms hazardous pollutants into non-hazardous pollutants. PGMs are effective automobile pollution control accelerators as they catalyze NO conversion into nitrogen and oxidize carbon monoxide (CO) and hydrocarbons (HC). Platinum is a common catalyst because of its oxidation properties and is usually the preferred metal for diesel and petroleum-powered vehicles. Additionally, palladium and rhodium are also commonly utilized in converters. Palladium is increasingly being implemented in automobile catalytic converters to minimize toxic emissions from petroleum-powered vehicles.
Sensors are widely utilized in the power sector, particularly the automotive industry. Sensors, such as radar, cameras, etc., are used in autonomous vehicles. Precious metals are an essential element in the functionality of sensors. Due to their electrical characteristics and intrinsic durability, platinum, gold, and silver are the most commonly utilized metals in these applications. Automobile navigation has become more accessible and more convenient because of sensors. Due to sensors, vehicles can easily prevent incidents and accidents, and automated technology is also being adopted to accomplish the same.
By region, the global precious metals market for automotive applications is divided into North America, Europe, The U.K., China, Asia-Pacific and Japan, and Rest of the World (RoW).
China is the most significant shareholder in the global precious metals market for automotive applications and is anticipated to grow at a CAGR of 8.8% during the forecast period. The growing economy, rise in disposable income, and government assistance have propelled China's automotive industry to unparalleled heights. The country is heavily invested in the introduction of unique, innovative cars. An increase in the sales of Chinese vehicles is beneficial to the demand for platinum group metals, particularly palladium.
In addition, most automobiles in China are gasoline-powered, with considerably significant palladium loadings. SUVs are more oversized vehicles that may necessitate using platinum in their autocatalytic loadings. The diesel vehicle market is also increasing, which is an excellent sign for platinum because diesel vehicles require additional platinum auto catalytic loadings. Some of the largest precious metals refining companies have planned to establish a precious metals refinery and reprocessing production facility in China as the country's demand for platinum group metals (PGMs) continues to increase. Furthermore, the country is a hub for various end-use industries, including heavy and light commercial vehicles and passenger cars, which drive the demand for precious metals for automotive applications.
Asia-Pacific and Japan are anticipated to grow at a CAGR of 5.9% over the forecast period. The increasing demand for light commercial vehicles in the region has propelled the demand for precious metals in automotive applications. The region consists of some of the world's largest automakers, such as Nissan, Toyota, Suzuki, etc., actively involved in the increased production of automobiles. These automakers use precious metals to manufacture car components and have planned to raise the prices of their vehicles. The increasing population and development in nations such as China and India have increased the demand for automobiles in the Asia-Pacific region. Furthermore, the rise in the market for automotive in this region can be attributed to inexpensive labor, raw materials availability, government assistance, and the developing economies of nations such as China, India, and Japan that have led to the growth in automotive production, further raising the demand for precious metals for automotive applications.
The North American region comprises the regional market of the U.S., Canada, and Mexico. In North America, the U.S. is expected to be one of the largest suppliers and consumers of precious metals in automotive applications. The region is expected to witness higher demand for precious metals because of stringent government regulations on vehicle emissions and a robust automotive manufacturing base. The automotive industry in North America is expected to grow on the back of technological advancements, including the development of autonomous and electric vehicles. Thus, the automotive industry is anticipated to push the demand for precious metals in the region. Precious metals are used to manufacture various automotive components, including catalytic converters, engine control units, circuit boards, sensors, and switches. BASF recently completed a milestone of producing 400 million catalytic converters in its production facility in the U.S.
European countries are significant contributors to the adoption and manufacturing of novel technologies for automotive industries due to the leading automakers in the region, such as Volkswagen Group, Daimler, BMW, Peugeot, Renault, etc. The inclination toward adopting safer and technologically advanced vehicles is expected to boost the demand for precious metals in the region. Europe is one of the world's biggest producers of motor vehicles and has the largest private investors in research and development. In addition, focusing on strengthening the competitiveness of Europe's automotive industry and preserving its global technological leadership, the European Commission supports international technical harmonization and provides funding for research and development. In Europe, manufacturers are developing autonomous cars. For instance, Mercedes–Benz and BMW are leading the development of the concept of driverless prototype cars.
In the U.K., precious metals play a vital role in gasoline and diesel-fueled cars and trucks. Moreover, with increased technological developments related to the automotive industry in the country, the demand for precious metals is anticipated to grow soon. The manufacturers in the country are also engaged in recycling platinum derived from used catalytic converters, harvesting, and recycling precious metals, which is a lucrative business in the country. Many luxury car manufacturers are present in the country, including Aston Martin, Bentley, Jaguar, Land Rover, etc. These cars use precious metals to manufacture their components, including catalytic converters, engine control units, circuit boards, etc.
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