Fuel price volatility and energy security concerns may accelerate adoption of electric vehicles across major economies in 2026, finds new report
The queues across petrol stations in several countries in South East Asia have been growing longer and the bills getting heavier since the West Asia conflict sent crude oil markets into a spiral earlier this year. The disruption to the Strait of Hormuz shipping lanes, which remains a lifeline for Asia's oil supply flows, has translated into something personal for millions of households, making cooking gas more expensive, steep rise in commuting costs and upsetting the family budget.
It is against this backdrop that the electric vehicle is having its most compelling moment yet. It is increasingly positioning itself not merely as a climate product sold to the environmentally conscious, but as a practical, economic alternative to the fuel price shocks arising out of a conflict zone thousands of kilometres away. Global EV sales have risen significantly every year for the past decade, and last year was no different.
As people manoeuvre through the ups and downs of 2026, the EV story has shown signs of getting better. Global electric car sales are expected to rise in 2026, “reaching 23 million and accounting for close to 30% of all cars sold worldwide”, according to the new edition of the International Energy Agency’s annual Global EV Outlook. Amid the major energy crisis stemming from the war in West Asia, the new report also presents initial data for the early months of 2026 and considers the consequences of the crisis for EV policy and market development. Let us take a look at the highlights of the latest outlook.
Fig 1: Workers assemble second-generation R1 vehicles at electric auto maker Rivian's manufacturing facility in Normal, Illinois, U.S. June 21, 2024. REUTERS/Joel Angel Juarez
Global EV Outlook: Key Findings
The report pointed out that in 2025, global electric car sales grew by 20% to exceed 20 million, “meaning that a quarter of all new cars sold worldwide were electric”. It said electric cars accounted for 10% or more of new cars sold in around 40 countries. “In terms of production, Chinese automakers supplied 60% of electric cars sold worldwide, while European and North American automakers were each responsible for about 15% of global sales,” it said.
However, global electric car sales in the first quarter of 2026 fell by 8% compared with the same period in 2025 owing to policy changes in China and the United States. But “this overall decline masked strong sales growth in many other countries and regions. In Europe, sales increased by close to 30% year-on-year; in the Asia Pacific region excluding China, sales jumped by 80%; and in Latin America, they were up by 75%,” the outlook pointed out.
“In March, close to 90 countries around the world logged year-on-year sales growth, with around 30 of them registering record-breaking monthly sales,” it said, adding that “By 2035, even without any new policy announcements, the global fleet of EVs (excluding two- and three-wheelers) is projected to surge as high as 510 million, up from nearly 80 million today.”
The momentum behind EVs is particularly strong in southeast Asia. “Annual electric car sales in the region more than doubled last year, giving them a market share of close to 20%,” it said.
“According to the latest projections, that share could surge to 60% by 2035, based on supportive price dynamics and policies. Some countries in Southeast Asia – including Viet Nam, the largest EV market in the region – have already announced plans to expand or extend EV tax incentives as part of their response to the current energy crisis,” it said.
It pointed out that China remains the world’s largest manufacturing hub for EVs, making nearly three-quarters of the almost 22 million electric cars produced globally last year. “As production outstripped domestic demand, Chinese electric car exports doubled to a record high of more than 2.5 million. Outside of the three major EV markets of China, Europe and the United States, 55% of the electric cars sold in the rest of the world were imported from China – up from less than 5% just five years earlier,” it added.
How Is The Electric Mobility Story Shaping Up In India?
According to the report, electric car sales in India remain “modest” but are “starting to pick up”
“Despite being the second-largest car market in the Asia Pacific region, India’s electric car sales remained below levels seen in Viet Nam and Thailand. However, sales started to pick up in 2025, increasing 75% year-on-year to reach 165 000, representing nearly 4% of total car sales,” the latest outlook pointed out.
“Roughly 60% of electric car sales were produced in India by domestic automakers Tata and Mahindra. Mahindra introduced two new electric models in 2025, and saw electric car sales increase fivefold compared to 2024. Besides local automakers building up sales, more brands started to sell electric cars in India, with the number of electric models available increasing from 33 to 45 between 2024 and 2025,” it said.
India announced the Scheme to Promote Manufacturing of Electric Passenger Cars in India (SPMEPCI) in 2024, with the final requirements announced in June 2025. The IEA’s outlook said that the SPMEPCI will” allow selected automakers to import higher-priced CBUs at a minimum import value of USD 35 000 with a reduced import rate of 15%, compared with duties of up to 110% for non-eligible imports, for a period of five years.”
“While several automakers expressed interest, decisions to participate were delayed in 2025, with companies citing uncertainty related to the ongoing European Union-India free trade agreement negotiations and Chinese restrictions on rare‑earth magnet exports, which raised concerns about meeting the scheme’s localisation requirements,” it added.
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