Major Automotive Global Trends April 2026

Global

The energy crisis following the war in Iran, which led to a surge in fuel prices in March, continued into April and stimulated global demand for EVs

In April, the global auto market continued to be shaken by the sharp spike in energy prices as a result of the war in the Middle East. One immediate result was a significant surge in sales of EVs worldwide. Despite the declarations of a ceasefire, the ongoing disruptions in the Strait of Hormuz and the fear of a renewed war with Iran continued to push up the price of crude oil on international markets and gasoline prices at gas pumps around the world.

At the same time as the price increase, concerns grew in the US and Asia about continued high prices and a physical shortage of fuel in the medium term. All of this led to a significant surge in sales of EVs for fleets and individuals. In Germany, for example, which is considered the largest car market in Europe, 70,633 new EVs were sold in March, an impressive 66% jump compared to the same period last year. This, while sales of gasoline and diesel vehicles have been consistently declining.

The market share of EVs has reached 24%. The hybrid vehicle sector has not been left behind and has recorded a 16% growth in sales. Major dealers in Germany reported that the trend continued well into April.

Even in the US, where electric EVs fell sharply at the beginning of the year due to the elimination of tax breaks, the segment has seen a resurgence. At the New York International Auto Show in April, there was strong interest in new EVs from customers who had been hit by the sharp rise in fuel prices.

It should be noted that since the Trump administration abolished the tax breaks last September, sales of new EVs in the US have plummeted, with the decline totaling 27% in the first quarter of 2026 compared to the same quarter last year. The trend is changing quite slowly, but in the meantime, dealers in the US are reporting a surge in demand for used EVs, which are more accessible and affordable. Their sales increased by 20% in March.

The energy crisis is also causing an accelerated change in the balance of power between the major automakers in some markets. Data from the Australian Automotive Industry Association indicates that sales of EVs jumped by 62% in March, accounting for 15% of all sales. As a result, the Chinese company BYD managed to overtake Japanese manufacturers, which traditionally dominate the Australian market, and climbed from seventh place to third place in the sales table. A similar trend was also recorded in Thailand. At the Bangkok Motor Show, eight of the top ten brands in pre-orders were Chinese manufacturers, focusing on electric and "Electrified" vehicles.

In Japan, on the other hand, the response was more subdued due to emergency government subsidies for fuel prices, which are intended to curb the damage to the industry.

At the same time, disruptions in the international supply chain of the automotive industry continued in April as a result of the prolonged blockade of the Strait of Hormuz. The disruptions in supplies from the Gulf countries go beyond oil and gas supplies and also extend to the supply of naphtha, which is a by-product of oil refining and a critical raw material for the modern automotive industry. The dependence on the supply of this material from the Middle East is particularly great in Asian countries. In Japan, for example, almost 75% of the amount of naphtha imported for petrochemical production comes from the Middle East.

Naphtha is used to produce basic chemicals such as ethylene, propylene, and others, which form the basis for essential intermediate products such as resins, synthetic rubber, coatings, and adhesives. Each modern passenger car contains an average of about 130 kg of plastic materials, produced from naphtha, such as polypropylene (PP), which is used to manufacture bumpers, dashboards, and door panels; polyurethane (PUR) and polyethylene (PE), which are common in insulation and upholstery, and body coatings based on synthetic resins. Another naphtha product is synthetic rubber, which is a critical component in the production of tires, pipes, or seals for braking and cooling systems, etc. In Japan, for example, the automotive industry is responsible for about 80% of synthetic rubber consumption.

Analysts estimate that in some countries, the automotive industry may face a shortage within two months even if traffic in the Strait of Hormuz gradually opens.

The war in Iran disrupts the global supply of Helium, placing an additional challenge to the global supply chain for semiconductors for the automotive industry

The shockwaves of the conflict in Iran continue to spread to the world’s advanced manufacturing sector, and one of the most severe impacts is on the supply of Helium (a critical and irreplaceable raw material in the production of semiconductors for the automotive industry). This rare resource, known as “Golden gas,” is a byproduct of natural gas production and a vital component in the production of advanced driver assistance systems (ADAS) as well as core chips for EVs

The damage to Qatar’s Helium production facilities during the war has reduced global Helium supplies, and the automotive industry is once again at risk of supply chain disruptions.

