Platinum Group Metals (PGMs)
Electric Vehicles & Catalytic Converters: Exploring the Impact on the PGM Recycling Industry
As a result of the looming promise of the electric vehicle market, recyclers want to know what the future of the catalytic converter and PGM recycling industry looks like. You might be wondering if there will still be converters in the recycling stream in 50 to 60 years and if your business will still be able to depend on its converter revenue stream as much as it does now.
Despite these anxieties, it’s important to remember that converters have been around for more than 50 years, installed on millions of vehicles with internal combustion engines. So even if new vehicles are being electrified to meet net-zero emissions goals by 2050, there will still be enough scrap converters available to recycle globally.
If you’ve been wondering about the growth and sustainability of your converter business, we’re here to explore the impact of vehicle electrification on the PGM and converter recycling industry. And rest assured, the outlook is good.
The Future of Internal Combustion Engine Vehicles
Study after study has shown the increasing importance of the electrical vehicle market, but that leaves automotive and scrap metal recyclers wondering about the outlook for the industry of gasoline vehicles.
But when you drill down into the numbers, the picture is actually much more nuanced. As of 2017, automakers were producing about 95 million light-duty vehicles annually, of which roughly 1.3% were electric vehicles (EVs). More recent data showed that in 2021, over 94% of all Canadian registered light-duty vehicles were motor gasoline. In the United States, EVs made up only 5.6% of the entire car market in 2022.
This information confirms that even with a goal to electrify the automotive market, the process will be gradual. We’re still seeing the massive production of internal combustion engines, which means that we’re still dependent on gasoline motors.
But the Electric Vehicle Market Is Booming
Although we aren’t finished with internal combustion engines, data shows that the demand for EVs increases on a year-to-year basis. Worldwide, sales are expected to grow by 35% by the end of 2023, so demand for EVs shows no sign of cooling off.
But like any new innovation, electric vehicles continue to face setbacks. Technological limitations in particular have kept EVs from achieving mass market success.
Electric Vehicle Technology
As it stands, the technology required to manufacture batteries for EVs depends on the extraction of lithium and its conversion into lithium carbonate. While lithium sources around the globe are plentiful, acquiring lithium and converting it to a usable form creates a huge production bottleneck. As of 2023, the production of lithium isn’t meeting demand and isn’t expected to exceed it until 2027.
There’s also the question of producing EVs that can sustain very low temperatures. Currently, the range of electric vehicles that work in freezing weather remains small, further limiting their appeal.
We also need to consider the ability to purchase an electric or hybrid vehicle. For the time being, their high cost makes electric vehicles unattainable for high earners. For the average consumer, the range of electric cars that are affordable is limited.
Unless manufacturers can increase the range of EVs, charging times, and weather adaptability, consumers won’t have much appetite to make the switch to electric vehicles. Until then, their other option is the more cost-effective hybrid vehicle.
What About Hybrid Vehicles?
While some car manufacturers are betting on the electric solution, many are opting to increase production of hybrid electric vehicles (HEVs). For converter recyclers, the good news is that every HEV has one or two catalytic converters. More importantly, converters for hybrid vehicles, while smaller than their gas-only counterparts, have high amounts of PGMs.
But the switch to electric and hybrid vehicles raises an entirely new set of questions yet to be answered.
Ecological Concerns For EVs and Hybrid Vehicles
Consumers have concerns about the environmental impact that electric and hybrid vehicles have on the planet. Most of the concerns involve the environmental impact of lithium extraction and its transformation into lithium carbonate. Many consumers are also concerned about the electricity needed to power the vehicles, particularly how that electricity is going to be produced. Many of these concerns have yet to be concretely answered.
In addition, few environmental regulators have developed systems for scrapping and recycling spent lithium carbonate batteries in a way that doesn't harm the planet. For now, the recycling process for scrap batteries is more expensive than mining and producing lithium carbonate from raw materials. However, there are American and Canadian recyclers who are developing methods to effectively recycle EV batteries and recover the precious metals they contain.
Although we still don’t have the infrastructure and legislative frameworks to effectively reclaim lithium from scrap batteries, there are several methods in development.
What Is the Impact of Electric & Hybrid Vehicles on the PGM Market?
If the number of electric vehicles being produced keeps rising, will there still be a demand for recycled PGMs? The simple answer is yes. Many industrial and technological sectors depend on platinum, palladium, and rhodium, and their demand won’t decrease just because of increased EV production. Let’s take a look at the current state of the PGM market.
PGM Supply and Demand in 2022 and 2023
In 2022, platinum and rhodium supply exceeded demand, while the opposite was true for palladium. For 2023, experts predict an increase in supply of PGMs from both primary and secondary sources and a rise in demand for platinum, while demand for palladium and rhodium is predicted to fall. But these statistics for palladium demand reflect the increase in platinum being used in converter manufacturing. Just a few years ago, palladium was the metal used most in the production of converters. So it’s normal to see fluctuations in demand for platinum and palladium in different years.
Keeping in mind that recycled PGMs supply roughly 25% of present demand and are less expensive to produce, we predict that the electric car isn’t going to have a significant impact on the PGM recycling industry for at least 20 years or more. If your business has anything to do with end-of-life vehicles, you’ll be dealing with catalytic converters for a long time to come.
That’s not to say that innovative companies shouldn’t begin looking for ways to recycle electric and hybrid vehicles and their batteries. As with the early adopters of catalytic converter recycling, there will be money to be made.
The Future of Catalytic Converters
We’re still recycling some of the first converters that went on the market more than 30 years ago. Even if electric vehicles are produced massively, converters will still be available for recycling. If the consumer automotive industry moves away from fossil fuels in the next few years, the footprint of the internal combustion engine and the need to recycle materials associated with it will still be around for decades.
The production of electric vehicles remains costly and faces the hurdle of lithium carbonate production. The financial and technological challenges of producing EVs and recycling their batteries ensures that internal combustion engines still have a big role to play for the foreseeable future. Simply put, while we will continue to see more electric vehicles on the road in the coming years, there’s still plenty of room and need for the PGM recycling industry.
One economic solution to reducing our carbon footprint is to produce cleaner-burning gasoline vehicles or a higher number of hybrid vehicles. In either of these scenarios, catalytic converters will still be a vital part of the automotive industry. If your business has anything to do with end-of-life vehicles, you will be dealing with catalytic converters for a very long time to come, and PMR will continue to be with you every step of the way.
For more information, visit PMR’s Resource Center.