March 7, 2026 | Weekend Drive: Iran conflict could spike oil prices; Ford plant’s pivot to energy storage

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Welcome to this weekend drive edition of daily drive for the first week in March

2026. I'm Jake Near and for Kellen Walker

Joining me today as always are Larry Velquette and Michael Martinez to talk through the biggest stories from the past week in the auto industry and

What's in store in the days ahead?

Today, we're going to talk about the Iran conflict, how it's threatening global automakers with Asian brands most at risk

We'll talk about Ford's plan B for its Kentucky battery plant and we'll talk about how wealthy shoppers are keeping auto sales afloat

Well, lower income consumers struggle. I want to talk about the Iran conflict. I think this is sort of what's on

Everybody's mind not just in the auto industry, but all across the US and many parts of the world as well

You know the war in Iran started threatening global automakers this week, especially Asian brands

We have this new report from Bernstein. It says that Toyota accounts for 17% of Middle East sales

Hyundai for 10% and cherry for 5%

Chinese automakers who dominate Iran's market they face the biggest direct hit

Bernstein says though that the greatest risk is rising oil prices from disrupted tanker shipments through the straight-of-horn mues

That really could crash auto sales well beyond the golf hitting gas-dependent automakers like Stellantis hardest

Larry, let's start with you you cover Toyota

It has the most exposure here of any major automaker with the presence in the US

What does this mean for them specifically?

Well, it has the most exposure in terms of direct sales, right?

And that that's the point that that the Bernstein equity report is making here

But these are I mean, it's it's basically a rounding error in the Middle East out of Toyota's 11 million units that it produces globally each year

We're not talking about very much. So yes, there's a a squeeze that you may cut auto sales in the Middle East, but for Toyota

They'll simply just redirect those vehicles elsewhere if they you know if they become available

The bigger threat here is as they point out is oil

Right if if oil go if you know if oil goes to a hundred and fifty dollars a barrel, right and gas goes to

six dollars a gallon at a national average, so about double what we're at right now

Boy all those all those

Mothball EV bet plans and and plants are going to look really dumb

Right now all those cancel plans and this is what happens when you're you know when you don't have a

Plan that you stick with when you react to the to the market or you go you know to farm one direction or too far in the other direction

This is the risk you take the global global circumstances are going to

Move beyond what your plan is

That that said though Larry. I mean the pivot to hybrids has been pretty significant and

That could end up looking pretty smart, couldn't it? Yes. Yeah, absolutely that that will look smart and that's kind of what I

Thought they should have done before

But you know they like stilantis for example. They canceled their their plug-in hybrids

I think fuel economy is going to become very very very important

Is this year goes on if we don't have some resolution here?

You know within a couple weeks. It's gonna get it could get really dicey really fast on a global basis now there's

I saw somebody that pointed out that it's not that there is a there's right now

There's a whole lot of oil

Already sitting on the ocean, right? It's in tankers not in the straight-of-hormo's

But there's a lot of oil sitting in tankers

That's growing more valuable by the day as prices as the price of oil goes up

So as that comes on you might see those those tankers start pulling into port

Emptying out to they'll keep prices relatively stable

But it it all depends. It's all speculative at this point, right? And it's speculators driving a lot of this a lot of this market push

Mike, what are your thoughts on all this?

Yeah, I mean Larry touched on it all the the story here isn't about the sales of the automakers in the region

It's not about how many workers they employ there. It's about what's passing through that straight-of-hormo's or what isn't right now

Not only do you have 20 million barrels of crude oil going through every day

According to Alex partners. You also have a whole bunch of liquid natural gas

You have aluminum you have plastics components

You have steel inputs so a lot of things suppliers and automakers need to build the cars

especially in Asia and Europe aren't getting to them or will not be getting to them in the coming weeks

That could raise prices and as Larry mentioned

Suddenly you're gonna have gas prices spiking at a time when most automakers are

Reinvesting in gas powered vehicles and moving away from EVs

So in around about way this is the Trump administration promoting EV sales

We're going down the line here, but you know, it's

Hybrids are gonna become more critical and there needs to be

As long as the fighting in the region if that doesn't stop

Hopefully there will be some resolution to

Passage through the straight-of-hormo's because that could have a lot of knock-on effects

