Electric vehicles are entering a different phase of the global car market. The transition is increasingly being driven not only by climate rules or early adopters, but by a calculation familiar to almost every household: what does a vehicle cost to buy and keep moving?
That calculation has shifted markedly in 2026. Higher oil prices have made gasoline more expensive in many markets, while a widening selection of lower-priced EVs—particularly models built by Chinese manufacturers—has narrowed the upfront-price gap. Europe is recording strong growth, several emerging markets are advancing even faster, and global EV sales are expected to keep gaining share. Canada, meanwhile, is pursuing its own reset, combining renewed purchase incentives, charging investment, new emissions rules and limited access for lower-cost Chinese EVs.
The Global EV Story Is Becoming an Affordability Story
Electric-car adoption was already expanding rapidly before the latest energy shock. More than 20 million electric cars were sold worldwide in 2025, according to the International Energy Agency, representing roughly one-quarter of all new-car sales. More than 100 countries recorded EV sales growth during the year. Yet the pattern is becoming less concentrated in the familiar markets of China, Europe and the United States. Countries across Southeast Asia and Latin America are beginning to account for a larger share of demand as models become cheaper and buyers gain more choice.
The IEA expects approximately 23 million electric cars to be sold globally in 2026, equivalent to about 28% of new-car sales. First-half conditions have been uneven, with policy changes weighing on China and the United States, but growth elsewhere has been striking. Europe recorded close to 30% year-over-year growth during the first quarter, while Asia-Pacific markets excluding China grew about 80% and Latin America roughly 75%. That geographic spread matters because EV adoption is increasingly moving beyond wealthy households willing to pay a technology premium.
Cheaper Models Are Changing the Purchase Equation
For years, one of the simplest arguments against buying an electric vehicle was the sticker price. That obstacle is weakening fastest where manufacturers have introduced smaller vehicles, simpler specifications and lower-cost battery platforms. In China, almost 70% of battery-electric cars sold in 2025 were already cheaper than comparable internal-combustion vehicles before government incentives, according to the IEA. Electric SUVs in China also reached average price parity with combustion-engine SUVs, a notable development in a segment that represents a large portion of global vehicle demand.
Chinese manufacturers are exporting that cost advantage. Outside China, Europe and the United States, electric-car sales approached two million units in 2025, nearly 50% above the previous year. In emerging and developing economies excluding China, sales increased roughly 80%. Chinese-built vehicles represented about 60% of EV sales in those markets. Thailand has already reached a point where electric-car prices can be comparable with combustion vehicles, while growing Chinese competition has pushed premiums lower in Indonesia. The transition becomes much easier when electrification stops requiring a luxury-car budget.
Expensive Fuel Is Making Running Costs Harder to Ignore
The other side of the affordability equation appears every time a driver visits a fuel station. The IEA estimates road transportation consumes close to half of global oil demand, leaving motorists highly exposed when crude supplies tighten or fuel prices jump. The Middle East energy crisis has therefore created a new incentive for households and fleets to reconsider electric vehicles. EVs convert energy into motion much more efficiently than internal-combustion vehicles, meaning the operating-cost advantage can become substantially more visible during periods of expensive gasoline and diesel.
The IEA calculated that, using average oil prices in April 2026, the annual fuel-cost savings associated with driving an EV in the European Union were about 35% greater than the savings available in 2025. For high-mileage corporate fleets, the difference can be considerably larger because every additional kilometre magnifies the fuel-cost gap. That does not mean an EV is automatically cheaper for every household: electricity rates, insurance, financing, charging access and purchase prices still matter. But expensive oil changes the arithmetic, particularly for drivers who can recharge at home at predictable electricity rates.
Europe Is Showing What Happens When Prices, Policy and Fuel Costs Align
Europe has become one of the clearest examples of several adoption drivers arriving simultaneously. Battery-electric vehicles accounted for 25.7% of new registrations across 16 major European markets in July 2026, with more than 224,000 units registered during the month. France reached an EV share of roughly 35%, while Germany was close to 29%. Across the European Union, EV sales increased 40.5% during the first half of 2026 compared with the same period a year earlier, helped by tighter emissions requirements, incentives in several countries and a broader choice of vehicles.
