Electric vehicles are becoming increasingly central to the global technology and energy transition, with the latest International Energy Agency (IEA) outlook showing strong sales growth continuing across major and emerging markets despite mounting geopolitical and economic uncertainty.
The IEA’s Global EV Outlook 2026 found global electric car sales rose 20% in 2025 to exceed 20 million vehicles for the first time, meaning one in four new cars sold globally last year was electric.
While China and Europe continue to dominate EV adoption, the report suggests the broader industry is entering a new phase — one increasingly shaped by software, artificial intelligence, battery technology and energy security concerns rather than vehicle manufacturing alone.
Software and AI become central to EV competition
One of the report’s strongest themes is the growing convergence between the automotive and technology sectors.
The IEA said battery electric vehicles were now leading the shift toward “software-defined vehicles”, where core vehicle functions are increasingly managed through centralised software systems capable of remote updates and AI-enabled optimisation.
“Battery electric vehicles are currently the most advanced of these ‘software-defined vehicles’,” the report said.
The agency highlighted growing use of artificial intelligence across battery management systems, advanced driver assistance features and autonomous vehicle technologies, supported by more powerful semiconductors and falling sensor costs.
Driverless electric taxis are already operating commercially in more than 20 cities globally, primarily across China and the United States.
The report also pointed to rapid advances in charging technology, including the rollout of new ultra-fast charging systems and high-voltage EV platforms capable of cutting charging times to under 10 minutes.
China tightens grip on global EV supply chains
China remains the dominant force across the global EV market, accounting for nearly 75% of electric vehicle production in 2025 and around 60% of worldwide EV sales.
More than 13 million EVs were sold in China last year alone, representing almost 55% of all new vehicle sales in the country.
The report said China’s strength extended well beyond vehicle assembly into batteries, software integration, charging infrastructure and supply chains.
Chinese manufacturers also continue expanding aggressively into international markets. Chinese-made EVs accounted for more than half of electric vehicle sales across Southeast Asia in 2025, while exports reached a record 2.5 million vehicles globally.
At the same time, Europe recorded some of the strongest growth among developed markets, with electric car sales climbing more than 30% in 2025 following tighter emissions standards and broader availability of lower-cost models.
Australia continues to lag global leaders
Australia remains behind many comparable developed economies on EV adoption, though local uptake continues to improve.
The IEA said electric vehicle sales in Australia rose steadily in 2025 to reach around 15% of new car sales, supported by growing plug-in hybrid demand and a broader range of available models.
That remains well below markets such as China and Europe, where EVs already represent more than one-quarter of total vehicle sales, and far behind Norway’s world-leading 97% EV sales share.
Still, Australia continues to play an increasingly important role in the broader EV ecosystem through its exposure to lithium, graphite, rare earths and other critical minerals used in batteries and electrification technologies.
Companies such as Janus Electric Holdings Ltd (ASX:JNS) are already expanding infrastructure aimed at electrifying Australia’s heavy freight sector, while battery materials and rare earths developers continue positioning for longer-term EV demand growth.
Globally, the IEA estimates EVs displaced around 1.7 million barrels of oil demand per day in 2025, with that figure expected to rise sharply over the coming decade.
For investors, the shift is broadening the focus beyond automakers themselves and towards the wider technology stack supporting electrification — including batteries, charging infrastructure, semiconductors, grid technologies and AI-enabled vehicle systems.