According to data, about 30% of the world’s Helium supply comes from Qatar, which is home to the world’s largest liquefied natural gas (LNG) plant. Last March, the Qatari Foreign Ministry announced that missile attacks had caused “Serious damage” to the plant’s facilities and that halting production would reduce Helium exports by 14%. It said that repairing the facilities would take years, which would affect production capacity over time.

Analysts say that there are currently not many global supply sources that can quickly replace those that were damaged, and the necessary equipment is not available on the market. The real concern, they say, is that the Helium shortage will force semiconductor factories to shut down, similar to the 2021 chip crisis that severely affected global auto production.

It should be noted that a significant portion of today’s smart vehicles depend on high-precision chips, the production of which depends on Helium as an irreplaceable “Cleaner” and “Coolant.” Helium stocks of semiconductor manufacturers around the world are currently nearing exhaustion, in part because Helium’s unique physical properties mean that companies cannot store it in large quantities for long periods of time, even in advanced isolation tanks. The safe storage range in standard commercial tanks is only 40 to 48 days. A tank of liquid Helium will completely evaporate in six months.

The US, the world’s largest producer of Helium, has limited production capacity due to technology and infrastructure limitations that hinder rapid expansion. Chip manufacturing economies in Asia are particularly dependent on Qatari Helium. South Korea imports about 65% of its Helium from Qatar, while Japan imports between 28% and 33%. A disruption in the supply of Helium from Qatar is now pushing major global chip manufacturing hubs such as South Korea and Japan to the brink of a possible production crisis.

Analysts estimate that a complete shutdown of production in the short term is unlikely, but a severe chip shortage in the style of 2021 is a highly probable scenario. However, as the conflict with Iran continues to escalate, the Helium supply gap will widen, and the associated risks will gradually seep into the automotive industry.

Europe

The EU Council has finally approved the relaxations in CO2 emission regulations for truck manufacturers

The relaxations in CO2 emission limits for truck manufacturers, which were preliminarily approved by the European Parliament in March, were also finally approved in April by the Council of the EU and will enter into force 20 days after their official publication.

The basic regulations governing CO2 emissions standards for heavy-duty vehicles will apply from 2027 and represent a change from the current regulations. They require truck manufacturers to reduce emissions from new trucks by 15% by 2025, 45% by 2030, 65% by 2035, and 90% by 2040 compared to 2019 levels. They seek to achieve this by accelerating the market introduction of electric trucks and improving the fuel economy of models with internal combustion engines.

While the amendment does not include a general change to the interim targets, it opens up more opportunities for truck manufacturers to obtain CO2 “Credits” for positive deviations from the targets, which can be offset against future, more stringent reduction targets.

The CO2 emission credit mechanism already exists, but it is difficult to accumulate it because current regulations require further reductions in emission targets each year (the current CO2 reduction target for trucks is around 20% in 2026 and around 26% in 2027).

The idea behind the amendment is that the CO2 emission reduction curve between 2025 and 2029 will be eliminated. Alternatively, the 15% reduction target set for 2025 will also apply to the years 2026 to 2029. This is expected to benefit truck manufacturers because if they, for example, achieve an 18% reduction in 2026, they will be able to receive 3% credits and accumulate them for later years. “This change takes into account the structural challenges facing the industry, in particular the slow expansion of public charging infrastructure,” the council said in a statement.

EU policymakers have effectively adopted an industry demand since last October. The updated mechanism for calculating emissions credits applies mainly to heavy trucks with a gross vehicle weight of 16 tons or more and certain categories of buses over 7.5 tons. City buses are explicitly exempted from the regulation because the uptake of zero-emission buses is well underway.

EV sales in Europe surge by 51% in March compared with last year due to the rise in fuel prices. Energy security is a key driving factor

In March 2026, battery electric vehicle (BEV) registrations in 14 of the largest countries in the EU and the European Free Trade Area (EFTA) jumped by 51% compared to the previous year. More than 224,000 new EVs were registered in the same month, accounting for 22% of total new car sales in these markets and 21.2% of all sales in the EU as a whole.

The growth comes at a time when the conflict in the Middle East is reviving concerns about Europe’s dependence on imported oil. The data shows that the adoption of EVs is no longer just about climate targets or operating costs, but is increasingly linked to energy security.