You have customers that are already dealing with inflation have been for a while

You have the automakers and suppliers that are dealing with

A strain supply chain anyways, so this just adds on to it. It's not a great look for anybody

We all need to remember because obviously the the response to this is well, we'll just drill you know

We'll just drill more at home or right

US is a

huge supplier of

petroleum producer of petroleum and along with Canada

we have a you know, we have a

outsized

Corner of the market

however

A lot of the oil is already sold and it is a global commodity, right? It gets sold to the highest better

No matter where it's gonna go because the the for the most part

Transporting it is relatively cheap on tankers as long as those tankers, you know, stay afloat and aren't don't get shot

so

The answer is not to you know open drilling or maybe you know open the strategic

petroleum reserve which is you know, certainly maybe an option depending on where we go, but

We need to remember it's a global commodity. It's a global price that gets set

So, you know, keep that in mind

Absolutely

Now Mike, I wanted to ask you about a really interesting story that you have out this week as well

Ford's new battery business is seeking to spin profits out of costly EV investments

Talk about what's going on here and what this kind of says about the direction of Ford and other automakers

basically Ford's plan

for what it wanted to do

Building EV batteries and Kentucky went up and smoke

They invested a lot, but the demand just wasn't there. They've cancelled the EV version of the F-150 lightning

And I believe the Kentucky plant was supplying batteries to the lightning specifically

So suddenly they don't have a product anymore. So we've seen other automakers try to pivot or

You know really just bail. I think Stellantis sold its battery plant in Windsor for a hundred bucks

Right, they just said hey, we're done. We're washing our hands of this. Ford however is trying to

You know have the best case scenario as their plan B and they have decided to get into the energy storage

Business because they see sky high demand

We hear about data centers popping up across country all the time with the rise of AI

And there's a big need to

Power those data centers with consistent reliable electricity

Ford believes that instead of making batteries for EVs it can make energy storage units

That they can turn a profit on more easily because everybody will be wanting these things commercial businesses will be wanting

These larger units in the future. So they created Ford energy. It's a new business for them. It's adjacent to autos

I'll admit I was on this podcast a couple weeks ago talking about how when automakers do things beyond auto making it tends not to work out very well

But I will say this seems like

To me the the best idea they have as opposed to just letting a plant sit idle or taking an even bigger loss than the 21 billion dollars

They're already losing on EVs here

They're making less sour lemonade out of what they're out of their lemons, right?

Yeah, this brings up a really interesting question in my mind and I'd curious what both of you think about this

We're at this weird

Kind of crossroads right now for the industry in terms of what it's making, right? I mean, you know they had this huge

Investment all all the automakers had huge investments in EVs that are now looking questionable to say the least

And you've got emerging industries in terms of energy energy storage

Humanoid robots which we'll talk about in a little bit

Is this a moment where you guys think the industry has a opportunity

To really diversify

What these businesses do away from maybe not away from but so that it's not so focused just on

Autos and the auto sector

Larry you got you want to take this one

Yeah, I'll I'll say is that

While diversification is certainly certainly valuable right as a strategy in business

You don't want to be chasing shiny pennies

Right, and that's that's the real danger of diversification is

You lose your concentration you lose your core competencies

You lose your focus on

profitability and on efficiency and

Improvements of your of your products and your relationship with consumers

Because you're out chasing shiny pennies. You're chasing the the latest trend

You know, so now we spent how many tens of billions of dollars

Chasing a desk we chase it hundreds maybe hundreds of billions of dollars

We chase certainly it scores a billions of dollars chasing electrification

And improving those technologies

You can't just abandon them because something sexier comes along

You have to see these through and make them core competencies of your company if you're ever going to make money

That's what we have to remember right auto makers are not in the business

Of making autos. They're in the business of making money

That they just happen to do it by selling automobiles

Fair enough now Mike you look very pensitive. We look like you're thinking very too hard about this

So I'm curious what's going through your mind

Well, I have maybe two or three points that I want to make quickly here one is that I think Ford's argument is that

