Over the last several years, governments around the world have made bold announcements about phasing out internal combustion engine vehicles (ICEVs) and transitioning to electric vehicles (zero tailpipe emission vehicles, or ZEVs). The headlines have been big. The ambitions, high.
But how much of this is translating into real, enforceable policy?
In my latest research update for clients—part of an annual tracking series I’ve published since 2016—I focus on this critical question. And the answer remains: not much. The reality isn’t keeping pace with the rhetoric.
Key Takeaways from the 2025 Update
- 70+ countries have announced ICEV phaseouts or ZEV sales targets.
But only a handful—Canada, the EU-27, the UK, and China through its New Energy Vehicle (NEV) program—have binding, enforceable mandates to back up those announcements. - Hybrid flexibility and compliance credit schemes are becoming more of a norm.
The UK, for example, allows plug-in hybrids to count toward compliance through 2035 and has relaxed penalties on automakers for noncompliance. The EU is proposing a three-year averaging system for CO₂ compliance, extending flexibility well into the decade. - The U.S. is now actively rolling back its ZEV-supporting policies.
Under the new Administration, EPA’s 2024 GHG vehicle standards are under reconsideration, with revocation certain. In fact, I question whether there will even be EPA-developed GHG standards in this Administration at all. Meantime, it is pursuing multiple avenues to revoke California’s waiver for its Advanced Clean Car (ACC II) program, including invoking the Congressional Review Act (CRA) (which could result in Congress overturning the waiver) and direct agency action. - China remains the global leader on durable EV policy.
With an aggressive NEV credit system and strong market incentives (including tax exemptions), China continues to drive EV adoption at scale. In March 2025, NEVs surpassed 50% of new passenger vehicle sales—achieving what many other markets are still debating. Consistent, durable, certain policy helped the market get there.
What It All Means
The gap between ambition and execution continues to widen. Many ZEV-related targets announced since COP26 remain aspirational rather than enforceable. According to the International Council on Clean Transportation (ICCT), only about 20% of the global light-duty vehicle market is currently covered by policies likely to deliver 100% ZEV sales commitments—and even that number is optimistic given impending rollbacks.
Political volatility is now one of the biggest risks to ZEV deployment. And tariffs, including those imposed by the U.S. on EVs and batteries from China, will also introduce significant friction into global EV supply chains. This is already creating market uncertainty not just in the U.S. but also in Canada and Europe, where these trade tensions will likely delay progress toward announced ZEV timelines.
A Core Lesson: Durability Matters as Much as Ambition
The true test of any policy is not in the press release and talkshops at the COPs—it’s in the design, implementation and enforcement. That’s going pretty abysmally for ZEV. Moreover, all three of the foregoing policy elements should account for market realities, consumer demand and their ability to shoulder the cost burden (they always do though most simply cannot), technological development and maybe especially, political volatility. On the last point, that is not going away and so stakeholders are going to have to find ways to risk manage. Right now, I see very few markets that have laid the regulatory and institutional foundation necessary to sustain momentum through these challenges.
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