In the first quarter of 2026, more than 500,000 fully electric vehicles were registered in the EU, a 33.5% increase compared to the same period in 2025. Analysts estimate that the surge in EV sales in March is a breakthrough in efforts to secure Europe’s energy supply and wean it off oil. According to them, the fact that EV sales growth in key EU markets has exceeded 40% represents a clear structural change and not just a statistical fluctuation. The half a million new vehicles sold this year could reduce oil demand by about 2 million barrels per year.

The growth is occurring in all major European markets. Germany, France, Spain, Italy, and Poland. The five largest economies in Europe all recorded growth of more than 40% in EV registrations in the first quarter. In Italy, the overall share of EV sales rose from about 5% at the end of 2025 to 8.6% in March 2026, an increase of 65% since the beginning of the year. Germany recorded a significant jump, also driven by a new incentive policy: one in four new cars sold there in March was a fully electric vehicle, and since the beginning of the year, the increase stands at 42% in sales.

The picture in France was similar, and sales of new EVs recorded a jump of 69% and accounted for about 28% of all sales in the local market in March, with a lasting effect into April. Due to the gap between the date of ordering the vehicle and the date of its actual registration with the Ministry of Transport, analysts in France expect that sales figures in the segment will remain very high throughout the second quarter as current orders mature for delivery.

The analysts note that this turnaround was noticeable even before the situation in the Middle East had time to fully affect the data, and accelerated significantly. As the trend continues, the pace of transition to EVs in Europe is expected to accelerate even further towards the end of 2026.

The German government presses the EU to grant carmakers further relief on emissions regulations

The EU has recently yielded quite a bit to pressure from the European car manufacturers' lobby and updated its tough environmental policy. However, EU member states, led by Germany, which has a strategically important car industry, do not intend to be satisfied with existing achievements.

During April, representatives of the ruling party in Germany discussed a "Plan to strengthen the automotive industry", which aims to obtain additional concessions for the EU's and Germany's car industry in particular. A document distributed after the meeting stated that "Further adjustments to the proposed regulation on CO2 emission limits for the vehicle fleet, as well as other regulatory issues in the automotive sector, are required".

It should be noted that before Christmas 2025, the EU Commission presented an updated "Automotive package". This included a number of significant relaxations from the original target, which stipulated that after 2035, new vehicles with internal combustion engines would no longer be allowed to be registered in the EU.

According to the updated package, certain hybrid vehicles and vehicles with internal combustion engines would still be allowed to be registered after 2035, provided that their CO2 emissions are fully offset by clean fuels or “Green steel” originating in the EU. For now, these are only recommendations, and if the EU institutions do not adopt them, the current law, i.e., zero emissions from 2035 onwards, will remain in force.

Against this background, the German government has decided to push for further changes in Brussels. According to reports, the new requirements include setting less stringent conditions for plug-in hybrid vehicles, and that additional emissions that will be allowed after 2035 will not have to be fully offset.

In addition, the German government is demanding that vehicles powered exclusively by synthetic fuels (e-fuels) be considered zero-emission vehicles immediately and that the interim targets until 2035 be made more flexible. In addition, the German government intends to oppose the proposal to grant increased credits (super credits) to EVs that are less than 4.20 meters long, as well as to oppose the planned purchase of EVs for company fleets.

USA

The US government has been ordered to refund importers about $20 billion in tariffs that were illegally collected last year.

 The auto industry is still debating whether and how to demand the refund

In April 2026, the US government announced that, starting at the end of April this year, companies that paid increased tariffs last year on imports to the US will be able to submit official requests for refunds totaling approximately $20 billion. This is after the Supreme Court ruled on February 20 that the imposition of tariffs was unconstitutional. A large portion of those tariffs were collected last year from manufacturers and importers of vehicles and parts, on which tariffs jumped by tens of percent.

However, the path to refunds is still fraught with bureaucratic and perhaps political obstacles. US Customs has made it clear that submitting refund requests will only be possible through a digital system, which is intended to streamline the process, but in practice, requires maximum accuracy. Any error in entering data could lead to the rejection of the application and lengthy delays. Furthermore, although the filing of applications begins in April, the actual cash flow into companies’ accounts is not expected to begin until the third or fourth quarter of 2026. For companies that are in an immediate liquidity crunch, this is a very long wait.

The refunds are not distributed evenly; large automakers, which have advanced data management systems, will be able to file the applications quickly, while small and medium-sized suppliers may have difficulty gathering the required documents. Industry experts warn that without professional assistance, a significant number of small companies will not be able to exercise their rights.