It's not chasing the shiny new thing. It believes it can credibly compete in this space because they're using technology from cat

one of the biggest

Battery suppliers in the world who's based out of China

Their main competitors would be the LG's samsung's sk on

Even tesla redwood materials and they believe with catls technology behind what they're building they

You know stack up with the rest of them

two

There's a good

Test case that an automaker can be successful and that is tesla

It's been selling energy storage batteries for some time now

In 2025 it sold more than double it produced more than double the gigawatt hours at Ford hopes to produce eventually

And it's gross profits were 1.1 billion dollars in 2025 so that help prop up some of the auto business

And that gets me to my third point is that the ultimate goal here whether it's this battery pivot or

Anything else that's beyond the core auto business

These companies are trying to make their

businesses less cyclical right because every 10 years or so there's a recession

Sales go down

shareholders get mad

You have some dark days

But if they can supplement

Selling Broncos and Mustangs with selling subscription services with selling

Energy storage systems to commercial businesses and all the other stuff quote unquote

And hopefully that'll level out and we won't see these wild swings and profits from year to year or decade to decade

And the shareholders will be happier

Really interesting stuff guys really appreciate this and when we come back

Hyundai is going to make a big investment in one of those areas robotics

And it's also investing in hydrogen

We'll see what layer he and Mike have to say about that next on weekend drive

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Well come back to weekend drive. I'm Jake near joined by Larry Velliquette and Michael Martinez

Guys, let's talk about Hyundai

They announced a six billion dollar investment this week in robotics AI and hydrogen in South Korea

Larry six billion dollars. That's a big investment right there. What do you make of this?

Well, it's not that big

Six billion dollars is you know, it's big to you and I the three of us right? It's certainly those are big that's it's big money, but

This is a pretty giant industry. It's notable. Let's put it that way. It's notable investment at six billion dollars. Yeah, that's all right

What I'll say is what the robotics the in the AI piece

I understand it. I mean they have to keep up right and you have other automakers

Direct competitors who are looking at these you know eventually trying to go to dark factories

So they have to keep up. Otherwise, they're gonna wire the in business, right?

They're gonna get swamped if they don't

Hydrogen is a you know, make sense. We talked about this off air a little bit

Hydrogen right now is a niche play. I don't know if it's a long-term strategy for passenger vehicles

And long-term alternative for passenger vehicles given the amount of energy that takes to

Produce the few the hydrogen fuel

For vehicles right now, but it does make sense for heavy-duty

Vehicles for towing and it makes sense when you have you know hub and spoke systems

And I think what we have to remember here is that Hyundai

We are obviously familiar with with Hyundai the automaker, right? Hyundai is a giant conglomerate with many many many facets

and so

You have to remember that all of those you because it's such a giant conglomerate any of those investments

Could have a benefit across anywhere across it that may be bleed

Bleeds into the auto business

Mike, what are you thinking about this investment especially when it comes to the hydrogen piece?

I mean, you know a lot of other automakers have

tried it backed away from it not interested anymore

What do you think is this is this risky?

Yeah, I think it's it's a risky bet, but it's a bet we've seen you know others

Try to make right toyota is invested in hydrogen

Couple other automakers as well

Ford CEO Jim Farley even remarked to Larry's point about

larger trucks and towing and hauling that you know the super duty would go hydrogen

Before it would ever go electric

He wasn't making any news

He was just talking about the state of the technology because the idea is

You can have a longer range you can fill up quicker and

You know the weight is less and it's better for the that sort of long haul trucking so

Is it smart to

Invest I think it is is it risky? Probably because as long as I've been in the industry

Everybody's been talking about hydrogen is the next great thing maybe

Half a decade to a decade away and still seems to be the case

So maybe this is a longer term play, but who knows could work out?

So Mike who here's here you and I you're my bet

What will come first?

I'll probably be dead by the time we are able to settle this right?

What will come first the hydrogen

Transportation system or the driverless vehicle

That's the driverless

You know retail vehicle

Yeah, I mean that's a good question because you got to define the driverless one right you literally just get in in your driveway

And have it take you anywhere you want without touching anything

Although my bet would honestly still be on the hydrogen

Well, and this you're talking consumer level right Larry?

