EVs and Catalytic Converters: Rethinking the Demand for Platinum

During their recent episode, Taylor, Carlisle, Daniel, and Collins discussed EVs and Catalytic Converters: Rethinking the Demand for Platinum, here’s an excerpt from the episode:

Tobias: So, a basket of commodities is beating the S&P 500 this year. I saw that on Twitter.

Vincent: Yeah.

Porter: Go take a look at the platinum chart.

Vincent: I was funny. I was going to mention platinum, just so you go at it.

Porter: No. It’s like the contrarian’s dream. It’s gotten killed. And Vincent pointed out that the platinum card ranks higher in the Amex ecosystem than gold.

[laughter]

Porter: And the two have crisscrossed in the night in terms of prices. And so, there’s a couple ways to play it. Anglo-American, a bunch of other, Sibanye-Stillwater. There’s degenerate ways to play it, and there’s cash flowing ways to play it, or you just play the commodity.

Vincent: The beauty of platinum– How long have we been doing this? 25 minutes? We haven’t spoken about Tesla yet, but here we go.

[laughter]

Vincent: The beauty of platinum– It’s not really a Tesla thing. It’s actually not a Tesla thing. It’s an EV thing. When people dream of the TAM of EV by 2040 and the like, it might come to fruition. Who the hell knows? Their spreadsheet will do wonders, ours won’t. But at least in the near-term portion of that ramp from now to 2040, it’s not looking so good for EV. Yes, Tesla, their sales are down and their like– I’m talking– [crosstalk]

Porter: Robotaxis, Vinny.

Vincent: Stop. I’m talking about Mercedes. I’m talking about BMW. I’m talking about Ford, GM. All of them are doing a pivot. And Toyota seems like they had it right from the jump to say, “Not so fast. These hybrids are probably the better technology for now until we really figure this out.” And so, what that means, long winded way for platinum, is that if catalytic converters, which everyone thought they would make zero catalytic converters by 2030, all of a sudden, we were making more than zero, platinum is in demand. Then when you take that into account, that fundamental view, and marry it with the chart that you’re looking at with platinum, which is on its ass, there is an opportunity.

Porter: During the UConn basketball game last night, Ford had a commercial out. You think of the Super Bowl two years ago, it was all electric. Last night, the commercial was, “We have it all. We have gas, we have electric and we have hybrids.” So, it’s interesting.

Tobias: The weird thing about those hybrids is how hard they are to buy, because I’ve just bought a car. I just rolled one of my cars, and I wanted the hybrid for exactly that reason that you can get these like 30 miles EV that converts into an ICE, which is perfect, because I drive around a little area where I want to drive longer periods. They’re not available anyway. They don’t exist. They’re not real cars.

Vincent: The big myths of Seawolf about a year or two ago was truly not believing in what you believed in, which is that hybrids were going to be an answer. I wouldn’t say the answer, but an answer. I was going around, shopping around, looking for a hybrid and it’s like, “Why wouldn’t I buy this over an EV?” I think Toyota was trading– You want to talk about in Acquirer’s Multiple valuation, Toyota, which is once again turning out to be the best auto manufacturer in the world, I think was trading at sub five times. Some crazy number for such a quality franchise. It just sat there, because everyone thought they were dead. Thats not the case anymore.

So, yeah, I’m with you, Tobias. I actually think you have to be a complete contrarian and ignore everything you’ve heard from your friends to TV, social media, to everything else saying, “No, I don’t think this is going to work as well as you people think.”

Porter: You mean you had to think for yourself?

[chuckles]

Vincent: Yes, something like that.

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