And if that were not enough, in April, President Trump made it clear in one of his “Tweets” on his X account that although the administration is obligated to refund the duties collected, he himself will “Remember favorably” companies that do not request a refund. This fact raised concerns in the auto industry that the administration may, in the future, “Close accounts” informally with companies that demand full refunds of the duties.

Research: New vehicle prices in the US continue to move away from the reach of many consumers

During April, the American media presented new and worrying data, showing that since 2020, the average price of a new vehicle has jumped by 30%, reaching a peak of approximately $48,000 in 2025. Several reasons contributed to this, including disruptions in the supply chain during the Corona period, a surge in the development costs of electric vehicles, and manufacturers' decision to focus on more luxurious and profitable models.

To illustrate, data from the US National Insurance Administration shows that the median annual income of US citizens in 2025 was about $43,000. This means that half of US workers earn less than the price of an average new pickup truck.

This gap is also putting heavy pressure on the used car market and increasing the debt burden of households, with car loan repayment periods extending to seven years or more. According to the data, new car models are no longer sold in the US market for less than $20,000.

Analyses by analysts in the US show that the increase in the average worker's hourly wage has frozen, while high-income households have accumulated considerable wealth. The continued demand from wealthy groups for luxury vehicles is leading car manufacturers to produce expensive models with higher profit margins at the expense of cheap vehicles.

Although the "Abandonment" of the popular segment results in car manufacturers selling fewer units, the purchasing power of the top decile of the population (whose annual income is $250,000 or more) supports the process.

South Korea

The South Korean government intends to limit subsidies for imported EVs

In April, South Korean media reported that the government was planning to introduce a new scoring system to promote EVs in order to strengthen the local industry. The move is intended to curb the rapid invasion of the domestic market by foreign automakers by requiring the establishment of research facilities or production sites in South Korea, which would make it difficult for foreign manufacturers to achieve the required score for subsidies.

Until now, the government has granted new EVs a direct subsidy of approximately 3,000 to 3,300 euros (equivalent in local currency) depending on the size and price of the vehicle. However, in addition to domestic vehicles eligible for the subsidy, foreign TESLA models, which are manufactured in China, and several BYD models have also benefited significantly from it.

Until now, the criteria for receiving the subsidy have been based mainly on the performance of the vehicles, such as electric driving range and energy efficiency. Anyone who bought an EV below a certain price threshold automatically received a full government subsidy. This helped foreign manufacturers, led by Tesla, capture about 48% of the country’s EV segment last year, with Tesla alone selling about 60,000 vehicles in South Korea. But now, South Korea’s Ministry of the Environment and the Ministry of Infrastructure are reportedly planning to introduce a more complex scoring system.

To qualify for subsidies under the new system, automakers will need to score at least 80 points out of 100 in seven categories. These categories include, among others, “Industrial contribution,” which examines the extent of the manufacturer’s cooperation with local suppliers and the transfer of technology to South Korea. Investments in South Korean research and development centers will also be rewarded, and under the heading of “Sustainability,” the number of local jobs and the size of each brand’s local service network will also be taken into account.

At the same time, starting in July 2026, all manufacturers will also be required to present proof of dedicated fire insurance for EVs in order to continue to be eligible for subsidies. This requirement is also an advantage for locals, because following past incidents, the Korean public views locally produced batteries as safer than batteries made in China.

South Korean government officials were quick to clarify that "The government does not intend to eliminate TESLA from the game, but is putting pressure on foreign companies to expand their local sales networks, cooperate with suppliers, and increase their contribution to the Korean market as much as they want to continue receiving subsidies."

Earlier in April, it was announced that the South Korean government also intends to make it more difficult for Chinese manufacturers to sell electric buses in the country. The means for this is not an import ban, but rather a change in the criteria for providing subsidies to public transport operators interested in purchasing electric buses. Among other things, the requirements for batteries installed in buses have been tightened, giving priority to domestic batteries.

Previously, a flat subsidy of 87 million won (about 50,000 euros) was given to each low-floor city bus; from now on, up to 90 million won (about 52,000 euros) will be paid per bus, but models equipped with low-energy-density batteries will be excluded from the subsidy. This condition will make the purchase of Chinese electric buses unattractive for public transport operators compared to domestic buses. This is because most Chinese manufacturers use cheap LFP batteries with low energy density compared to Korean manufacturers, which use high-energy-density NCM batteries. This means that subsidies for Chinese-made electric buses have been reduced by more than half, almost overnight.

