The IEA raised its forecast for electric cars to 29% of world sales this year, even as total car sales fall and more than 1 million Chinese-built EVs go missing from overseas sales figures.

PARIS: Electric car sales rebounded sharply in the second quarter and are now expected to account for 29% of all cars sold worldwide this year, the International Energy Agency said, even as the broader auto market contracts under the weight of the 2026 energy crisis.

Global car sales fell about 5% in the first half of the year, driven mostly by steep declines in the world’s two largest markets, China and the United States, the Paris-based agency said in an update to its Global EV Outlook. Electric car sales dipped about 1% over the same period — but a 35% jump from the first quarter to the second nearly erased an early-year slump.

More than 9 million electric cars were sold in the first six months of the year, over 5 million of them between April and June. EVs made up 24% of global car sales in the half, a percentage point higher than a year earlier.

The agency now expects electric car sales to grow roughly 10% in 2026, to 23 million, while total car sales end the year about 2% below 2025. The 29% share is a 1-point upgrade from the forecast the agency published in May.

An energy crisis pushes buyers toward the plug

The conflict in the Middle East that began Feb. 28 has put oil use in road transport back at the center of energy security debates. Road vehicles account for nearly half of global oil consumption, the agency said, leaving the sector heavily exposed to price spikes and supply disruptions.

Consumers in some markets have responded quickly. In Australia, where gasoline prices surged about 34% earlier this year, electric car sales in April nearly tripled from a year earlier.

Governments have moved as well. The Netherlands and Ireland announced scrappage schemes that pay drivers to trade older gasoline and diesel cars for electric ones. Laos suspended imports of fuel-powered vehicles through the end of 2026. Kenya waived import duties on 100,000 EVs, Rwanda required that at least 30% of newly purchased government vehicles be electric, and the European Commission published an electrification action plan in July.

Sales grew year-over-year in more than 90 countries. Outside the largest EV markets, first-half sales were up about 75%. In Australia, Brazil, India, South Korea and Vietnam, sales roughly doubled in the March-to-June window compared with the same months of 2025. Colombia was up about 300%, Uruguay 170%, New Zealand 180% and Singapore 110%. African sales more than doubled to over 30,000, with South Africa growing more than fivefold.

Europe posted the strongest growth among the major markets, with first-half sales 30% above last year and EVs taking more than 30% of European Union car sales. The United States moved the other way: second-quarter sales topped 275,000 but were about a quarter below a year earlier, following the expiration of the federal tax credit at the end of the third quarter of 2025. The U.S. sales share averaged 7%, down from 10% across 2025.

China exports its way through a domestic slump

Total car sales in China fell more than 20% in the first half — about 2.5 million fewer vehicles, equivalent to every car sold last year in the United Kingdom and the Netherlands combined. A revamped trade-in program that cut subsidies for the cheapest cars contributed to the decline, along with broader economic pressure.

Chinese manufacturers responded by shipping abroad. Car exports rose 65% in the first half, holding the drop in domestic production to about 6%. Electric car exports grew more than 120%, fully offsetting weaker domestic EV sales, and lifted the electric share of China’s car exports above 45% from about 35% last year.

China, first half of 2026

Total car salesdown 20%+Car productiondown ~6%Car exportsup 65%Electric car exportsup 120%+EV share of exports45%+Exported EVs not yet sold abroad1 million+

That surge has opened a gap the agency flagged as a significant uncertainty. Over the past 18 months, more than 1 million electric cars exported from China have not shown up as registered sales in destination countries. Shipping times explain part of it, the agency said, but the scale suggests unusually large inventories piling up in some markets. When those cars sell, and at what price, remains an open question.

Chinese-built EVs already dominate several markets. They accounted for about 90% of new electric cars sold in South Africa and a similar share in Argentina, where sales reached roughly 9,000 in the first half after BYD entered the market last year. Import volumes into Australia and New Zealand grew 140%.

Incumbents strong in gasoline, thin in electric

Established automakers still sell close to 90% of the world’s cars and about 98% of internal combustion vehicles. But they captured only about 55% of electric car sales in 2025, with newer, EV-focused manufacturers taking the rest — up from less than 35% in 2019.

The gap is widest in fast-growing markets. Chinese automakers account for roughly 60% of electric car sales across emerging economies outside China, against 10% of conventional car sales. In Latin America they hold nearly 90% of the EV market but less than 10% of the gasoline market. Japanese automakers sell 65% of conventional cars in Southeast Asia and 50% in India, yet hold negligible EV share in both.

China and other emerging economies are projected to make up almost 60% of global car sales by 2035, the agency said, making those markets decisive for who leads the industry.

Pressure on jobs and suppliers

Car manufacturing employs more than 10 million people worldwide, concentrated in China and the European Union. Volkswagen has signaled it may cut a further 50,000 jobs by 2030 on top of 50,000 previously announced, citing costs and oversupply in Europe. Ford, General Motors and Stellantis have cut a combined 20,000 U.S. jobs this decade.

Value is migrating from engines and gearboxes toward batteries, electronics and software. Batteries account for roughly a quarter of an electric car’s value, and China leads much of that supply chain. Producing a battery electric car there costs about 35% less than in advanced economies, and EV battery packs were about 35% cheaper than in Europe last year, a wider gap than in 2024.

Beijing is now tightening support. The purchase tax exemption for new energy vehicles was cut to 50% this year and disappears entirely in 2028. Plug-in hybrids face annual ownership taxes from 2027, and a consumption tax on batteries phases in at 2% in April 2027, rising to 4% a year later — with sodium-ion and solid-state batteries exempt through 2028 to encourage newer chemistries.

Automakers are increasingly pairing up rather than going it alone. Stellantis and Dongfeng signed a memorandum to sell and build Dongfeng EVs in Europe using existing Stellantis plants. Nissan and Chery are exploring contract manufacturing at Nissan’s Sunderland plant in England. Renault is partnering with Geely in Brazil, and Malaysia’s Proton is using its Geely tie-up to assemble EVs locally.

Figures in this article are drawn from the International Energy Agency’s July 2026 report Electric Car Markets in a Time of Uncertainty: An update to the Global EV Outlook 2026, published under a Creative Commons Attribution 4.0 licence.