In the summer of 2008, the United States of America experienced an oil shock, first of a kind since 1970s. The American public became sensitized to the concerns about foreign oil supply and climate change and global warming, and to the role of transportation in emissions of carbon dioxide and other greenhouse gases (GHG). Several proposed federal policies impose stringent limits on the transportation sector, in terms of fuel consumption and GHG emissions. Within transportation sector, light duty vehicles (LDVs) - cars, light trucks and SUVs - currently emit the most GHGs. Hybrid technology emerged as a promising option to address several of these challenges. A modern hybrid electric vehicle (HEV) offers significantly better fuel economy together with lower levels of pollutant and CO2 emissions. HEVs are currently categorized as Advanced Technology Partial Zero Emission Vehicles (AT-PZEV) by California Air Resource Board. Recently, a new generation of vehicles, plug-in hybrid electric vehicles (PHEV), has been announced in the immediate future by major auto manufacturers. While HEVs have a relatively small battery that is recharged by the engine or by regenerative braking, a larger battery of a PHEV and a charger allows a vehicle owner to recharge the battery from the electric grid. The plug-in technology further increases fuel economy and reduces emissions from the tailpipe. For example, a Chevrolet Volt PHEV is expected to be launched as 2011 model with 40 mile allelectric travel with no tailpipe emissions. However, there are multiple challenges associated with the new technology. HEVs and PHEVs incur higher costs due to additional components, such as electric motors and motor controllers, and a battery. Today's batteries provide energy storage density hundred times lower than that of gasoline. Electricity consumed by hybrids is generated by coal and other fossil fuel power plants that emit harmful chemicals and greenhouse gases. The infrastructure for electric cars is at the infancy stage. Some government policies designed to introduce all-electric cars, such as the California ZEV mandate of the late 1990s, failed to introduce a sustained number of electric vehicles to the market. To provide an integrated approach to the causes and effects of electrified powertrains, two plausible scenarios of advanced vehicle market penetration were developed. Federal policies and consumer preferences were considered as primary drivers. Biofuels were considered alongside fossil fuels as primary energy sources for transportation. Rapid adoption of PHEVs was found to cause a perceptible, but not a significant increase in electric power demand. The scenarios demonstrated ability to achieve fuel economy milestones and quantified the challenge of achieving 80% reduction in greenhouse gas emissions by 2050.