Brazil’s Election Rally & Are EVs Back?

SPEAKER_1 (0:00)

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John Crotteau (0:34)

Our high gas prices fueling an EV come back. We dig into Tesla's latest delivery numbers.

Kaila Lopez (0:39)

And why are Brazilian stocks surging after a surprise first round election results?

John Crotteau (0:43)

For Monday, October 5th, it's Brew Markets Daily. I'm John Crotteau.

Kaila Lopez (0:46)

And I'm Kaila Lopez. Let's get movin and groovin.

John Crotteau (0:57)

All right, Kaila, thank you so much for being here in the studio today. We're going to get into the news of the day. But tell us a little bit about yourself and we'll get into the stories.

Kaila Lopez (1:04)

Yeah, John, thank you so much for having me. I'm so excited to be here hosting Brew Markets for the first time. I am the co-host of Per My Last Email, which is Morning Brew's work life podcast. So I'm not unfamiliar with the podcasting studio, but I am extremely excited to be here. All right.

John Crotteau (1:21)

Well, thank you for joining us today. And Kaila, cast your memory back to this time last year, if you would. Ohtani was pitching and hitting for the Dodgers and the playoffs. The government had just shut down and would remain closed for yet another month. Gas was around three bucks a gallon and Tesla was coming off its best quarter ever, delivering nearly half a million electric cars. Why?

Well, the clock had been ticking on the $7,500 federal EV tax credit that Biden-era incentive that expired at the last of September.

So buyers rushed in to take advantage of the credit. EVs hit nearly 11% of US car sales that quarter, which was an all-time high. Then the credit expired on October 1st and sales dropped.

Kaila Lopez (2:03)

Yes. Then came months of headlines that American carmakers were pulling out of EVs. It was the narrative of the winter. GM had planned for Cadillac to sell only electric vehicles by the end of the decade. And now CEO Mary Barra says gas-powered Cadillacs are coming back, starting next spring.

And the company booked $11 billion in EV-related charges since last year. It's been an expensive shift.

John Crotteau (2:30)

A very expensive walk back from the EV plans. And the impact was even larger at Ford. In December, the company announced it was scaling back EV production and reallocating capital, to make its division financially viable and aligned with actual market demand. That was the wording out of the company. Ford canceled three planned EVs and ended production of the F-150 Lightning, I remember that, with taking a $19.5 billion charge, which is going to come over the next several quarters on their balance sheet.

Kaila Lopez (2:57)

You mentioned Tesla. Even they were feeling the pinch. US sales dropped 16% through August, and Musk even killed the Model S and Model X to open up factory space for Optimus Robot Manufacturing.

John Crotteau (3:09)

Right, exactly. Maybe fewer electric cars, maybe more of those robots. Then it all changed with the war in Iran. Oil jumped to over $100 a barrel. It's still at about $102 today, and gas is currently at $4.40, over a dollar more than we were talking about last year. September, that just wrapped up, was the highest average September for gas prices on record.

So, Kaila, do you drive?

Kaila Lopez (3:35)

Yeah, I do. I have a car, and I drive a bit, but I live in the city, which means I don't drive as much as I do spend time parking.

John Crotteau (3:41)

Right, exactly. The opposite side of the street for Kaila.

Kaila Lopez (3:44)

Exactly. I saw this morning a report by Nikkei Asia that worldwide, for the first time ever, gasoline-only cars accounted for less than half of global new cars sales.

49% for the first six months of this year.

John Crotteau (3:57)

Right, so for the first time worldwide, there were fewer new gas-powered cars sold than electric or hybrid. Gas-only sales dropped 10%, and that 51% also includes hybrids, like I said. But that's globally. The US has effectively shut out imports of Chinese EVs, and we are at about 6% EV penetration here domestically.

So, might these high gas prices fuel a domestic EV comeback? That's the speculation today in all of the headlines. Well, the demand might be there. Dealer EV inventory went from about 180 days of supply earlier this year to 78 days in August. Hyundai's North American CEO says dealers are asking for more EVs. But, Kaila, he says Hyundai isn't planning to boost production because, quote, this thing could change again tomorrow. There could be another incentive. There could be another government or administration come in that can change the incentives. We've seen the price of oil jump and fall with each story out of the Strait of Hormuz, different signaling from the White House, and stockpile releases, so I think it's still a volatile situation.