Rethinking EV Policy: A Smarter Standard for a Smarter EV

By Fred Surr, EREVNow 

July 24th, 2025

Recent Federal uncertainty notwithstanding, America’s electric vehicle (EV) policy is at an inflection point. While the federal government and several states have had attractive incentives for EVs, the numbers tell a stubborn story: fewer than 1% of vehicles on U.S. roads are electric, and EV sales growth has plateaued. Even with rising interest, adoption is stalling. Why?

Part of the answer lies not in what policymakers are doing - but in what they’re not doing.

“We're not just [appreciating] range anxiety [is a barrier for consumers],” says Stewart Stropp, executive director of EV intelligence at J.D. Power. “It’s the exceptional use case - like a vacation road trip - that’s holding shoppers back”. (2023 Electronics 360). His firm found that nearly half of drivers still cite lack of charging infrastructure as the main reason they won’t buy an EV.

While regulators have focused on supporting battery electric vehicles (EVs), it’s time for a closer look at a less well known, highly practical alternative: the Extended-Range Electric Vehicle (EREV) - an EV with a small gas engine under the hood, the sole purpose of which is to run a generator when the battery runs low.  For EREV drivers, the gas station is their on-the-road charging station.

Why EREVs Deserve Regulatory Attention

EREVs aren’t plug-in hybrids (PHEVs). PHEVs are mostly gasoline driven vehicles, with electric motors and small battery packs for short (30-60 mile) drives. In an EREV, the gas engine never powers the wheels.  It’s an EV with an on-board generator.

And this distinction is more than technical - it’s regulatory.

Under current U.S. Environmental Protection Agency (EPA) rules, an EREV doesn’t qualify as an EV unless its battery range exceeds its gasoline generator range.  This constraint is well-intentioned, but highly counterproductive. The BMW ix3, an EREV sold in the US from 2016-21, had a 60-mile battery range, and these regulatory constraints limited the range extender to a 2-1/2 gallon gas tank (that’s not a typo). Giving that great little car a 6-gallon tank would have resulted in a 300-mile range, which could have made the car a big winner.

In California, the Advanced Clean Cars II rule does allow up to 20% of of EVs to be plug-in hybrids or EREVs - but range extenders still must have less range than the battery. 

A realistic EREV - with, say, a 150 mile battery range and 6 gallon tank, would still cut emissions 85-90% for the average driver, but they won’t meet current regulations.  

EREVs can make an impact – right now.  All they need is a clear regulatory on-ramp, at either the federal or state level.

Learning from China — Before They Win the Race

China has taken a different approach to vehicle electrification. Instead of drawing hard lines between EVs, hybrids, and EREVs, the country has embraced all of them under the “new energy vehicle” umbrella. And the results have been dramatic.

In 2024 alone, EREV sales jumped 79% to 1.2 million units in China - more than the U.S. total for all EVs that year. (Reuters, April 2025) Chinese regulators saw that supporting a diversity of electrified options could help consumers transition at their own pace - without waiting for perfect infrastructure. In contrast, the U.S. has favored an EV-or-bust approach, tying many incentives to criteria that EREVs may not satisfy unless regulators explicitly include them. The result? A class of cars that could dramatically increase electric vehicle adoption is being left on the sidelines.

Avoiding Past Mistakes

The window for smart regulation is narrow. The U.S. is already seeing consumer fatigue around pure EVs, especially in rural areas, colder climates, and among drivers without at-home charging.

“There’s a sizable segment [of consumers] who would consider an EREV for their next vehicle purchase if the option were available,” McKinsey reported. “Two-thirds of these potential buyers noted an intent to purchase an ICE or hybrid vehicle in the absence of an EREV option.” (McKinsey & Company, Feb 2024 report)

In other words, if policymakers fail to support EREVs now, many consumers will simply remain in gasoline-powered vehicles - or worse, switch from EVs back to gas. McKinsey also found that 46% of U.S. EV owners were considering returning to gas-powered cars because of charging challenges.” 

A Call for Regulatory Clarity

So, what would smarter EREV policy look like?

• Define EREVs as electric vehicles in all federal and state frameworks - distinguishing them clearly from PHEVs and hybrids.
• Ensure EREVs qualify for existing EV incentives when they meet battery range thresholds, regardless of gas tank size.
• Support uniform standards across states to prevent a patchwork that confuses consumers and discourages automakers.

Kathy Harris, Director of Clean Vehicles Policy at the NRDC, puts it plainly: “The future is fully electric... but many drivers are worried about going fully electric. While the country continues to build out a robust charging network, EREVs can be a good choice for some of them”. (Wired 2024-11-03)

Let the Market Work — But Level the Field

EREVs won’t replace EVs. They don’t need to. But they can play a pivotal role in decarbonizing transportation over the next decade - especially if regulators support them with clarity and consistency.

“EREVs could help smooth the transition from ICE vehicles to BEVs,” McKinsey concluded. “For OEMs to benefit... achieving an expeditious time to market is critical”. (McKinsey & Company, Feb 2024 report)

EREVs are a practical path forward - and public policy should treat them as such.