Climate change is coming for your Bordeaux

Good morning from the Financial Times. Today is Friday, January 3rd, and this is your FT News Briefing. China's best-selling car maker is nipping at Tesla's heels, and another crypto boss faces criminal charges. Plus, climate change is saying goodbye French Bordeaux. Hello, fine Danish light. I'm Sonia Hudson, and here's the news you need to start your day.

The electric vehicle race is cranking up a gear. Tesla, the world's top EV maker, said yesterday that its annual sales had dropped for the first time since 2011. That same day, Tesla's Chinese rival, BYD, reported its best year ever.

China is actually expected to sell more EVs and hybrids than gas vehicles for the first time in 2025. Tesla and other Western carmakers, meanwhile, will have to compete with China's cheaper offerings. Not to mention, a global slowdown in demand for battery-only powered cars.

A crypto mogul had his long-awaited day in court yesterday. Do Kwan is the disgraced co-founder of the bankrupt crypto firm Terraform. He'd been the subject of an international manhunt since fleeing South Korea in 2022. But he finally reached US soil this week after being extradited from Montenegro. The FT's Will Schmidt has been following this case. He joins me now. Hi Will. Hey Sonya. So what happened this week for Do Kwan?

So, Dokwan started this week in Montenegro where he'd been held for over a year. He had been trying to leave that country after the fleeing South Korea. Montenegrin authorities had been detaining him while their justice ministry decided whether to send him for extradition to the US or South Korea. Both governments wanted Dokwan on their soil so they could try him for various charges.

Initially, there were eight charges for commodities fraud, wire fraud, securities fraud. Unsealed this week in a new indictment was an additional count of money laundering, all related to Terraform Labs and various platforms, coins, and procedures that that company, which was co-founded by Doquan back in 2018, had carried out over the last several years. Yeah, so can you go into some more detail about what actually happened in this whole Terraform saga?

So back in 2022, Terraform Labs had launched this token called Terra. Terra was what we call a stablecoin, which means it's supposed to be pegged to the US dollar. And there was also a kind of a sister coin called Luna. And at the time, Terra was one of the biggest stablecoins in the world.

However, it was not backed by real assets. And as a result, in May 2022, Tara lost its peg. Luna fell to zero. They both collapsed and wiped out over $40 billion with a value, leading to the eventual declaration of bankruptcy for Terraform Labs in January 24. So what are prosecutors alleging was Kwan's involvement in all of that?

Generally speaking, the gist of it is that whether making statements on social media, on podcasts, to investors directly or to government regulators, quan either outright lied or misled any of those parties about a variety of how the tokens worked, how they were allegedly backed, how they were traded to keep that peg intact in an attempt to prop them up and to make them more palatable and more attractive to investors and to placate regulators.

You know, Quan's name making headlines again during this moment of crypto euphoria, it feels a little ironic, right? Like we're in this place where Bitcoin is doing really well. There's all this optimism because Donald Trump has signaled that he's more pro crypto. Do you think the darker days of fraud and scandal are coming to an end? I mean, has crypto finally cleaned up its image?

I guess how clean it is remaining to be seen, especially depending on how Daquan's case proceeds over the next months, potentially years. But yeah, you're right, this has been a moment, these last few months since the November elections of really highly renewed optimism for the crypto industry. But there are cases like Daquan's ongoing case, you have Sam Bankman Fried who's appealing his conviction in his prison sentence that are just these kind of unwelcome reminders rather for those in the crypto industry who thought that this was all yester years problems.

Will Schmidt is the FT's acting US capital markets correspondent. Thanks, Will. Thanks to you. Global trade is in the middle of a major upset. There are a few things going on, like geopolitical tensions between the US and China, conflict in the Middle East, plus all the tariff talk from President-elect Donald Trump.

And that has ship owners rethinking their traditional routes. Instead of just stopping in China to pick up goods, they might have to stop at several ports in places like India or Vietnam. So they're going for smaller ships. That is a major turnaround. Not long ago, the bulkiest carriers were the vessels of choice. Remember the ever-given that got stuck in the Suez Canal during the pandemic?

Now, flexibility seems to be the name of the game for ship owners. And that means downsizing.

Climate change is shaking up the European wine industry. French and Italian grape growers are struggling to adapt to warmer and drier weather, which means that the bordos of the past probably won't taste like the bordos of the future. But this has also opened up an opportunity for Northern European countries to compete. I'm joined now by the FT's Susanna Savage to explain. Hi, Susanna. Hi, Sonia.

So tell me about some of these Scandinavian wines. What does the industry look like there? So we've really seen a boom in Scandinavian wine over the last couple of decades, but particularly the last decade. A number of vineyards in Denmark, for example, has doubled. And this is mainly because of the climate's just changing and becoming more like it was in more southern parts of Europe, say 40, 50 years ago. And also there's a bit of an improvement in viticulture

There's a development of hybrid varieties of grape, which grow more easily in these types of terrains. And going down south now to France and Italy, how is the warmer weather there going to impact the wine industry?

It's already having a massive impact because the weather has meant that grapes are ripening quicker and in hotter conditions, which it means that the wines are stronger, more alcoholic and often sweeter. And so generally it's seen as a lower quality if it's too strong, too sweet, if it's ripened too quickly.

This is a problem going forward as she's only going to get worse. So the University of Palermo has looked at this and found that in some particular regions of Spain, Italy and Greece, coastal and lowland regions were at the moment they grow grapes for wine. Drought and heat waves could leave 90% of these areas unsuitable for wine making by the end of the century. Wow. So what are these traditional wine producers doing to adapt to that?

There are a few things that you can do to try and get around it. One of them would be changing the variety of grape, another might be irrigating the land, now generally grapes to make wine should grow on land that's a little bit deprived of water, but that's only up until a certain point, then it becomes detrimental.

Quite controversially, some of the regions in Italy and France and Spain have allowed irrigation, or you can also plant so-called cover crops which compete with the vines for water and nutrients, which slows down the ripening of the fruits to prevent what I described about excessive alcohol and too much sugar. Okay, so irrigation is controversial in the wine world. What about the rest of those strategies? Are they raising eyebrows too?

Yes, because they interfere with the notion of Tehuah, which is, you know, the interplay of soil and climate and the culture in that particular part of the world where those grapes are grown. And also with the legislation that's developed around this, you know, Appalachian legislation whereby to be called champagne has to be grown in the region of champagne, etc. And so some

winemakers, they're really against the idea of changing these things. One person I spoke to said it was like a face with too much Botox. It might look nice from far away, but it loses its character and its interest when you get up close. Others say that these are absolutely necessary in order for these regions to continue to produce wine and for the business to survive.

What do you think the European wine industry is going to look like in the next few decades? I think we're going to see a huge growth in Northern European wines from countries like England, but also increasingly from Scandinavia or Poland, the Baltics, and that's going to come into competition with the more traditional wine growing regions.

I also think, you know, these regions are going to have to work really hard to survive and to adapt and to persuade consumers to buy into that adaptation. So consumers are going to have to get used to the idea that a burgundy grown in burgundy won't taste like they're used to it tasting. And that will be the challenge. Can you convince them to buy into that idea? And will the brand still survive?

Susanna Savage is the FT's commodities correspondent. Thanks Susanna. Thanks very much. You can read more on all 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.

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