The worldwide boom in electric cars continues apace. Sales rose sharply last year and the growth continued into the first months of 2025, with a 35 percent increase globally in the first quarter and sales jumps across most major markets.¹ It is true that year-on-year sales growth for 2024 was not as strong, in percentage terms, as in some recent years, but that should be expected: electric cars are now growing on a much larger base than in the past.

The International Energy Agency forecasts that electric cars will make up 25 percent of all cars sold in the world this year.² The market share will be roughly the same across Europe, albeit much higher in a few markets, like Norway. Cars with plugs now constitute well over half of new-car sales in China and they continue to gain market share in that automotive market, the world’s largest.³ Chinese automakers are now producing some of the world’s best and most affordable electric cars, and they are gaining share in many export markets, including the United Kingdom. Markets in Latin America, Southeast Asia and Africa are starting to see rapid growth in sales of Chinese cars, off a very low base in some countries.

As it has been throughout the automotive transition, the United States is the most important laggard, with only about 10 percent of its car sales being electric in 2024. The IEA forecasts that this number will jump slightly in 2025 as consumers race to buy cars ahead of the expiration of federal subsidies for their purchase.⁴ Then, the hammer could fall: the Trump administration is so determined to kill the market for electric cars that it is stripping away every federal support programme, risking thousands of jobs that were expected in new battery factories. California and several other states are likely to continue supporting the automotive transition, however, so it is somewhat unclear how far the American market will drop. California car sales were about 25 percent electric in 2024, matching the average across Europe, but sales so far in 2025 suggest their penetration may already be slipping.⁵

Compounding the confusion in America is Donald Trump’s on-again, off-again tariff policies, which could make all cars — not just electric ones — more costly. If Mr Trump’s machinations drive the American economy into recession, the entire automotive market would be expected to suffer. Whether the tariffs are even legal is an open question, with one court having already ruled that they are not.

Tesla, the company headed by Elon Musk, was for years responsible for the bulk of electric-car sales in the United States. But that dominance is eroding as other companies improve their offerings. Tesla’s worldwide importance is also declining, especially in countries where Mr Musk’s foray into politics as a supporter of Mr Trump has become a liability for his company. Tesla sales fell 27 percent in France, 62 percent in the Netherlands, 58 percent in Belgium, 52 percent in Denmark and 86 percent in Sweden as the backlash took hold. Only a few markets bucked the trend, including Spain, up 27 percent, and Norway, up 83 percent.⁶ The company has pinned its hopes on offering driverless ride-hailing services. But in that nascent market, Tesla is far behind competitor Waymo, a Google offshoot that has been offering driverless rides in a handful of cities for as long as five years, and is now expanding rapidly.

If Mr Trump manages to precipitate a stagnation or decline of the American electric-car market, that will be a development of global importance. The country is so car-dependent that its autos are the largest single source of greenhouse gas emissions in the United States,⁷ and one of the most important sources worldwide. Mr Trump’s actions threaten to undo decades of effort to get the United States into a better place regarding emissions, and to cut its dependence on oil.

As batteries continue to improve and their costs continue to fall, the electrification trend is starting to show results in heavy transport, not just in passenger cars. Sales of electric versions of heavy lorries jumped 80 percent in 2024, off a tiny base; they are now almost 2 percent of global truck sales,⁸ with growth expected as new regulatory standards take hold in Europe and California. It is already clear that electrification will be possible for some segments of the heavy transport market: the city of Shenzhen in China has managed to put 16,000 electric buses on the road.⁹ How quickly electricity can displace diesel in all heavy-duty road transport is still unclear, however. One of the biggest bottlenecks will be the availability of heavy-duty, high-powered chargers, which in most countries are only just starting to be installed.

So far, the small electrification trend is far from adequate to tackle the growing problem of freight emissions. Of all the emissions from transportation, more than 40 percent can be attributed to moving goods rather than people,¹⁰ and as passenger cars get cleaner, this proportion will grow. The most emissions-intensive form of goods hauling, air transport, is also the fastest growing,¹¹ and countries have yet to come up with policies adequate to tackle this issue.

