High oil prices caused by the U.S.-led conflict in Iran triggered the largest supply disruption in history, driving electric vehicle sales to record levels in 50 countries, according to the International Energy Agency.
The agency released its findings Thursday, stating the conflict, which began in February 2026, created an energy crisis that sped up global adoption of plug-in vehicles. It now expects EVs and plug-in hybrids to make up 29% of new car sales this year, a slight increase from its earlier estimate.
Oil shock reshapes global auto markets
The war’s impact on fuel costs pushed dozens of countries to expand incentives for electric vehicles. Many governments, especially those dependent on imported oil, introduced or strengthened policies to reduce their oil import bills.
In the second quarter of this year, automakers sold over 5 million plug-in vehicles globally—part of a 9 million total in the first half. Sales nearly doubled in Australia, India, Brazil, South Korea, and Vietnam compared to the same period last year.
Australia expanded its plug-in vehicle incentives and fast-tracked a curbside charging program. Thailand launched a loan program for battery-powered cars, while Vietnam extended lower tax rates on plug-in models until 2030. France increased its public funding for electrification, and Spain extended tax deductions for EV purchases and charger installations.
These measures came as global vehicle sales dropped 5% year over year in the first half of 2026. Plug-in vehicles bucked the trend, rebounding sharply in the second quarter after a weak start. By June, they held a 24% share of global light-vehicle sales—almost erasing the earlier slump.
U.S. and China lag behind
The surge in EV adoption remains uneven. While much of the world ramped up electrification, the U.S. and China experienced declines. In China, overall vehicle sales fell 20% in the first half, with new energy vehicles (NEVs)—which include EVs and plug-in hybrids—dropping at a slower rate due to reduced subsidies.
The U.S. saw a sharper decline. After the federal EV tax credit was eliminated last year and fuel economy penalties were scrapped, automakers shifted focus away from electric models. Sales have fallen since 2025, though the second quarter marked the highest figures since the tax credit ended.
The agency’s report highlights that the oil crisis has widened the gap between the U.S. and other nations on EV adoption. The conflict in the Middle East and the resulting energy crisis renewed focus on oil use in road transport as a key security concern. The situation reinforced the case for EVs as a way to address energy security and fuel costs.
For countries reliant on imported oil, the shift isn’t just about emissions—it’s about economic survival. The war’s disruption to supply chains forced governments to act quickly, creating policies that may outlast the crisis.
The IEA calls the oil shock unprecedented, but its effects on the auto industry could be long-term. Even as fuel prices stabilize, the infrastructure and incentives established during the crisis may keep EV adoption growing for years.
