Sales of electric cars and plug-in hybrids rose 4% compared to the same period last year and 35% compared to the previous quarter in the second quarter of 2026, setting records across 50 countries tracked by the International Energy Agency (IEA). The IEA says the jump was caused by fuel price spikes from the US-Iran conflict, which made filling up a gas-powered car much more expensive. Cars and trucks on the road account for nearly half of all oil used worldwide, per the IEA, so even a small change in what people choose to drive has a big effect on how much oil the world needs.

The IEA expects electric vehicles, including both fully battery-powered cars and plug-in hybrids (which combine a battery with a gas engine), to make up 29% of all car sales globally in 2026. That number is rising even as the overall car market shrinks: total car sales fell 5% in the first half of 2026, mostly because of fewer sales in China and the US (Engadget).

Europe stands out in the data. Fully electric car sales hit record levels across the continent, with 19 out of 27 EU countries setting new highs, according to Transport & Environment (T&E). In the UK, the Society of Motor Manufacturers and Traders reported a 35% increase in electric car registrations compared to a year earlier, with electric and plug-in hybrid vehicles together making up 36% of all car sales so far in 2026 (SMMT). The SMMT notes that sales are still falling short of government targets despite the growth.

Emerging markets also posted new highs. India, Brazil, Australia, and Korea all set electric car sales records in the first half of 2026, per the IEA. These are countries where electric car adoption has typically been slower than in China, Europe, and North America. Global electric car sales reached 1.60 million vehicles in April 2026 alone, according to Benchmark Minerals (Benchmark Minerals).

China's role in the electric car market is more complicated than the record numbers suggest. The share of electric cars in China's exports rose from about 35% in 2025 to more than 45% in the first half of 2026, per the IEA, as the country increasingly builds electric cars to sell abroad. Making an electric car in China costs about 35% less than in Western countries, also per the IEA. But Chinese buyers are not buying enough of what Chinese factories produce: an estimated one million electric vehicles are sitting unsold in China as of 2026.

The US government has moved in the opposite direction from the sales trend. The Trump administration eliminated federal tax credits for electric vehicles and weakened fuel economy rules for gas-powered cars (Engadget). Those changes would normally slow down electric car adoption. But the oil price shock from the US-Iran conflict appears to be pushing past that, at least for now.

There is a historical parallel worth noting. The 1973 oil embargo changed American driving habits for good and sped up the adoption of fuel-efficient cars, including the first wave of Japanese vehicles that reshaped the US auto industry. The oil supply shock did what decades of rules and regulations had not: it changed what people actually bought at the dealership. The current moment has a similar feel. Fuel prices are doing what tax credits and emissions rules have done only inconsistently, and across many more countries.

In my view, whether this shift lasts depends on oil prices staying high. If the US-Iran conflict cools down and gas prices drop, the money-saving argument for buying an electric car gets weaker. Countries that pushed electric cars through laws, like the EU with its emissions standards, are better protected from that reversal than places where people are buying electric cars mostly to save on fuel costs. The million unsold vehicles in China are a reminder that factories can build more cars than people want to buy, even during a boom, and that surplus inventory tends to push prices down across the markets those cars get exported to.

China's 35% cost advantage and its growing focus on exports mean that cheaper electric cars will keep flowing into Europe, emerging markets, and eventually the US, regardless of tariffs. For car companies in Western countries, the gap is not closing. For people shopping for a car, it means more affordable electric options at lower prices. Over the next few quarters, electric vehicles will probably keep gaining market share, even if the oil price spike that drove the Q2 surge turns out to be temporary.