Palladium Demand Transition Continues as Autocatalyst Market Share Erodes at Slowing Pace

The collapse in palladium autocatalyst demand — while dramatic in percentage terms — has a natural floor. Despite rapid EV adoption, the global internal combustion engine vehicle fleet still numbers 1.45 billion vehicles, each requiring emission control catalysts that contain palladium for gasoline engines. The replacement catalyst aftermarket alone consumes 500,000-600,000 ounces annually for vehicles already on the road, providing a stable demand baseline.

The slowdown in demand erosion is partly attributable to slower-than-expected EV adoption. Global EV market share reached 22% of new vehicle sales in Q1 2026, up from 18% in 2025, but the pace has decelerated from the 2021-2023 period when annual growth averaged 40%. Hybrid vehicles — which require both gasoline and electric powertrains and thus use palladium-containing autocatalysts — now account for 35% of new vehicle sales in the US and 38% in Europe.

The platinum substitution threat to palladium demand is also moderating. As palladium's price has fallen to $1,389/oz, the economic incentive for automakers to switch from palladium to platinum has diminished. At a palladium-to-platinum price ratio of 1.4:1, the cost savings from substitution are $8-12 per vehicle, compared with $35-50 per vehicle in 2022 when palladium was at $2,500-3,000/oz.

Looking forward, palladium demand is projected to stabilize at 2.8-3.0 million ounces annually by 2028-2030, supported by the large installed base of gasoline vehicles requiring replacement catalysts and the slower-than-expected EV transition in developing markets. The palladium market does not face a further 30-50% demand decline from current levels, which provides a structural price floor.