US-Iran war boosts used electric vehicle sales

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0:17Good morning from the Financial Times. Today is Friday, April 10th, and this is your FT News Briefing. Hopes are fading fast that a U.S.-Iran ceasefire will reopen the Strait of Hormuz. and the war is making electric vehicles more attractive to consumers. Plus, Hungarian voters could oust their longtime leader this weekend. Orban turned Hungary inside out in those 16 years that he's been in power. So now Orban very much finds himself cornered and isolated. I'm Victoria Craig, and here's the news you need to start your day.

1:04Shipping through the Strait of Hormuz remains at a standstill. That's despite a U.S.-Iran ceasefire that was meant to reopen one of the world's busiest waterways. Iran effectively closed it when the conflict started. But yesterday, NATO Secretary General Mark Rutte said the alliance could play a role in helping to get ships moving again. If NATO can help, obviously NATO is there. There's no reason not to be helpful. Obviously, we will. Oil supplies remain extremely tight, and more cracks in the market are starting to show. Prices of North Sea oil for immediate delivery rose to record highs yesterday, and traders were unable to buy some Brent crude contracts.

1:52Since the start of the war, governments around the world have rushed to cut fuel taxes. It was a way to shield consumers from the energy price shock. Now, the OECD's new chief tells the FT that those tax cuts could fuel inflation and they should be phased out. Good thing, then, that some consumers have been finding their own ways to protect their budgets. Here in America, they're turning to used electric vehicles as a way to save cash on gas. The FT's U.S. industry reporter Christian Davies has been reporting on that and joins me now. Hi, Christian. Hello. So why are U.S. car buyers looking at pre-owned electric cars now?

2:29The main reason is that there is a glut of very cheap used EVs coming onto the market. This is because after the pandemic, there was a boom in EV sales, partly because the Biden administration introduced a$7 ,500 consumer tax credit for EV purchases. And a lot of these vehicles were only available if they were leased. And these vehicles are now coming off lease onto the market just at a time when gas prices and the price of owning a gasoline-powered vehicle is spiking sharply. And do we have a sense, Christian, of how much this higher gas price is propelling people to want to buy a used EV? The industry experts say that it generally takes a very prolonged escalation in gas prices for people to start changing their buying patterns.

3:31The gas price has gone up several times and come down again. So the average American consumer still has the sense that what goes up must come down. However, the longer that the gas price stays escalated for a longer period of time, and coupled with a growing realization that some of these bargains of these used EVs are out there, means that more people may be tempted to buy EVs who wouldn't be otherwise. And as people say, people who buy EVs tend not to go back. There have long been concerns, I think, across the United States about the availability of charging stations for these EVs, causing what a lot of people call range anxiety.

4:14So when it comes to pump anxiety, so concerns about prices at the gas pump versus that range anxiety, do you have a sense of which one will win out and become a bigger concern longer term for American consumers? The interesting thing about pump anxiety is when energy prices go up, that affects all kinds of different aspects of your life. The difference is when you're filling up at the pump, it's right literally in front of your face and you can see it ticking up. So it has a kind of outsized psychological impact on consumers. When it comes to charging and range anxiety, nearly every EV on the market now is adequate for a very high proportion of people's daily commute.

4:54But in America in particular, there is the sense that at least once a year you'll do that great long trip. And so people are being put off by that. A few things, however, have changed. Charging companies and EV producers have done more and more deals to make their various types of charger compatible with each other, making them more accessible. And more chargers are being built all the time. I'm curious how this trend toward a bigger adoption of EVs because of the war in Iran, is that translating to other markets outside the United States? First of all, US gas prices are historically lower anyway in the first place.

5:33And so a lot of Americans are even quite shocked when they see what the price of petrol or diesel is in Europe. I think in a sense, the most interesting comparisons are within the United States and principally California. The EVs account at the moment for around six, six and a half, 7 % of total auto sales in the US. But California is around a quarter, around 25%. The price of gas in California is much higher than in nearly all of the rest of the United States. And so EV advocates say, if you look at California, you see that there is a clear link between higher gas prices and EV adoption. And therefore, you will start to see Californian attitudes to EVs start to spread throughout the U.S.

6:21As one advocate put it to you, the dream of mass EV adoption in America is not dead yet. Christian Davies is the FT's U.S. industry correspondent. Thanks so much for your time, Christian. Thanks so much.

