The global switch to electric cars continues apace, and indeed, seems to have accelerated this year in response to the high petrol prices caused by the Iran war. One in four cars sold worldwide in 2025 had a power plug, and that figure is projected to reach almost 30 percent this year.¹ It is clear, in retrospect, that sales of petrol-only cars peaked in 2017 and will likely never recover to the volume of that year.

In a few countries, electric cars now account for more than half of new-car sales. That includes China, the world’s largest maker and buyer of electric cars and the largest producer and user of EV batteries. Electric models rose from 53 percent of new-car sales across the full year of 2025 to 62 percent in the second quarter of 2026. Over the same periods, the shares rose from 35 to 42 percent in Britain, from 30 to 38 percent in Germany and from 15 to 35 percent in Australia. The US was a notable exception, falling from 10 percent in 2025 to 7 percent in the second quarter of 2026.²

More and more countries appear determined to phase out petrol cars entirely. The number of countries announcing such policies keeps growing. It is true, however, that as the bans draw closer — 2035 is a common target year — the political backlash against them is intensifying. Western carmakers, who dragged their feet on this transition for 20 years and are now deeply threatened by China’s dominance, are lobbying furiously to weaken the bans. They appear to be on the verge of a limited success in the European Union, where a measure going through the bloc’s tortuous approval process would somewhat undermine the 2035 targets, without repealing them entirely.³ In some countries, the carmakers have already won massive tariffs on Chinese EVs in an attempt to protect themselves, including 100 percent tariffs in the US. Canada adopted a 100 percent tariff as well, but then replaced it with a quota that limits Chinese imports to 49,000 vehicles a year.

Some developing countries with no capacity to make their own cars have decided to embrace electric models from China wholeheartedly — another example of the leapfrog trend at work. It has not escaped their attention that China is making high-quality cars at remarkably low prices, as low as $4,800 for one ‘micro’ urban runabout. Nepal is pushing hard and its small car market is now 68 percent electric.⁴ Ethiopia, weary of subsidising fuel for motorists who refuse to pay global prices, has entirely banned the import of petrol-only cars.⁵ In Latin America, Uruguay has achieved 28 percent electric sales.⁶

The US appears determined to bring up the rear. National sales of cars with plugs comprised about 10 percent of the market in both 2024 and 2025, but they fell off a cliff late in the year after the repeal of a federal tax credit for car buyers. Anecdotal reports suggest that high petrol prices from the war in Iran have somewhat revived interest in electric cars, but we await the full-year numbers to see how much difference that will really make. Attempts by California, Colorado and other states that are leading the energy transition are under threat as the federal government mounts a legal assault on their ability to set their own car standards. With the hostility emanating from the federal government, the US could be the last major car market to switch entirely to electric drive trains; we also have no doubt that it will happen, eventually. These are simply superior cars. Technological innovation is driving prices down to the point that electric cars are going to be cheaper than petrol cars, and they will eventually charge almost as fast as a petrol car can refill. They require less maintenance than petrol cars, and are far cheaper to operate for people who can charge at home. Ultimately, we believe Washington will not be able to stop this technology.

Electric cars fall into the category known as light-duty transport, and it is basically a good-news story for a simple reason: batteries are now good enough to carry that much weight. Heavy transport, which includes lorries, buses, trains and planes, is a more complicated problem. Batteries can work well on repetitive, fixed routes. The vans that deliver post and packages within cities are well on their way to complete electrification. Buses, including school buses and public transport, can also run on batteries and are gradually going electric. (Many cities have for decades run electric buses that draw power from overhead wires, which are known as trolleybuses, but the infrastructure to do that is expensive and batteries are going to render it unnecessary.) Electrification of the heaviest lorries, known as Class 8 lorries, is proceeding at a brisk clip in China. The Chinese government has used its might to conjure into existence a battery-swapping system that can keep heavy lorries on the road. Now, we are seeing evidence that electrification of the largest lorries is going to spread beyond China.

Tesla, the American electric car company, is finally producing a large electric lorry in significant volume, after years of dabbling. As production scales in Nevada, the company is taking orders for hundreds of Tesla Semis at a time. Similarly, in Europe, sales of electric lorries are escalating as manufacturers seek to comply with European Union regulations requiring emissions cuts. Unfortunately, the lorry manufacturers have already succeeded in watering those regulations down somewhat, which will slow the development of the market. Nonetheless, some of those lorry makers are reporting that 3 to 4 percent of their order books are for electric vehicles.⁷ More heavy-duty charging infrastructure is needed to keep up, but we foresee the gradual electrification of even the largest lorries on the road.

Ships represent an unsolved problem. Again, electrification will work on certain routes, like ferries covering relatively short distances, but the shipping of goods on the high seas is likely to continue to depend on liquid fuels, and it is not clear yet what the best options might be. All low-carbon fuels that could replace diesel or marine bunker fuel continue to cost more than companies are willing to pay. A set of rules that would have required the clean-up of shipping was agreed to at the International Maritime Organisation several years ago, but the Trump administration is trying to block the deal. We hope countries will move forward without the US, if necessary, adopting rules that give shipping companies the incentive to work harder at finding clean fuels.

Aeroplanes represent an even bigger problem. They are a relatively small part of the global emissions picture now, but are growing fast as carriers expand to meet the seemingly insatiable public demand for global travel. European rules are gradually forcing into existence an industry to make low-carbon fuels for the airlines; if you have been offered the chance to buy ‘sustainable aviation fuel’ for a flight you booked, that is basically a request to pay extra to help fund the development of such fuels. Commercial-sized fuel plants, using feedstocks such as waste wood, are just going into operation to meet the European mandates. However, the fuels can cost more than 10 times the price of standard jet fuel,⁸ so the big question is how fast the price can come down as the industry scales up.

As we have argued for years, successful transportation policy must do more than call better cars or lorries into existence. In dense urban areas, especially, the big task is to get people out of cars, not to put more of them on the road. Every time an electric car is substituted for a petrol car, that is a win, but the bigger win would be no car. Greater investment in public transportation is a critical need, although in truth, many public transport systems are still recovering from the ridership hit they took during the COVID-19 pandemic and the subsequent work-at-home trend.

With determined political leadership, profound transformations can be achieved in a decade or two. Paris, for instance, has gone a long way towards undoing one of history’s great mistakes, the surrender of public space to the tyranny of the car. The city has now seized many kilometres of roads to create cycle routes, shut down main roads along the River Seine and converted them to pedestrian and bike paths, and eliminated tens of thousands of parking spaces. The results have been stunning: car traffic in Paris fell by half from 2002 to 2022.⁹

We continue to advocate one policy that is the closest thing to magic for cities choked by cars: congestion charging. This is essentially a toll for driving a car into the most crowded part of a city during the busiest times. It has been proven to work in Singapore, in Stockholm, in London — and now, in New York City.

The governor of New York State, Kathy Hochul, delayed the plan in a political panic after it was already agreed to by multiple parties. But she finally allowed it to go into effect, after cutting the proposed congestion charge in half. The results have nonetheless been remarkable, with less traffic entering Manhattan, speedier travel times for cars, more people riding mass transit, and billions of dollars being collected to invest further into the public transport system.¹⁰ We are not surprised by these developments; they mirror the effects seen all over the world when congestion charging is put into effect.

We thus believe that any city coping with severe traffic congestion should be tracking the results in these leading cities, and drawing up their own plans for a tolling system that will let them regain control of the public streets.