A new state policy—California’s Advanced Clean Cars II (ACC II) rule—could dramatically accelerate electric vehicle (EV) deployment, deliver hundreds of dollars in annual consumer savings, and cut United States greenhouse gas (GHG) emissions. Seventeen states—nearly 38% of the U.S. car market—are contemplating or have already adopted these standards.
New Energy Innovation Policy & Technology LLC® modeling shows if all 17 states adopt ACC II, more than 75% of all cars on the road in the U.S. could be EVs by 2050.
We used our open-source Energy Policy Simulator model to determine how accelerated EV adoption could affect GHG emissions, the economy, and public health. The results show state adoption of ACC II could save households more than $600 per year, depending on which state they live in. OPEC’s latest round of production cuts mean these savings will likely grow.
Getting cleaner cars on the road would also protect the climate, avoiding 1.3 billion tons of carbon pollution by 2050, roughly the same as removing an entire year’s worth of today’s car emissions or the GHG emissions of 13 coal plants operating through 2050.
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 (together with California dubbed “177 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 justjust 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.
Cutting greenhouse gas emissions, protecting public health, and creating jobs
We used Energy Innovation’s free and open-source Energy Policy Simulator models to evaluate the impact of state ACC II adoption on GHG emissions, public health, and the economy. We find a higher share of EVs would significantly decrease U.S. GHG emissions. Through 2050, ACC II adoption would reduce emissions by 1.3 billion tons, roughly equivalent to removing the annual emissions of more than 282 million gasoline-powered vehicles. For context, 278 million personal and commercial vehicles were registered across the U.S. in 2021.
Fewer gasoline vehicles on the roads would also generate significant public health benefits, preventing approximately 5,000 premature deaths from air pollution and 161,000 asthma attacks in 2050. Because car pollution tends to be most heavily concentrated in communities of color, health benefits would be concentrated in those communities.
Finally, ACC II adoption by all 177 states could generate significant U.S. job growth thanks to increased production of domestically sourced EVs and re-spending of fuel and maintenance savings. All told, by 2050, full ACC II adoption could create nearly 300,000 additional jobs. Job gains could be even larger depending on the impact of IRA tax credits for battery and vehicle manufacturers.
No time to waste
Several other policies are important alongside ACC II adoption to ensure a smooth and equitable transition. State incentives, particularly for low-income households, can help ensure equitable access to EVs alongside sales standards like ACC II, especially as IRA tax credits expire. States must also continue to support charging infrastructure deployment through incentives, especially in transportation corridors and underserved communities.
Finally, with or without ACC II, state policymakers need to plan for the coming surge in EV adoption by updating buildings codes, improving utility planning, and implementing clean electricity standards to get the most value of the coming surge in EV sales and ensure a smooth transition.
The ACC II standard empowers states to take full advantage of IRA incentives to strengthen their economies and lower household energy costs. Increasing the number of EVs on roads will cut state GHG emissions and deliver health benefits to local communities. Gas prices are on the rise again after OPEC announced new production cuts, so there’s no time to waste—ACC II will significantly benefit those states bold enough to adopt it.
