The global automotive industry is experiencing a significant shift towards hybrid vehicles, driven by the threat from Chinese companies in electric vehicles (EVs). This trend has carmakers focusing more on hybrid technology, which offers double-digit profit margins compared to the often loss-making fully electric vehicles.
Toyota Motor (TM) has been at the forefront of this hybrid resurgence, with its operating profit soaring to $7 billion in the first quarter of the year, reflecting the growing demand for hybrid vehicles worldwide. The company has even unveiled a new generation of internal combustion engine (ICE) vehicles, anticipating a longer timeline for the global adoption of EVs.
In the United States, hybrid vehicles have historically lagged behind, accounting for only 7% of the market share in 2023. However, there has been a notable shift recently, with U.S. hybrid sales rising at an impressive 35% year-on-year rate in 2024. A similar trend is seen in Europe, where hybrid vehicle sales have increased by 21% so far this year, outpacing the growth of EVs.
Investors are also taking note of this hybrid boom, particularly in the commodities market. Demand for platinum (PLV24), used in both hybrid and traditional combustion engine vehicles to reduce emissions, is on the rise. ETF holdings backed by physical platinum have surged, driving the platinum price up by 20% in recent months.
Platinum’s demand is not limited to the automotive sector, as it is also used in AI and data storage applications like hard disk drives (HDDs). With the growing interest in AI technologies and expanded data storage needs, platinum is poised to see continued demand in the future.
For investors looking to capitalize on the ongoing hybrid trend, the abrdn Physical Platinum Shares ETF (PPLT) offers a promising opportunity. Backed by physical platinum bars and with a reasonable expense ratio, PPLT provides exposure to the strong demand for platinum in the automotive and technology sectors.
