This chapter examines policy drivers of battery electric vehicles (EVs) and plug-in hybrid EVs, the current and anticipated impacts on carbon emissions, as well as what potential role policy can play in enhancing the innovation system and market development around such vehicles in the future. The authors start with a policy review of key targets in the Nordic countries and the EU, up to 2030, and they discuss to what extent they are consistent with industry and expert estimates of how the systems can grow. On the basis of this, the second part of the chapter elaborates two simple scenarios of EV development in the EU: one breakthrough expansion scenario and one incremental expansion scenario. Building on that is an analysis of the climate impacts of the two scenarios, given different assumptions relating to, for example, electricity production as well as EV penetration in the fleet. The third part examines what policy drivers might be needed to enable the breakthrough scenario, using a technological innovation systems perspective to describe the needed processes, drivers and developments.