Seventeen States Could Accelerate U.S. Electric Vehicle Sales 75% By 2050

California’s Advanced Clean Cars II (ACC II) rule is a new state policy that is designed to accelerate electric vehicle (EV) deployment, reduce greenhouse gas (GHG) emissions, and deliver savings for consumers. Nearly 38% of the US car market, or 17 states, have either adopted or are considering these standards, which could significantly impact the environment and the economy.

According to modeling by New Energy Innovation Policy & Technology LLC®, if all 17 states adopt ACC II, more than 75% of all cars on US roads could be EVs by 2050. The open-source Energy Policy Simulator model was used to analyze the impact of accelerated EV adoption on GHG emissions, the economy, and public health. The results indicate that the adoption of ACC II could save households over $600 annually, depending on the state they reside in. With OPEC’s recent production cuts, these savings could grow even more significantly.

By getting cleaner cars on the road, ACC II could reduce carbon pollution by 1.3 billion tons by 2050, equivalent to the GHG emissions of 13 coal plants running through 2050 or removing a year’s worth of current car emissions. This policy could play a critical role in protecting the environment and promoting the economy’s growth.

But these household savings and emissions reductions are not guaranteed. If states fail to act or worse, renege on earlier commitments to adopt ACC II, they will leave billions in benefits behind and detour households toward higher energy costs.

California paves the way

ACC II is a vehicle sales standard enacted by California in August 2022, setting a gradually increasing requirement for sales of zero-emission vehicles (ZEVs) up to 100% in 2035. Given the projected lower cost of EVs relative to other ZEV technologies, including plug-in hybrids and fuel cell vehicles, the policy will likely result in nearly 100% EVs sales in any state that adopts it.

Although the U.S. Environmental Protection Agency (EPA) is tasked with setting national pollution standards for vehicles, Section 177 of the Clean Air Act gives California the authority to set stronger standards than those set by the EPA, and allows other states to adopt California’s standards.

Sixteen states adopted California’s earlier standards. While some of these states already adopted California’s latest standards, such as Virginia and Massachusetts, which have mechanisms that automatically adopt the latest California standards, others require new legislation or regulation to do so. As a result, some states have already announced plans to adopt ACC II, whether through existing or new legislation and regulations, while others are actively considering it.

Driving Home Inflation Reduction Act benefits

California finalized ACC II just after Congress passed the Inflation Reduction Act (IRA)—the most significant federal clean energy investment in U.S. history, which includes EV incentives that significantly lower their costs. The new clean vehicle tax credit provides up to $7,500 for purchasing a new EV, with certain qualifying criteria. There is also a new $4,000 tax credit for used EVs. A commercial clean vehicle tax credit of $7,500, which can be used without stipulations, has been determined by the U.S. Treasury as applicable for leased EVs. Additional tax credits support installing home EV chargers in lower-income communities.

In addition to the IRA tax credits, many states provide their own incentives for EV buyers. For example, New Jersey offers a rebate of up to $4,000 for new EVs, meaning a new vehicle qualifying for the full IRA incentive plus the state incentive could receive $11,500 in incentives.

Beyond savings from federal and state incentives, owning an EV is significantly cheaper than owning a gasoline vehicle due to lower fuel and maintenance costs. The lower ownership costs of EVs coupled with IRA incentives mean adopting ACC II could save drivers in those states hundreds of dollars a year, with some households in states with strong EV incentives saving an average of more than $600 per year.

While the IRA will significantly increase EV sales, the tax credits expire in 2032. After that, sales would likely drop without additional policy, undoing much of the progress electrifying new vehicle sales. ACC II could help fill this gap by carrying the IRA’s momentum through to 2035 and beyond, when all newly sold cars would be EVs under the rule.

Because they compose such a large share of the U.S. car market, the 177 states could significantly increase total U.S. EV stock if they all adopted ACC II. Without ACC II the U.S. car fleet could be 60% electric by 2050. But if all 17 states adopt ACC II, more than 75% of all cars on the road could be electric by then.