The change is increasingly visible in mainstream showrooms. Renault reported that electric models represented more than half of its United Kingdom orders in July, compared with roughly 10% two years earlier, while the retro-styled Renault 5 became the country’s top-selling EV that month. Manufacturers are preparing additional lower-priced products, including the electric Twingo. Europe still demonstrates how sensitive adoption is to government policy—markets that remove incentives can weaken quickly—but the arrival of credible lower-cost models means subsidies are no longer carrying the entire burden of making EVs attractive.
Emerging Markets May Be the Bigger Long-Term Surprise
Some of the fastest EV growth is occurring far from the markets that dominated the industry’s first decade. Southeast Asian electric-car sales more than doubled during 2025, reaching nearly one-fifth of new-car sales in the region. Latin American sales rose approximately 75%, led by countries including Brazil and Mexico. The Philippines provided an especially dramatic example: electric cars climbed from a negligible share to nearly 10% of new-car sales in 2025 after tax relief and import-duty exemptions helped expand the selection available to buyers.
Affordability is crucial in these countries because households are generally more sensitive to both purchase prices and fuel costs. Imports from China have helped bring vehicles into price ranges that would have been difficult to reach using only premium EVs developed for wealthier markets. Viet Nam has an additional advantage through domestic manufacturer VinFast, while Thailand has become a major production and assembly centre for Chinese brands. The IEA expects EV sales across Asia-Pacific markets outside China to increase more than 50% in 2026 and Latin American sales to rise about 45%, illustrating how quickly the centre of EV growth is broadening.
Canada Is Reworking the Route Rather Than Abandoning the Destination
Canada’s approach has changed substantially. Ottawa announced in February that it would repeal the Electric Vehicle Availability Standard, which had been built around escalating mandatory ZEV sales targets, and instead strengthen fleet greenhouse-gas standards. The new framework is intended to put the country on a path toward approximately 75% EV adoption by 2035 and an aspirational 90% by 2040 while giving automakers more flexibility over which technologies they use in the earlier years. Proposed regulatory changes were published in the Canada Gazette in August, continuing the implementation process.
At the same time, Ottawa restored consumer assistance through the five-year Electric Vehicle Affordability Program. It offers incentives of up to $5,000 on eligible battery-electric and fuel-cell vehicles and up to $2,500 for plug-in hybrids, generally subject to a $50,000 transaction-value ceiling. Canada is also committing $1.5 billion through the Canada Infrastructure Bank toward charging and hydrogen infrastructure. ZEV sales have responded: Statistics Canada recorded 21,876 zero-emission vehicles sold in June 2026, up 56.1% year over year and representing 11.5% of new-vehicle sales.
Canada Is Also Testing Whether Cheaper Imports Can Coexist With Industrial Policy
Perhaps the most consequential part of Canada’s reset involves trade. Under its preliminary arrangement with China, Ottawa created an annual quota allowing 49,000 Chinese-origin EVs into Canada during the first year. The quota is scheduled to rise 6.5% annually, while an increasing proportion will be reserved for vehicles priced at or below a defined affordability threshold. The initial quota system began March 1, with a longer-term allocation system scheduled to start September 1. The policy potentially gives Canadian buyers access to products from the world’s most competitive EV manufacturing base.
That opening, however, sits beside a distinctly Canadian industrial strategy. Vehicles receiving federal EV purchase incentives generally must be manufactured in Canada or in countries covered by Canadian free-trade agreements, meaning Chinese imports do not automatically qualify for the same consumer subsidy. Ottawa is simultaneously seeking Chinese joint-venture investment, supporting Canadian production and offering incentives for eligible lower-priced vehicles. The balancing act is becoming clearer: Canada wants the affordability benefits that global EV competition can provide without surrendering the manufacturing jobs, battery investment and supply-chain capacity it has spent years trying to build.