I'm not ready to add a consumer. Yeah, a consumer level. Yeah, both are both are already here

Right. Yeah, to some degree. I just think there's too many questions too many ethical

dilemmas and laws and everything that need to be written for AVs

So I'd go with hydrogen. I'm a little

I'm a little down on the AV transition right now

Okay, before we go guys, we got a really interesting look at the state of the retail market

in the United States right now

wealthy shoppers are keeping auto sales afloat while lower income consumers are struggling

I mean, we've sort of touched on this for a while now, but this is really confirming

That trend that we've been seeing at the same time more buyers are stretching auto loans to seven years or longer just to afford

These vehicles

Mike I want to start with you with the wealth divide

What does this tell us about

You know the the strategy that auto makers are taking and also like the health of the market in your mind

Doesn't seem great to me. You know, it's that k-shaped economy and in action

Cox automotive had some interesting data that you know before the pandemic half

Of buyers had income less than a hundred thousand dollars per year

And last year only 37% did meanwhile, you know more folks making over

$250,000 or the ones

Buying vehicles. I think that percentage doubled

So we talk almost every week about the affordability crisis and how auto makers need to be

Investing in you know 30,000 dollar or lower priced vehicle

But if you're a bean counter

See in that data

You're going to keep pumping out

$100,000 platinum f-150s and in other

Top of the line trim vehicles because people are buying

Unfortunately, there's a big segment of the population that can't afford them

But the ones that still are are driving sales and driving profits. So it's going to be hard to get these guys

To come down to a level that more and more people can afford. What do you think Larry?

Um, I think that

It's okay that loan terms. It's okay from a quality standpoint

That long terms are an underwriting standpoint that loan terms have extended out to seven years

In terms of the vehicle right terms of the vehicle quality itself

You can you can rest assured that if you have to buy a vehicle on a seven-year loan

It is probably going to last that seven years, right? That's a good point. Yeah

And that wasn't always the case

And I think part of the you know part of the

The angst about extending loan terms is kind of a left. Oh it's kind of a residual no pun intended a kind of a residual effect of

You know the quality was that this industry has had for decades

but you know through

Huge effort has kind of overcome

So I think

From that standpoint

That's not as worrisome the worrisome part obviously is the interest

It's the and the you know when being upside down and the long-term effect that it has on customers returning

You know to franchise dealers

If you don't come back for six years because you're underwater for six years

That's problematic

Right, it's problematic for the entire business, but

And automakers you know as we went through the

The start of the year automakers almost universally had their best years ever

In service in parts last year and in you know service

so

You're starting to see this

the impact of this

As well as you know use car values

In the impact of this k-shaped economy. Yeah, you're gonna you're gonna lose more on the front you know in the

The front part of your dealership from new vehicle sales. We

JD power estimated, you know, we've got we've cut two million units off

The the saw because of this right? We're never we're not gonna get to 17 ever again

Those what they're saying because of the affordability problem

but

From a consumer standpoint, you know, it's you don't want to you don't want to pay that much interest at all

For god's eggs don't pay interest

If you're gonna possibly avoid it and and Jake this is exactly why

My 2010 dies challenger with a hundred and seventy

hundred and fifty five thousand miles on it

It's going strong. I'm gonna make sure it keeps going strong. You know Larry styles himself as a

Carbine aficionado and is always sending me deals and telling me

There's no better lease deal than zero dollars a month

Yeah, so yeah, you know

And I think there's a lot of people that will be hanging on to their

Vehicles longer and riding them into the ground

To try to avoid some of what's going on right now

All right, well good place to leave it if even if it is maybe not the brightest note

That we've had at the end of a weekend drive

It's coming

It's gonna be 70 degrees here in Michigan this weekend

All right, so thanks Larry

Thanks Mike really appreciate you guys joining me today on weekend drive. Thank you Jake

Thanks, Rick you can get the latest news on the Iran conflict

Hyundai's investments and everything happening in the auto industry at auto news calm

We'd love to hear from you. Let us know what you think of the show in the topics we covered today

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