Nearly 30% of cars sold this year are set to be electric as the war in Iran has sent petrol and diesel prices soaring and drivers in many parts of the world look to electric vehicles as a cheaper alternative.
The analysis, released on Wednesday by the International Energy Agency (IEA), shows that in March, after Iran effectively closed the Strait of Hormuz following US and Israeli military strikes, around 30 countries saw record-breaking monthly sales of battery electric cars and plug-in hybrids.
In the first three months of the year, sales grew by 80% in Asian countries outside of China and by 75% in Latin America – driven by adoption in Brazil and Mexico – compared to the same period last year. In Europe, sales were up close to 30% year-on-year.
Iran war creates upside potential for EV sales
Globally, electric car sales are expected to grow to 23 million this year, accounting for 28% of total car sales, despite falling in China and the US in the first quarter of the year.
In Europe, one in three cars sold this year is projected to be electric. In China, early data for April shows that monthly sales grew to more than 60% of total car sales. Outside China, sales are projected to rise by more than 50% in Asian countries and 45% in Latin America this year.
Araceli Fernandez, the head of the IEA’s technology innovation unit, said the energy crisis caused by the Middle East war has spotlighted the benefits of driving an electric car and created “an upside potential” for the agency’s EV forecast this year. But, she added, it will take time for this to be reflected in the market, partly because of the time lag between ordering a car and it being ready to drive.
Consumers might also be weary of the impact of the war on the economy and wait for government support and policy incentives to make the switch to electric. As a result, the extent to which the growth in sales recorded since the start of the year can be attributed to the energy crisis is hard to estimate, IEA analysts said.
Attractive response to the energy crisis
The road transport sector is the largest consumer of oil, accounting for close to half of global demand.
The IEA has described the blockade of the Strait of Hormuz, through which around a fifth of oil and gas trade passes, as the “largest supply disruption in the history of the global oil market”. Earlier this week, it warned that global oil inventories were depleting at record pace.
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How governments respond to soaring oil prices could shape the global car market for years to come, according to the Paris-based agency, which was set up to respond to the oil crisis of the 1970s.
Unlike in the 1970s, electric vehicles are now an alternative to oil dependence for transport. In 2025, a quarter of all new cars sold were electric. That year, the global EV fleet avoided the consumption of around 1.7 million barrels of oil per day, according to the IEA’s analysis.
“Many governments in oil-importing countries in particular will potentially turn to identify ways for scaling up electric vehicle deployment,” said Timur Gül, the IEA’s chief energy technology officer.
Southeast Asia’s ‘spectacular growth’
Countries in Southeast Asia, including Vietnam, the largest EV market in the region, have already announced plans to expand or extend EV tax incentives in response to the energy crisis.
“It’s possible that other countries will follow,” said Gül, adding that supportive policies being implemented this year could lead to “important upside potential for EV sales”.
The region, which heavily depends on fuel imports from the Middle East, has been particularly affected by the crisis, with prices at the pump spiking.
In Nepal, where nearly three-quarters of new cars sold are electric, the EV roll-out has helped cushion the impact of the oil shock. In Bangladesh, where significant barriers to EV deployment remain, dealers of electric cars, scooters and three-wheelers said they have seen a rise in sales and customer enquiries in recent months.
Gül said electric car sales across Southeast Asia have seen “spectacular growth” over the last two to three years, reaching nearly 20% of car sales across the region last year, led mainly by Vietnam, Thailand and Indonesia.
More than half of the cars sold in the region were made by Chinese carmakers but around a third were manufactured by Vietnamese company VinFast, whose small affordable models have enabled mass adoption in the country. Nearly 40% of new car sales in Vietnam were electric in 2025 – above levels seen in most European countries.
China’s hegemony
Technological advances and cheaper prices have continued to drive EV deployment in China, the world’s largest oil importer.
In 2025, seven out of 10 electric cars sold in the country were cheaper to buy than their petrol and diesel engine counterparts in Europe. The cost of owning an electric truck is now competitive with owning a diesel one and last year, one in four trucks sold in China were electric – a market that doubled twice in just two years.
Cheaper EVs saw car exports from China double in 2025, mostly targeting Europe and Asia. Chinese automakers manufactured 60% of electric cars sold around the world last year and imports of Chinese cars account for more than half of sales outside Europe and the US.
“We are seeing increasingly intense competition domestically in China, which is squeezing the margins for electric car manufacturers and is making them increasingly look for export opportunities overseas,” said Fernandez.
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Electric car sales race ahead in SE Asia and Latin America amid oil supply crisis
June Rubis is a steering group committee member for the Cali Fund, from Sarawak in Malaysian Borneo.
At COP16 in Cali, governments made a significant commitment: at least half of the funding from the new Cali Fund should support the self-identified needs of Indigenous Peoples and local communities, including women and youth. It was a watershed moment for multilateral benefit-sharing.