6:37The International Monetary Fund has a strong warning about the economic effects of the U.S.-Iran war. Even in the best case, there will be no neat and clean return to the statu quo ante. That's IMF head Kristina Georgieva. Had it not been for this shock, we would have been upgrading our growth projections. But now, even in our most hopeful scenario, we would have a downgrade. Her comments come as the ceasefire hangs in the balance after Israeli strikes killed hundreds in Lebanon this week. Iran called those attacks a, quote, grave violation of the truce. Israel has since agreed to direct talks with Beirut, quote, as soon as possible.

7:33Hungary is preparing this weekend for what could be its most consequential election in years. That's because of this man, Peter Magyar.

7:48He is challenging strongman Prime Minister Viktor Orban, and Magyar's party is leading Orbán's by double digits in most independent polls.

8:03At a campaign stop, Magyar said the Hungarian people do not tolerate more because they have never tolerated having their freedom taken away. Voters will decide on Sunday then whether to bring an end to Orbán's 16 years in power. The FT's Martin Dunai in Budapest is covering this election for us, and he joins me now. Hi, Martin. Hello, how are you doing? I'm good. Thanks so much for joining us. So just tell me about Orbán's political nemesis, Peter Maggiar. What do we know about him? He is a young 45-year-old former insider of the ruling Fidesz Party. He broke off two years ago in the middle of a child sex abuse scandal that shook the establishment to the core.

8:45He came forward and said Fidesz is morally corrupt and financially corrupt. His policies are sort of a mix of much more pro-European positions than Orbán. He's a middle ground conservative and has centered his campaign on improving social services like health care and education, which has resonated very well with voters, it seems. Now, Orban has been in power for 16 years. Can you just remind us, given the platform that his opposition is running on, how Orban has changed Hungary in that time? Orban turned Hungary inside out in those 16 years that has been in power. he immediately possessed a constitutional two-thirds majority so he could rewrite all of the laws, which he successfully did for three and a half terms, which make it very difficult to un-pick the system now.

9:39Other things that Orbán did, he tied Hungary over and over again, very, very closely in with the Russian regime of Vladimir Putin. He built a system of businessmen loyal to his regime, doing his bidding in the private sector. This, of course, has been very detrimental to Hungary standing within the European Union. So now Orban very much finds himself cornered and isolated. So what do you think is resonating with Magyar's message with voters? There was a good stretch of economic development in the earlier phase of Orban's tenure. But since COVID, he has not been able to find a way back to prosperity.

10:21By the time Magyar showed up, Hungary's economy had stalled. Its inflation was the highest in the European Union. You know, you go to a hospital in Hungary, you're more than likely to have to take toilet paper with you because they won't have any in the hospital. If you live in smaller towns and villages, you're unlikely to be able to get around using public transit because trains and buses are in such horrible condition. And so when Maja showed up, he could rightly say this government is doing nothing right. So Martin, could this really then spell the end for Viktor Orban's reign in Hungary? Yes.

10:57I used to be skeptical of polls predicting a comfortable victory for Maja's Tisa party because Orban has an election day get out the vote machine that is formidable, which usually has been enough for him to secure the supermajority. But our reporting shows that ability to mobilize the vote on election day may have been jeopardized, both because attention has been called to some of the fraudulent nature of that effort, including giving money for votes, which is illegal, but also because the people that tended to be mobilized that way are the poorest people in the country who are increasingly fed up with Orbán's inability to get them out of that poverty.

11:38and the fact that the ruling party only cares for them come election day and not in between elections. A very high stakes election, that's for sure. One we'll be watching very closely. Martin Dunai covers Hungary for the FT. Thanks so much for your time, Martin. Thank you for having me. You can read more on all of these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back next week for the latest business news. The FT News Briefing was produced this week by Mark Filippino, Safiya Ahmed, Sonia Hudson, and me, Victoria Craig. Our show is mixed by Alex Higgins and Sam Giovinco.

12:14We had help this week from Peter Barber, Michael Lello, David De Silva, and Gavin Kallman. Our executive producer is Topher Forges. The FT's global head of audio is Cheryl Brumley, and our theme song is by Metaphor Music.

13:05Transcription by CastingWords Visit Schwab.com to learn more.

13:36Marton Dunai: wherever you get your podcasts.