Electric Vehicles and Rhodium: Will EV Adoption Reduce Demand?

The rise of electric vehicles (EVs) is one of the most significant trends in the automotive industry today. With global EV sales soaring by 25% in 2024, reaching 17.8 million units, and projections estimating 21.3 million in 2025, accounting for 24% of the market share, it’s natural to wonder about the impact on other automotive components and materials. One such material is rhodium, a rare and valuable precious metal primarily used in catalytic converters. But will the increasing adoption of EVs reduce the demand for rhodium?

Rhodium’s Role in Catalytic Converters

Rhodium is a member of the platinum group metals (PGMs), a collection of chemically similar elements that also includes platinum, palladium, iridium, osmium, and ruthenium. Known for its high melting point (1,964°C or 3,567°F), exceptional resistance to corrosion, and catalytic properties, rhodium plays a crucial role in reducing harmful emissions from gasoline-powered vehicles.

Catalytic converters, introduced in American vehicles in the 1970s, use PGMs to catalyze chemical reactions that convert toxic pollutants into less harmful substances. In a three-way catalytic converter, rhodium is primarily responsible for reducing nitrogen oxides (NOx) into nitrogen and oxygen. Platinum and palladium, on the other hand, catalyze the oxidation of hydrocarbons and carbon monoxide into water and carbon dioxide. Studies by the Environmental Protection Agency (EPA) have shown that catalytic converters can reduce harmful emissions by up to 90%.

The amount of rhodium in a catalytic converter can vary depending on the vehicle’s size, age, and manufacturer. However, the average converter contains about 1-2 grams (0.0353 – 0.0705 ounces) of rhodium, along with 3-7 grams of platinum and 2-7 grams of palladium.

The Electric Vehicle Revolution

Electric vehicles are gaining momentum worldwide, driven by increasing environmental awareness, government incentives, and technological advancements. In 2024, global EV sales increased by 20%, and in the first quarter of 2025, sales grew by 35% compared to the same period in 2024. The International Energy Agency (IEA) projects that EV sales in the U.S. could account for almost one quarter of total passenger car sales by 2035.

As battery technology improves and charging infrastructure expands, EVs are becoming increasingly competitive with internal combustion engine (ICE) vehicles. However, pure battery electric vehicles (BEVs) do not require catalytic converters, as they do not produce exhaust emissions. This raises concerns about the future demand for rhodium and other PGMs used in catalytic converters.

Impact of EV Adoption on Rhodium Demand

The increasing adoption of EVs is expected to have a negative impact on the demand for rhodium in the long term. As more consumers switch to EVs, the production of ICE vehicles will decline, leading to a decrease in the demand for catalytic converters and, consequently, rhodium.

However, the transition to EVs will not happen overnight. Several factors could mitigate the decline in rhodium demand in the short to medium term:

Hybrid Vehicles: Hybrid electric vehicles (HEVs) and plug-in hybrid electric vehicles (PHEVs) still rely on internal combustion engines and, therefore, require catalytic converters. As the market share of HEVs and PHEVs increases, the demand for rhodium may remain relatively stable. Bloomberg Intelligence estimates that by 2030, the global market share for hybrid passenger vehicles (32%) will surpass that of BEVs (31%).
Stringent Emission Standards: Governments worldwide are implementing stricter emission standards for ICE vehicles to combat air pollution. These standards require more efficient catalytic converters with higher loadings of PGMs, including rhodium.
Recycling: Recycling of rhodium from spent catalytic converters is becoming increasingly important. As the price of rhodium rises and supplies become constrained, recycling offers a cost-effective and environmentally friendly alternative to mining. According to the International Platinum Group Metals Association (IPA), recycling contributes over 30% of the global supply of platinum group metals (PGMs), including rhodium.
Global Vehicle Growth: Despite the rise of EVs, the global vehicle population continues to grow. This means that even with a declining market share, the absolute number of ICE vehicles on the road may remain significant for some time, sustaining the demand for rhodium.

Rhodium Market Dynamics

The rhodium market is characterized by its volatility and sensitivity to supply and demand factors. Rhodium is one of the rarest precious metals, with annual production of only around 30 tons, compared to over 3,000 tons of gold. South Africa is the largest producer of rhodium, accounting for over 50% of global production, followed by Russia with about 10%.

The price of rhodium has fluctuated significantly in recent years, reaching an all-time high of $29,800 per ounce in March 2021 due to supply constraints and rising global emission standards. As of September 3, 2025, the price is around $7,291.57 USD/t oz, and is expected to trade at $7,733.44 in 12 months time.

Analysts predict that the automotive demand for rhodium will decrease slightly due to the adoption of BEVs. However, the price is expected to remain relatively high, ranging from $3,500 to $6,500 per ounce, making it a valuable commodity for recycling.

The Future of Rhodium

While the long-term outlook for rhodium demand may be uncertain due to the rise of EVs, the metal is expected to remain a valuable commodity in the coming years. The demand for rhodium in catalytic converters will likely persist, driven by hybrid vehicles, stricter emission standards, and the continued growth of the global vehicle fleet.

Moreover, rhodium has various other applications in industries such as electronics, chemical, and jewelry. In the electronics sector, rhodium is used in electrical contacts due to its low contact resistance and excellent conductivity. In jewelry, it is used for plating silver and white gold to enhance appearance and prevent tarnishing.

Furthermore, research is underway to reduce the amount of precious metals required in catalytic converters. Scientists are exploring the use of atomic platinum and other non-precious metals as catalysts to lower costs and improve efficiency.

Investment Considerations

For investors, rhodium presents both opportunities and risks. The rarity and unique properties of rhodium make it an attractive investment option, especially considering its potential for price appreciation. However, the volatility of the rhodium market and the uncertainty surrounding long-term demand require careful consideration.

Investors can gain exposure to rhodium through physical rhodium, rhodium-backed exchange-traded funds (ETFs), or mining companies that produce rhodium as a byproduct. Companies like Impala Platinum, Northam Platinum Holdings, Anglo American Platinum, and Sibanye Stillwater are major PGM producers that could benefit from rising rhodium prices.

Conclusion

The increasing adoption of electric vehicles will undoubtedly impact the demand for rhodium in the automotive industry. However, the transition to EVs will be gradual, and several factors could sustain rhodium demand in the short to medium term. Moreover, rhodium’s other industrial applications and the potential for recycling and technological advancements could further mitigate the decline in demand.

As the automotive industry evolves, it is crucial to monitor the rhodium market closely and assess the potential risks and opportunities. While the rise of EVs may present challenges, it also opens new avenues for innovation and sustainability in the precious metals industry.