The move could strengthen local bus manufacturers at the expense of Chinese electric buses, which recently achieved a 34 percent market share in South Korea.

China

International research: China is gradually taking the lead in the area of software for “Smart” cars

In April, a new study by the international consulting firm AlixPartners was published that attempted to identify the reasons for the Chinese auto industry's accelerated lead in the development of "Software-defined vehicles" (SDV). This refers to vehicles whose features are mostly controlled by data processors, whose software can be configured and changed even after the vehicle is purchased.

The study is based on a survey conducted among about a thousand senior executives from the auto industry in Europe, America, and Asia, and it revealed a worrying picture for manufacturers in the West. According to the data, Chinese automakers are overtaking their Western competitors in every major indicator in the field of software-defined vehicle development. The competitive gap between the two sides is widening every quarter, fueled by significant Chinese investments in research and development and government encouragement for the independent development of core technologies.

The authors of the study call it a “Historic paradigm shift” and say that “Software-defined vehicles are the future of the industry, and control of that future is now in the hands of Chinese automakers and technology companies.” They claim it is much broader than people think.

The researchers write that the competition has long gone beyond the boundaries of a normal technological battle and has become a struggle for strategic control of the industry. The main differences stem from a deep strategic fragmentation in the way manufacturers approach development. Western automakers have chosen an “Outsourcing” model in which control of the development of core technologies is entrusted to external partners and suppliers. In contrast, Chinese manufacturers have focused on building independent research and development capabilities in more sensitive core areas such as chips and software.

The survey data paints a clear picture: Some 41% of Chinese automakers choose to develop their own vehicle software, compared to just 27% of European manufacturers and 25% of American manufacturers. This gap means that Western manufacturers have no control over software optimization and rely too heavily on third-party technology providers, limiting their ability to respond quickly to market changes.

This view is also supported by an analysis by the research firm S&P Global Mobility, which states that domestic Chinese manufacturers are advancing faster in the field and are accelerating the pace of R&D and implementation of software on a large scale. According to the analysis, this ability is based on inherent advantages in the Chinese market, such as flexible decision-making mechanisms, a developed supply chain, and an extensive feedback system from the local market.

The investment gap is also translated into numbers on the budget line. Approximately 36% of Chinese automakers currently allocate more than half of their R&D budget to the software-defined vehicle field, compared to only 21% of Western manufacturers. 98% of Chinese manufacturers have stated that they intend to increase their software budgets, compared to only 76% of Western manufacturers.

Analysts estimate that the Chinese heavy investments in software-defined vehicles are not a one-time investment and will yield significant bonuses in the future. Among them are technological development tools and superior architectures, which will create a cumulative competitive advantage over non-Chinese manufacturers in the coming years.

The Chinese are also moving faster than their Western counterparts to a new and more advanced generation of software tools. Against a backdrop of geopolitical concerns and cybersecurity risks, 59% of Chinese automakers are now adopting a decoupled architecture, in which there is a complete separation between hardware and software, allowing for flexible integration and independent expansion of components, similar to Lego bricks.

This architecture supports rapid software upgrades and the flexible integration of new features. In contrast, 70% of Western automakers still use a traditional system, which places new software on top of outdated hardware architectures in a “Patch-on-patch” manner, leading to redundant systems, difficulty in upgrading, and an inability to adapt to the demands of the current era.

The Chinese auto industry breaks export records, but the crisis in its domestic market is deepening

China's global auto exports are currently expanding at a dizzying pace, with a growth rate of over 120% in the first quarter of 2026 compared to the same quarter last year. However, at the same time, its domestic auto market has gradually weakened due to a fierce price war, excess production capacity, and problematic marketing methods. In April, the Chinese government began to address some of these problems through regulations:

•  Government measures to prevent price wars

In April, China’s State Administration for Market Regulation (SAMR) began formally enforcing strict guidelines aimed at curbing the phenomenon of destructive competition. The measures include, among others, the enforcement of minimum prices, under which authorities began monitoring transactions in order to prevent car manufacturers from selling vehicles at a price lower than their total production costs.