The challenge now is to translate that commitment into access arrangements that recognise the different institutions, priorities and decision-making processes of Indigenous Peoples and local communities.
For generations, biodiversity and traditional Indigenous knowledge have provided significant value to companies who depend on nature’s genetic diversity to discover new drugs that fight diseases, create products that improve health, and grow crops resilient to extreme heat and flooding events. While some compounds are sampled directly from the source country, increasingly the digital blueprints are held in online public databases which are freely accessible to use for innovation and research.
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The Cali Fund was established at COP16 to encourage commercial users of Digital Sequence Information, or DSI, to share benefits arising from its use. Estimates suggest it could generate over $3.5 billion a year – a stark contrast to the modest $10,656 currently committed to the fund from just five SMEs, underlining how much progress must be made at COP17 over the next two weeks.
The COP16 decision that set up the fund offers two routes for money to reach Indigenous Peoples and local communities: through government authorities, and through direct payments to institutions identified by Indigenous Peoples and local communities themselves.
Varied ways of organising
Indigenous Peoples and local communities organise through a wide range of institutions. Some have national or regional organisations experienced in managing international grants. Others work through territorial organisations, customary institutions, community associations, cooperatives or networks. Some have professional finance teams and audited accounts; others have extensive experience governing territories, collective resources or conservation work without having been organised around international funding requirements.
For direct access, some questions are already apparent. Which institutions should be able to receive funds? How should they be identified? What fiduciary standards should apply? How should safeguards and accountability work where institutional capacities differ? What support may be needed where institutions have strong community mandates but less experience with international finance?
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If access is designed mainly around institutions that already meet the expectations of large international finance mechanisms, early funding will tend to favour those already familiar to funders. They will gain further experience and become better positioned for future funding, while institutions with less administrative capacity may remain outside the system despite strong community mandates and long histories of stewardship.
These first decisions matter most, because they set the terms for everyone who follows.
The role of intermediaries requires care. Some Indigenous organisations may want a fiscal host to hold and manage funds on their behalf. Communities may choose to work through an NGO they trust. Government-facilitated arrangements may work well in particular national contexts.
What matters is the function an intermediary performs and the authority that comes with it. Providing administrative support is different from deciding which Indigenous organisations qualify, which priorities can receive support, or how success will be assessed. Direct access means communities keep that decision-making authority.
Decision-making power
The COP16 decision refers to institutions that Indigenous Peoples and local communities identify. But authority among Indigenous Peoples does not sit in one kind of body. It may sit with territorial organisations, customary institutions, community associations or combinations of these. Legal recognition and customary authority do not always align neatly.
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An important feature of the Cali Fund’s governance is that Indigenous Peoples and local communities participate as full members of the Steering Committee, rather than as observers. Seven Indigenous Peoples and local community representatives, one from each of the seven socio-cultural regions, participate in consensus-based decision-making alongside representatives of governments and UN entities. Six additional representatives from civil society, scientific institutions and the private sector participate as observers.
That representation carries responsibility. Institutional legitimacy, access and representation take different forms across the seven socio-cultural regions. Indigenous Peoples and local communities members therefore have an important role in bringing those differences into the Fund’s governance and in ensuring that arrangements developed for one context do not become the assumed model for everyone else.
Safeguards and clear responsibilities
COP17 can establish the core principles and direction, while allowing operational pathways to develop in ways that respond to different regional contexts. The decisions countries take in Yerevan will shape how that flexibility is realised in practice.
The choices made around access will influence which institutions are able to participate, which routes become established and which forms of authority are recognised within the funding architecture. The aim should be an architecture with enough structure to maintain confidence while allowing for different forms of Indigenous and community governance.
A credible direct-access pathway will need safeguards, financial oversight and clear responsibilities. This would give the 50% commitment a stronger institutional foundation.
The Cali Fund’s importance will ultimately depend not only on how much funding reaches Indigenous Peoples and local communities, but on whether they are able to determine how the money is accessed, governed and used. This requires access pathways that recognise their institutions, priorities and decision-making processes, rather than requiring them to conform to a single predetermined model.
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COP17 must settle who decides how Cali Fund money is disbursed
The UK government has approved extraction at the Jackdaw gas field in the North Sea, despite acknowledging that this decision could make it harder for Britain to convince other countries to move away from fossil fuel production.
UK energy secretary Miatta Fahnbulleh approved the drilling on Wednesday after months of high-profile debate, fuelled in part by interventions from US President Donald Trump. She argued that the project would boost energy security in the wake of the Middle East fossil fuel crisis, protect hundreds of jobs and add £2.9 billion ($3.88bn) to the UK economy.
She said Jackdaw’s gas would be cleaner than imported gas and would not prevent the UK from meeting its legally-binding carbon targets and its goal of net zero by 2050. As the field is already licensed, she said extraction was consistent with the Labour Party’s 2024 manifesto promise not to issue any new oil and gas licenses.
