Palladium – one of the six platinum group metals and one of the four major precious metals – is most commonly used in exhaust systems in cars to turn pollutants into carbon dioxide. As governments institute tighter regulations for auto makers to help combat the global climate change, demand for the precious commodity has far exceeded supply. Supply is short because it is not mined as a primary product but rather as a secondary product of platinum and nickel and that means that the supply is low. Thus the price has risen to staggering heights; currently trading above gold for the majority of this year and has been in deficit since 2012.
With the cost skyrocketing, automakers have been paying more for the metal and may have to pass the cost onto consumers. They have been looking into alternatives to palladium, such as platinum, but the technology hasn’t advanced enough to get the same performance as the existing models. Electric cars may be the answer as they don’t need exhaust systems since they don’t burn fuel, but it seems that electric vehicles becoming the majority of cars on the road is still many years out.