In addition, the authorities issued new rules prohibiting car brands from forcing dealerships to sell at a loss through “Cashback” programs or negative incentives. Starting in April, online car trading platforms in China are required to act as real-time monitors and report to the government information on “Abnormally low” pricing, which indicates abnormal business behavior.

•  Subsidy structure change

The government has moved from a flat-rate subsidy to a percentage-based model by 2026, a move that is already impacting sales figures. Instead of a flat subsidy of 20,000 yuan, the scrappage subsidy is now 12% of the purchase price, capped at 20,000 yuan. The change reduces the subsidy for small, inexpensive EVs, putting significant pressure on them.

•  Technical and energy efficiency standards

The new energy efficiency standards, which came into effect at the beginning of the year, underwent their first quarterly review in April. Traditional and hybrid models are now required to meet strict fuel consumption limits with a reduction of at least 18% in consumption. Private electric vehicles (BEVs) weighing up to 2 tons are now subject to a hard cap of a maximum consumption of 15.1 kWh per 100 km.

• Vehicle-to-Grid (V2G) Charging Regulations

Regulators signaled in April that China's electricity pricing policy, based on peak and off-peak hours, would be accelerated with the aim of turning EVs into "Operational assets" capable of feeding electricity back into the grid.

Chinese auto industry executives are voicing complaints about the market situation

In April, the secretary-general of the China Passenger Car Association (CPCA), at a conference on smart EV development, presented data that aroused deep concern among the country's automakers. According to him, the Chinese auto industry, which was considered the main engine of economic growth over the past decade, is currently under unprecedented pressure.

The data paints a picture of extreme imbalances within the supply chain: While Chinese automakers saw their profit margins erode to just 2.9% in the first two months of the year, upstream suppliers enjoyed phenomenal profitability.

According to the data, in 2017, the industry’s profit margins were around 8%, a figure that allowed for massive investments in research and development. However, today the situation has changed completely. Profitability of metals manufacturers, which provide critical raw materials for batteries and vehicle bodies, has jumped from around 9% to 39.4%. Profitability in the oil and energy sector has also jumped to 30%.

According to the association's CEO, the automotive sector has effectively become the "Sponsor" of the Chinese economy, as it absorbs price increases and subsidizes the huge profits of raw material suppliers, while it itself is facing a saturated domestic market and aggressive price competition.

According to him, the domestic Chinese market, which previously seemed like a bottomless pit of demand, is showing clear signs of cooling in 2026. Between January and March of this year, sales of vehicles powered by internal combustion engines fell by 9%. A more worrying trend is that new energy vehicles (NEVs), for which demand was relatively resilient, have also started to show signs of slowing recently, and by the end of 2025, their sales had frozen.

Despite attempts to stimulate the market, prices have remained relatively stable in most segments, with the average discount rate standing at around 10%. In the gasoline vehicle segment, discounts are higher and reach to 22%, indicating a desperate attempt by dealerships to get rid of inventory.

In contrast, Chinese auto exports are experiencing an unprecedented boom. After exports jumped 124% in the first quarter of this year compared to last year, CPCA has revised its annual growth forecast from 25% to 35%. According to the CEO, China’s ability to flood global markets relies on a sharp decline in the production costs of key components.

Export prices for lithium batteries, for example, have fallen from $17,000 per ton last year to about $15,000 this year. The weakening of the local currency against the dollar is also contributing to competitiveness and allowing Chinese manufacturers to transport vehicles on ships to ports in Europe, South America, and Southeast Asia.

India

Delhi is not waiting for government policy and is launching its own strategic plan to reduce pollution from transportation by promoting EV sales

In early April, the local government in the Indian capital, Delhi, released a draft of its “Electric Vehicle Policy 2026–2030.” The comprehensive document outlines mandatory measures and economic incentives to accelerate the transition of the automotive market to electric propulsion.

Delhi currently has about 8.76 million motorized vehicles, most of which are equipped with polluting gasoline and diesel engines, which contribute to severe air pollution. In addition, India as a whole is critically dependent on cheap oil imports from countries in the Middle East, including Iran, and this supply is considered vulnerable.

According to the draft policy, from April 1, 2028, only electric two-wheelers will be registered in the city of Delhi. New commercial three-wheelers (L5) will be required to be fully electric (BEV) from the beginning of January 2027. In addition, from 2026, light commercial vehicle (LCV/LGV) and two-wheeler fleets will be prohibited from purchasing vehicles with internal combustion engines. Only two-wheelers that meet the strictest emission standards (BS-VI) will be able to register by the end of 2026.