One possible way to cut emissions from aeroplanes would be the creation of sustainable aviation fuels. Many of these are under development, but not all are equally sustainable. Electrofuel, known as e-fuel, offers the greatest environmental potential: it can be made with renewable electricity and waste carbon dioxide, potentially eliminating most of the emissions. This fuel would also avoid the land-use conflicts associated with biofuels, another potential way of fuelling planes.

The problem with these fuels is that they are prohibitively expensive today. In 2023, the European Union adopted the world’s most ambitious mandate for such fuels. This has helped to spur a wave of development, with 41 large-scale projects across Europe, giving the region the highest project count globally. However, challenges with financing and regulatory uncertainty mean these projects are hitting roadblocks. For the sector to develop, more airlines need to agree to binding deals to buy the resulting fuels, like the deal recently signed by International Airlines Group, which controls several carriers.

Even if the fuel mandates are fully met, e-fuels would cover just a sliver of aviation fuel demand by 2032. Barring technical breakthroughs and rapid declines in the cost of e-fuels, policymakers face hard choices. They could, for example, attempt to reduce the demand for flights with stiff ‘frequent flier’ taxes or the like, though intense political resistance to any such measures can be expected.

We have argued for years that public policy is too skewed towards private transportation, and not enough effort is being made to move people out of cars and into more efficient trains, trams and buses. We saw progress over the past year in a few countries, though. After delaying plans for a congestion charge to suppress car traffic in New York City, the governor of that state finally let it go through, albeit at a lower fee than planned; the money will be invested in transit improvements that are badly needed in New York.

In Germany, the new, conservative-led government is responding to years of public complaints about the deterioration of that country’s once-vaunted rail network. The government is setting up a $500 billion fund to invest in infrastructure, with more than $100 billion of that specifically earmarked for the railways.¹² Similarly, the new Labour government in the United Kingdom intends to spend billions improving the country’s rail infrastructure.

In principle, electrified railways running on a cleaned-up grid could satisfy a great deal of passenger and freight demand. High-speed rail lines, which have been built across China, Japan and large parts of Europe, can even compete with planes for intercity travel. But these projects are costly and sometimes controversial: a high-speed rail line under construction in Britain has bedevilled governments with cost overruns and political opposition. The few high-speed rail projects under way in the United States, such as one intended to connect Los Angeles to San Francisco, have had similar problems. Even in America, however, high-speed rail may work in specific corridors: a private company is pursuing a fast rail connection between the Los Angeles basin and Las Vegas, the gambling mecca. More than 40 million trips on that route are made every year by car,¹³ and the rail line could cut the journey time from four hours to two.

Ocean shipping is another large source of emissions that need to be cleaned up. In principle, large ships could run on fuels like ammonia without producing significant greenhouse gas emissions, although ammonia-burning does produce localised air pollution. Before Donald Trump took office, countries were on the verge of agreeing to bold new targets for the cleanup of global shipping, but the Trump administration is now trying to sabotage the deal. Despite the populist backlash against globalisation, shipping emissions are expected to continue growing in the future, so a cleanup plan is urgently needed.

One of the most hotly contested issues around the electrification of transport is when global oil demand will peak and begin to fall. The International Energy Agency says that it may happen before the end of this decade, as the rising share of electric cars eats into petrol demand in China and other countries. The Organisation of the Petroleum Exporting Countries has attacked this idea and projected growth in oil demand all the way through 2050, the end of its forecast period. The Western oil industry is also offended by the IEA’s forecast, for a simple reason: industry executives know that Wall Street detests shrinking businesses. If oil does peak and begin to fall, the stock prices and the political power of the oil companies will erode more rapidly than their revenues do. The industry has thus put its most faithful servants, Republican politicians in the United States, to work attacking the IEA.

The IEA is not perfect, but it is the best analytical shop the world has in trying to understand the energy system and its future. With the United States government captured by the oil lobby, we hope other governments will defend the agency’s independence and its right to make forecasts based on its best reading of the evidence.