LONDON (Scrap Register): Long-term platinum demand will take a big hit if forecasts for a dramatic increase in battery-powered automotive technology prove true, said INTL FCStone in a monthly report.

Platinum’s largest industrial demand is use of the metal in auto catalysts – in particular, for diesel-powered vehicles.

Analysts cited a Reuters report quoting the chair of the International Precious Metals Institute, Bodo Albrecht, as saying that electric cars could prove as devastating for platinum demand as digital photography was for silver.

“Albrecht says that the replacement of platinum group metals by battery electric technologies could result in a whopping 40% decline in platinum demand by 2023-2040,” INTL FCStone added.

“Indeed, we are already seeing some rumblings in this direction; in addition to the ongoing backlash against diesel caused by the VW [Volkswagen] scandal, Volvo became the first company to say this month that all its cars will be going fully or partly electric as of 2019,” the noted.

Just a day before, France said it would ban gasoline engines in new cars altogether starting in 2040 and the U.K. also fell in line with the French a few days later.

“If Albrecht’s analysis is correct, much of platinum’s fortunes will ride in large part on the auto industry’s ability to keep the largest component of its demand mosaic intact and re-establish the diesel engine ‘as an environmentally acceptable propulsion unit,’ at least for the carmakers and countries that still want it,” INTL FCStone concluded.