Even EV-Loving China Is Feeling The Iran War Gas Pinch
China’s April auto sales dropped 21.5% to 1.4 million vehicles, with gasoline car deliveries falling by a third due to the Iran oil shock and weakened EV demand from tax policy changes. The China Passenger Car Association cited higher oil prices and subsidy rollbacks as key factors behind the decline, marking the lowest April sales since 2022.
China’s auto market experienced a sharp decline in April 2026, with total passenger vehicle sales falling 21.5% to 1.4 million units—the lowest April figure since 2022 during COVID lockdowns. Internal combustion engine (ICE) car deliveries dropped by nearly a third, while new energy vehicles, including electric and plug-in hybrids, declined 6.8%, according to the China Passenger Car Association (PCA). The downturn was driven by surging oil prices following the U.S.-Israeli conflict in Iran, which increased fuel costs and dampened demand for gasoline-powered vehicles. The PCA’s General Secretary, Cui Dongshu, noted the impact exceeded expectations, as higher oil prices compounded existing challenges like the removal of trade-in subsidies and the reinstatement of an EV purchasing tax. Despite expectations of a rebound in EV demand due to rising fuel costs, domestic softness in the market prevented a recovery. The PCA had anticipated a sales decline from tax policy shifts but did not foresee the severity of the oil price shock. The slump highlights China’s ongoing transition from ICE vehicles to electric mobility, though the current economic and geopolitical pressures are delaying progress. Analysts suggest the market may stabilize if oil prices stabilize and government incentives resume.
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