Abstract:

Battery technology advances, automaker announcements, market developments, and policy statements all suggest that the prospects for electric vehicles are on the rise. Yet there is uncertainty about how quickly a transition could happen, and which policies are most critical to smartly navigate the transition. Factoring in this uncertainty is important for vehicle efficiency regulations. This paper assesses several key questions related to how efficiency regulations integrate electric vehicles, specifically analyzing the United States’ and European Union’s CO2 regulations. Beginning from the existing regulations, adopted through 2025 for the United States and through 2021 for Europe, the author apply hypothetical extensions of the standards, reducing new vehicle CO2 emissions by 6% annually through 2030. To understand how the regulatory approaches for electric vehicles are seen from the perspective of automaker compliance, the author assesses their cost-effectiveness versus other technology options.