The global shift to electric vehicles is still accelerating, even as the U.S. market slows.
New data reported by Axios show EV sales climbing to new records worldwide in 2026. The loss of American tax credits, on the other hand, has cooled demand in the U.S. At the same time, rising oil prices tied to the Iran war are pushing some drivers in other markets to reconsider gas-powered cars.
The International Energy Agency projects that combined sales of fully electric vehicles and plug-in hybrids could reach 23 million in 2026, or roughly 28% of all vehicle sales. That would come after another record-setting year in 2025.
The growth is expected despite a slowdown in China, still the world's biggest EV market by a wide margin, and the U.S. decline.
IEA projections show sales in Asia-Pacific countries outside China could rise by more than 50% in 2026. Latin America could see a 45% jump. Those gains are helping offset weaker momentum in the U.S.
Axios cited research released by Rhodium Group and MIT that showed consumer spending on EVs fell sharply in the fourth quarter of 2025 after tax credits expired. It then leveled off in the first quarter of 2026. That spending was 23% lower than in the same period a year earlier.
The current inaccessibility of EVs in the U.S. makes it difficult for drivers to make decisions that reduce air pollution and their exposure to volatile gas prices. When fuel gets more expensive, the math on switching to an electric car can become especially appealing.
EVs can also help drivers save money on maintenance costs compared to gas-powered cars.
In the U.S., analysts are watching for signs that a smaller post-subsidy market may be settling into place. Rhodium and MIT said flat consumer investment in early 2026 could indicate stabilization after the tax-credit shock, even if sales remain well below year-ago levels.
Cox Automotive showed new U.S. EV sales slipped again in April and were down 23% year over year last month. The firm said fully battery-powered EVs accounted for 5.6% of new-car sales in the U.S.
TCD Picks » Quince Spotlight
💡These best-sellers from Quince deliver affordable, sustainable luxury for all
Global EV demand is still rising fast, even as the U.S. market adjusts to life after incentives. It remains unclear whether higher fuel costs tied to the Iran war will create a lasting shift away from gas.
Get TCD's free newsletters for easy tips, smart advice, and a chance to earn $5,000 toward home upgrades. To see more stories like this one, change your Google preferences here.
Cool Picks