The same morning, the government announced a new Energy Wealth Fund to reinvest oil and gas revenues in the climate transition. It will start with £2 billion ($2.67bn) from the government and be topped up over time with tax revenues from offshore oil and gas production.
Climate campaigners in the UK and abroad were quick to condemn the decision, while a leading legal expert told Climate Home News it goes against the advice of the International Court of Justice. Meanwhile, the government’s own documents reveal that it recognises the drilling could damage the UK’s reputation and its ability to push forward the global transition away from fossil fuels.
“Climate leadership” blow
The 92-page decision document says Fahnbulleh “acknowledges that international standing on climate is important and accepts that a decision to grant consent may not further the UK’s international climate leadership.”
It adds: “She acknowledges concerns about the potential implications for the UK’s credibility and influence – including the difficulty inherent in encouraging other states to move away from fossil fuel production while the UK continues, in a limited and transitional way, to draw on its own domestic resources.”
While noting that Jackdaw has not been issued with a new license – just permission to extract gas – the document says Fahnbulleh “accepts this does not fully resolve the underlying tension in the UK’s position” but “considers this alongside the substance of the UK’s wider record [on emissions reduction], which remains significant”.
It continues that she accepts these concerns are “legitimate” and weigh against approving gas extraction, but only gives this argument a “moderate negative weight” set against the benefits of gas production.
“Huge” wrong signal
In international climate talks, the UK has long supported the transition away from fossil fuels and is one of very few major oil and gas producers to ban new licenses. Across the North Sea, the Norwegian government continues to make offshore areas available for oil and gas exploration through annual licensing rounds.
Climate experts and campaigners shared the concern, acknowledged in the decision document, that approving Jackdaw could set a precedent for fossil fuel production elsewhere. Sam Fankhauser, professor of climate change economics at Oxford University, said the direct climate impact of Jackdaw is “much smaller than the debate around it would suggest” but the “wrong signal it sends, however, is huge”.
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Bob Ward, policy and communications director at the Grantham Research Institute on Climate Change, said that while Jackdaw’s output will be very small, “it will signal to other fossil fuel producers that they too should carry on with business as usual, less than a month before the COP31”.
Kenyan campaigner Mohamed Adow, director of Power Shift Africa, called the decision “a serious blow to Britain’s international climate credibility” as “the UK cannot expect developing countries to move away from fossil fuels while giving the green light to new drilling in its own backyard”.
International Court of Justice
In July 2025, the International Court of Justice (ICJ) advised that government failure to take appropriate climate action “including through fossil fuel production” may amount to an internationally wrongful act.
The UK voted in favour of a United Nations resolution welcoming the advisory opinion. Yet, in its Jackdaw decision document, it notes that the ICJ opinion is not legally binding and says the UK does not accept the court’s opinion that the customary international law duty to prevent significant harm to the environment applies to climate change.
Fahnbulleh concludes that, although it will have “significant effect on the environment”, gas drilling in Jackdaw “would not lead to significant harm to the environment” – and so does not breach any duty to prevent such harm. Instead, the government document says the duty should be considered “as a matter of policy rather than legal obligation”.
Margaretha Wewerinke-Singh, who led Vanuatu’s legal team pushing for the ICJ’s advisory opinion, told Climate Home News that treating the duty as a matter of policy rather than legal obligation is “not how international law works”. “An advisory opinion is not a judgement,” she said, “but it states the law as it stands, and that law binds the UK whether or not it accepts it.”
“Even as a matter of policy,” she added, “the decision asks the wrong question: whether Jackdaw on its own would cause significant harm. The Court found that accumulated emissions are already causing significant harm. What matters is whether approving new production is consistent with the stringent due diligence the duty requires.”
Public support for decision
While the decision was criticised by climate campaigners and the opposition Green party, polling reported by Politico suggests that 55% of British adults support drilling at Jackdaw, with just 14% opposed. Even supporters of the UK’s net zero target back new drilling by more than two to one, the polling found.
Jackdaw is one of two North Sea oil and gas fields the government has been debating whether to extract more from for months. While Jackdaw is a small gas field, the other, Rosebank, is a much larger field that holds mostly oil.
Rosebank’s emissions are estimated to be around seven times higher than Jackdaw’s. Fahnbulleh told Sky News that Rosebank is “different” to Jackdaw because its oil would be exported, whereas Jackdaw’s gas will be used in the UK, adding that she will consider it “in its own right”.
The Guardian reported on Wednesday that UK officials say Fahnbulleh is minded to refuse approval for Rosebank. She has not yet taken a final decision on Rosebank, the newspaper said, but a ruling is expected later this year.
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UK approves gas drilling despite admitting blow to “climate leadership” status