The policy also requires the public sector: all vehicles leased or purchased by the government, as well as government buses, will be fully electric from 2026. Student bus fleets will be required to achieve a 30% electrification ratio by March 2030.

The policy offers full exemption from road tax and registration fees for EVs, whose price does not exceed $12,000. More expensive models will not be eligible for this benefit, while full hybrid vehicles will get a 50% tax reduction.

Buyers of electric two-wheelers will receive a subsidy up to a certain threshold in the first year, which will gradually decrease in subsequent years. In addition, a significant scrapping incentive will be offered to those who scrap an old polluting vehicle when buying an electric vehicle. The Delhi government has allocated a significant budget for both scrapping incentives and setting up public charging infrastructure.

However, experts warn that as long as the policy is local and governments in neighboring areas do not adopt similar restrictions, residents may buy cheap petrol vehicles in neighboring areas and use them in Delhi.

Israel

The Ministry of Finance is examining a series of vehicle taxation measures due to the deepening budget deficit following the war

The deepening budget deficit is currently causing the Ministry of Finance to examine emergency methods to increase the state's tax revenue, including from the automotive sector. During April, the economic press reported that the Ministry of Finance is conducting staff work to examine the implementation of a series of measures in 2027, which are supposed to increase collection from the industry by a cumulative amount of 3-4 billion NIS already in 2027. Most of them are measures that have already passed regulatory approvals and preparations for their implementation are already at an advanced stage; however, they have not yet received the "Green light" from the political system. According to estimates, the measures, if they are decided to implement them, are expected to be announced in the last quarter of the year, after the elections.

The two main measures are defined by the Ministry of Finance as "Environmental fiscal", and their stated goal is to reduce congestion on the roads and the indirect contribution of vehicles to pollution and damage to infrastructure. The main measure is the implementation of a congestion charge on vehicles entering and leaving large cities during rush hour, mainly in the morning and evening. The plan was originally planned to be implemented already in 2024; however, it was postponed several times due to political opposition. At the current point in time, it is ready for immediate implementation after its main implementation contractor was already selected last year, and most of the technical preparations for operation have been completed, including the vehicle number plate recognition system and the collection system.

According to previous publications, the congestion fee will be imposed in the first phase on vehicles entering and exiting the Dan Bloc with a rate of up to 37.5 NIS per day, which varies according to travel hours and travel area. Previous estimates estimated that revenues from the toll would amount to approximately 1.25 to 1.4 billion NIS. Various sectors, such as public vehicles, would be exempt from the toll.

It was originally announced that the expected revenues from the congestion fee would be allocated exclusively to financing public transportation and metro projects. However, more recent estimates estimate that due to the deep budget deficit, some of the revenues will now be directed to closing the overall deficit.

In addition, the Ministry of Finance is considering implementing a mileage tax on electric and plug-in vehicles in early 2027, which is intended to reflect the "Contribution" of these vehicles to congestion and damage to road infrastructure, which the Ministry of Finance claims is currently almost not reflected in the taxes imposed on them. The Ministry of Finance also claims that there are very significant gaps between the cost of fuel, the excise tax on which constitutes a kind of "Natural mileage tax" on gasoline vehicles, and the cost of charging electricity. These gaps, according to the Ministry of Finance, encourage excessive driving in rechargeable vehicles and an increased contribution to congestion.

The mileage tax was already approved in the 2024 Arrangements Law and was supposed to be implemented in early 2026, with expected revenue from collection of approximately 1.2 to 1.5 billion NIS in the first year and revenue of over 3 billion NIS per year by the end of the decade. However, its implementation was ultimately postponed due to opposition from the Minister of Finance. The tax is supposed to be about 15 cents per kilometer, and for fleet vehicles, it is supposed to amount to about 2,500 NIS per year on average.

Another move that has already been approved in the 2027 budget is the cancellation of the reduction in the purchase tax on EVs starting from the beginning of 2027, compared to that of gasoline and plug-in vehicles. Currently, the tax stands at 48% with a shekel benefit ceiling of approximately 22,000 NIS and is scheduled to increase to 83% in January 2027.

The move is expected to inject hundreds of millions of shekels into the treasury.