Total palladium demand in 2025 was slightly higher than 2024, with autocatalyst demand declining only 1.2% YoY according to UBS - far better than the dramatic collapse many projected. The hybrid boom and removal of US BEV tax credits extended the ICE timeline.
The premium reversal - platinum now trades above palladium - is creating some reverse substitution back to palladium in 2026. However, Heraeus says this is not enough to prevent net surplus. The structural shift toward lower palladium intensity per vehicle from 2022-2024 substitution is permanent.
The hybrid cushion is real but temporary. Hybrids carry 10-15% higher PGM loadings than standard ICE vehicles. The critical question is EV adoption timing. If it disappoints further, the palladium market could remain in deficit longer than current forecasts suggest.