High Fuel Prices Lead to Increased EV Sales Globally

• Electric vehicles seem to be making a comeback in Europe, Canada, and the United States in the second half of 2026.

• In August, 29% of all new cars sold in Europe were electric.

• Canadian federal and Quebec provincial incentives are set to diminish and be retired, respectively, in January.

While global sales of electric vehicles dropped off sharply at the end of 2024 due to the end of incentives in North America and a generalized cost-of-living crisis, things seem to be looking up.

Indeed, electrified models, including battery electric vehicles, are making a comeback in 2026, particularly in Europe, where 29% of all new cars sold last month were powered by electricity alone.

This marks a significant increase over the same period in 2025, when EVs accounted for only 20.2%.

Since the start of the year, this market share stands at about 23%, compared to 17.7% between January and August 2025.

This increase comes at the expense of gasoline and diesel-powered vehicles, which made up 27.9% of the market since the start of the year, down from 35.8% last year.

In August alone, gasoline-powered vehicles accounted for 18.5% of all new vehicle registrations in Europe, while those running on diesel made up just 5.8% of the total.

This return to popularity is so significant that Volkswagen now has more orders for electric vehicles than combustion-powered models in Germany for the first time in its history. As a result, the company has had to slow down the production of gasoline-powered models to free up some production capacity for EVs, notably the new ID. Polo, which is proving quite popular.

The picture is similar in Canada, where the market share of electric and plug-in hybrid vehicles has increased during the first eight months of the year over 2025.

Indeed, zero-emissions vehicles (EVs + PHEVs) have accounted for 10.7% of sales in the second quarter of 2026, up from 8.6% for the same period last year.

This increase seems to have stagnated, however, as results for the first quarter of 2026 were almost identical, with a market share of 10.8% for ZEVs. This figure was also down from 11.2% during the last quarter of 2025, so it will be interesting to see how EV sales have fared during Q3 of 2026.

In the United States, electric vehicles have also seen a resurgence over the last few months, with their sales increasing 14.7% between the first and second quarters of 2026. In addition, while sales are still significantly below their 2024 and 2025 numbers, the decline is stabilizing.

Indeed, EV sales for the second quarter of 2026 were 20.5% lower than during the same period in 2025, which is an improvement over Q1 figures, when 2026 sales were 27.3% behind.

Globally, this return to popularity for electric vehicles seems to be driven by high fuel prices caused by the war in Iran and the closure of the Strait of Hormuz, as it comes directly at the expense of gasoline and diesel-powered models.

In addition, sales of hybrid and plug-in hybrid vehicles are increasing in most major markets, reaching a 32.8% market share in Europe and 36.3% in the United States.

As gasoline and diesel prices keep climbing globally, it will be interesting to see Q3 and Q4 figures for 2026 in the coming months to see if this return to popularity proves persistent.

This will be especially true in Canada, where the federal EV rebate is set to drop from $5,000 to $4,000 in January, at the same time as the Quebec provincial $2,000 rebate is scheduled to expire.

This means that this fall could be the best time to buy an EV in Canada for those who are still on the fence.

Source: InsideEVs, ElectricAutonomy.ca and Cox Auto