‘Largest Supply Disruption In History’: High Oil Prices Drove Record EV Sales In 50 Countries

U.S. EV sales are down, but the rest of the world is picking up the slack to reduce its reliance on oil.

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Suvrat Kothari

By: Suvrat Kothari

Jul 31, at 2:22pm ET

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According to the International Energy Agency, electric vehicle sales have been sharply growing in many countries since the start of the war in Iran.
Dozens of countries have swiftly extended their pro-EV policies to reduce their oil import bills.
While EV sales continue to be down in the U.S. and China, the rest of the world is picking up the slack.

The International Energy Agency said Thursday that high gas prices due to the war in Iran drove record electric and plug-in hybrid vehicle sales in a whopping 50 countries in the second quarter of this year. With that boost, the agency now expects plug-in vehicles to account for 29% of new car sales, up from the 28% it estimated earlier this year.

The U.S.-led war in Iran triggered an oil shock so acute that it accelerated the adoption of EVs and PHEVs around the world, the IEA says. While EV sales in the U.S. have declined year-over-year, the demand for plug-in vehicles is booming in other parts of the world, the IEA said in its latest report.

"The conflict in the Middle East beginning on 28 February 2026 and ensuing energy crisis has renewed focus on oil use in road transport as a key energy security concern," the report says. "[T]he crisis has clearly reinforced the case for EVs as a way to address energy security and fuel cost concerns."

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Automakers sold more than 9 million electric and plug-in hybrid cars globally in the first half of this year, including more than 5 million in the second quarter alone.

The agency describes the oil shock as the "largest supply disruption in history," and much of the world has responded by doubling down on electrification. The biggest gains came in countries that rely heavily on imported oil. Faced with soaring fuel costs, many governments rolled out new incentives—or expanded existing ones—to encourage EV adoption and reduce their oil import bills. Plug-in vehicle sales in Australia, India, Brazil, South Korea and Vietnam doubled between March and June compared to the same period last year, according to the IEA.

In May, Australia strengthened its plug-in vehicle sales incentives and accelerated a new curbside charging program. In April, Thailand introduced a new loan program for purchases of battery-powered vehicles whereas Vietnam extended its lower tax rates on plug-in models to 2030. France is nearly doubling its public funding for electrification, and Spain has extended its tax deductions on EV purchases and charger installations.

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Those are just a few examples. According to the IEA, dozens of countries across Southeast Asia, Africa and Latin America have either expanded existing incentives or introduced new ones since the war began to boost electrification.

What's especially notable is that this happened during a broader downturn in the auto industry. Global vehicle sales fell 5% year over year in the first half of 2026. Plug-in vehicle sales were also down in the first quarter, but they rebounded sharply in the second quarter even as overall car sales continued to decline. That strong second quarter nearly erased the first-quarter slump, leaving EVs and PHEVs with a 24% share of global light-vehicle sales in the first six months of the year.

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The rebound is even more striking because it came despite sales declines in the world's two largest auto markets. In China, overall vehicle sales fell 20% in the first half of the year, while the sales of new energy vehicles (NEVs), which includes EVs and PHEVs, declined by a smaller margin as reduced subsidies weighed on demand.

In the U.S., after the Trump administration eliminated the federal EV tax credit last year and reduced penalties linked to fuel economy standards to zero, automakers had fewer incentives to prioritize EVs over gas cars. So sales are way down from last year. (Even so, U.S. EV sales in the second quarter reached their highest level since the tax credit expired.)

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No matter how you slice it, the rest of the world is moving on without the U.S. when it comes to EV adoption. And the oil crunch—ironically, one the U.S. triggered—is only making that gap more noticeable.

Contact the author: suvrat.kothari@insideevs.com

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