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The latest inflation data from the Bureau of Labor Statistics is out, and the news is not great. The price of gasoline is up 34 percent over the last year, while the price of heating oil is up 74 percent. Diesel is up 70 percent just since August. All that, of course, is because of Donald Trump’s war in Iran, which shows no sign of ending. Just on Tuesday this week, Iran struck five different oil tankers in and around the Strait of Hormuz.
In almost every country, the Trump oil shock has greatly accelerated the pace of the EV transition. As the energy think tank Ember details, of the new cars sold in the last year, in Norway 98 percent are fully electric; in Denmark it is 80 percent; in Nepal it is three-quarters; in Iceland and Singapore it is more than half; in Sweden, Vietnam, the Netherlands, and Finland it is more than 40 percent; in China—by far the largest auto market—it is 38 percent (and rising fast); in Luxembourg, Malta, Uruguay, and Belgium it is more than 30 percent; and in 11 further countries it is more than 20 percent. Worldwide, 21.4 percent of global car sales were fully electric, with a further 8 percent being plug-in hybrids. And all those figures are from August. The numbers today are certainly even higher.
There’s just one major exception: the United States. Even with those eye-watering gas and diesel prices, EV sales have increased only modestly, with third-quarter sales at 263,000, or a piddling 6.4 percent of new cars. That’s about 100,000 less than Q4 of 2024, let alone the 2025 peak.
It’s also not American companies that are selling most of those EVs around the world. Ford’s EV sales have fallen by about 75 percent over the last year, while GM’s fell by 62 percent, and Tesla’s have been flat. Instead, the Iran war has turned out to be quite the gift to Chinese automakers, who had been facing major business challenges. With China’s domestic economy weakening, their domestic sales had fallen sharply, and their ultra-cheap cars had touched off political backlash in almost every nation with a domestic auto industry. Just before Trump fired the first shot at Tehran, Chinese EV manufactures were having a tough time. BYD’s EV sales had collapsed from 646,000 in the last quarter of 2025 to 310,000 in Q1 2026, while Geely Group’s fell from 343,000 to 255,000.
No longer! With the Trump oil shock, EV demand has shot through the sunroof, as it were—particularly in Asia, where the fuel price increases have been much worse—and political worries about cheap Chinese imports fell somewhat by the wayside. BYD and Geely Group were quickly able to spin their factories back up and add more capacity. Tesla is the only major American player in the global EV market, but its sales have been largely stagnant since 2023, at less than half a million per quarter. BYD’s sales, by contrast, soared past 762,000 this quarter, and Geely Group is now nipping at Tesla’s heels with more than 410,000.
The timing of Trump’s actions has been so bad for American automakers that it almost looks purposeful. As I previously covered back in January, the Biden administration had convinced GM, Ford, and Stellantis to spend tens of billions of dollars investing in electric vehicles with a package of subsidies for EV production and purchase. A key part of the strategy was guaranteeing the subsidies for a full decade so the businesses would have the confidence the investments would have time to pay off. Then, just three years later, Trump signed a repeal of most of the subsidies, and played additional hell with the companies’ business model with his nonsensical tariffs.
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There was a brief boom in EV sales in late 2025 as American EV drivers scrambled to get one before the tax credits expired, but it was followed by a rapid collapse. American auto executives, timid and hesitant in the best of times, scaled back their EV ambitions. GM—which was and remains the most successful EV maker out of the legacy manufacturers—ate a $6 billion loss on its EV investments in early January. Ford canceled its F-150 Lightning and wrote down a $19.5 billion loss in December. And Stellantis swallowed $26.5 billion in EV losses in late February.
Days later came Trump’s war on Iran, which was perfectly timed to twist the knife Trump had already placed in Detroit’s back. Just as he ripped out a huge chunk of legacy automakers’ EV production, he suddenly made EVs more attractive than ever. The Big Three American automakers, caught wrong-footed once again, had little for sale, and had never even gotten a chance to get a toehold on the affordable end of the market. Analysts generally agree that canceling the EV credit has particularly crushed sales of cheap, low-margin models like the Chevy Bolt, leading GM to cancel it long before it could make the mass sales that would justify its factory. As a result, China is rapidly devouring the entire global auto market.
EVs are where the car industry will surely end up, probably within a decade. It couldn’t be more obvious. GM and especially Ford were foolish to give up so quickly, subsidy or no subsidy. Since the war started, the used EV market has seen substantially increased demand—particularly for the F-150 Lightning, ironically enough, which is selling more than twice as fast as the used car average, and at increasing prices.
It’s not all bad news. Hyundai has been toughing it out with its EV factory in Georgia, and its Ioniq 5 is still selling briskly. The Rivian R2 is a modest success so far. Ford has a small EV truck in the works that will supposedly start at less than $30,000. That is the choice: either slog it out making the EV business work without government help—aside from the oil wars—or spend a few more years selling big gas-guzzling trucks and SUVs before closing up shop forever.
