IEA Says EVs Will Reach 30% of Global Car Sales in 2026 as Oil Demand Displacement Quickens

IEA Says EVs Will Reach 30% of Global Car Sales in 2026 as Oil Demand Displacement Quickens Global EV sales topped 21 million last year, with the IEA projecting 23 million in 2026, while BNEF estimates electric vehicles could displace 13 mb/d by 2040. Global electric vehicle sales surpassed 21 million units in 2025, more than doubling since 2022 when annual sales first crossed 10 million, according to the IEA's Global EV Outlook 2026. One out of every four new cars sold worldwide last year was electric, with about 40 countries recording EV market shares above 10%. The IEA projects that figure will climb to nearly 30% this year, with around 23 million units expected to be sold.^7,1 The oil demand implications are accelerating faster than most traders priced in two years ago. BNEF estimates that electric vehicles could capture 35% of the global car market by 2040, which would displace 13 million barrels per day of oil demand. The rapid decline in battery costs is expected to make EVs cheaper than internal combustion engines within a few years, removing the price barrier that has been the primary constraint on mass adoption outside China.³ China dominates the supply side. Chinese automakers supplied roughly 60% of electric cars sold globally last year, the IEA reported. European and North American manufacturers each accounted for about 15% of sales. The imbalance is stark: China is not just leading adoption, it is controlling the manufacturing base that makes adoption possible everywhere else.¹ The first quarter of 2026 delivered a speed bump. Global EV sales declined 8% following policy shifts in China and the United States. In China, subsidy adjustments cooled purchases. In the US, regulatory uncertainty under the Trump administration dampened demand. Yet many regions continued to post strong growth through the dip, and the IEA's full-year projection of 23 million units implies a sharp recovery in Q2-Q4.¹ The Middle East oil shock is pushing consumers faster. Disruptions in the Strait of Hormuz have driven crude prices sharply higher, particularly in Asia's oil-dependent economies. Analysts are reporting a significant shift in consumer behaviour, with growing demand for electric vehicles as households and fleet operators seek to insulate themselves from oil price volatility. The crisis is doing more for EV adoption than a decade of government subsidies managed in some markets.² Southeast Asia captures the paradox most clearly. EV adoption is surging in Thailand, Vietnam, and Indonesia, transforming the region's industrial base. But the power grid infrastructure needed to charge those vehicles remains critically underdeveloped. The region is buying electric cars faster than it can build the charging and generation capacity to support them.⁶ The automotive industry itself is undergoing its most fundamental transformation since the Benz Patent Motorwagen hit German roads in 1886, the Economist reported. Everything is changing at once: the powertrain, the manufacturing process, the competitive landscape, and the software layer that increasingly defines the vehicle. Battery technology predates the internal combustion engine by decades, but it took until now for the economics to favour electricity over petrol at mass scale.^4,5 For crude oil traders, the 13 mb/d displacement figure is the number that matters. Even if BNEF's projection proves optimistic, half that volume — 6-7 mb/d of destroyed demand — would represent a structural shift in the crude market larger than any supply disruption in history. The question is not whether EVs will reduce oil demand. It is whether the current Hormuz crisis, by spiking fuel costs across Asia's fastest-growing vehicle markets, compresses that timeline by years rather than decades.^3,2