EVs projected to hit 29% of global car sales as Iran war drives oil prices higher

The ongoing war between the United States and Iran, which has shuttered the Strait of Hormuz since February, is reshaping the global automobile market. According to the International Energy Agency, electric vehicles are now projected to account for 29 percent of all new cars sold worldwide in 2026, up from just 4 percent in 2020.nytimes+1

Oil Crisis Accelerates the Shift

The closure of the Strait of Hormuz — through which more than 20 percent of the world's oil trade passes — has driven Brent crude prices up more than 25 percent since the conflict began. The supply disruption represents what IEA Executive Director Fatih Birol called "the largest oil supply shock in history".eenews+2

The price spike has translated directly into consumer behavior. In Australia, Brazil, India, and South Korea, EV sales roughly doubled between March and June compared with the same period in 2025, according to IEA data published in late July. South Africa saw electric vehicle sales surge more than fivefold in the first half of 2026, while several Southeast Asian nations including Laos have opened their markets to a flood of Chinese-made battery vehicles.nytimes+1

BloombergNEF analyst Andrew Grant noted a marked increase in online searches for electric vehicles since the conflict's onset, particularly in countries experiencing the steepest fuel price increases. "As you see sustained higher oil, you will see increased EV sales than what you might have expected otherwise," Grant said.nytimes

U.S. Market Faces Crosscurrents

In the United States, the picture is more complicated. Congress eliminated the $7,500 federal EV tax credit effective September 30, 2025, removing a key purchase incentive. U.S. EV sales dipped this spring as a result. Still, rising gas prices are pushing more American consumers toward electric options. Interest in new EVs climbed 16 percent in the first quarter, while interest in used EVs jumped 30 percent.financialcontent+3

China, which accounts for roughly half of global EV sales, also saw total vehicle purchases decline amid a sluggish economy and reduced government subsidies — though its EV market share continued to grow.nytimes

Governments Respond With New Incentives

The crisis has prompted a wave of policy action. Ireland and the Netherlands launched vehicle trade-in programs, Chile incentivized electric buses and taxis, and Spain extended EV tax credits. Laos banned imports of new gasoline cars for the remainder of 2026. Several nations, including Cambodia and Kenya, temporarily reduced tariffs on imported electric vehicles.nytimes

The IEA stated in its Global EV Outlook 2026 that "the crisis has clearly reinforced the argument for electric vehicles as a means to enhance energy security and address fuel cost concerns". Whether the momentum holds depends partly on the conflict's duration — but analysts say declining battery costs will sustain the long-term trend regardless of oil prices. "We believe the fundamental economics of decreasing battery costs will lead to increased electric vehicle sales over time," Grant said.iea+1