The American automotive sector is bracing for a major transformation in the coming years, largely driven by four ambitious clean-car policies to phase out tailpipe emissions. Arthur van Benthem, associate professor of business economics and public policy at the Wharton School, and M. Danial Syed, a research analyst at Wharton, explain what the four cornerstone policies are, and the legal and political threats the policies face.

This year, new regulations issued by the Biden administration are projected to increase the market share of electric vehicles in new-car sales to 56% by 2032, up from about 8% in 2023. An additional 16% of new vehicles are likely to be plug-in hybrid electric vehicles. The projected gasoline equivalent of this new-vehicle fleet in 2032 translates to an average fuel economy of 58 miles per gallon.

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