Electric vehicles (EVs) have known to have a potential for deep reduction in oil consumption and emissions, but their successful adoption requires technological advances (batteries) and overcoming customer barriers (high upfront cost). In this research, we analyze the impacts of introducing inexpensive and efficient EVs on energy use and emissions from the U.S. transportation sector using an integrated energy model, conduct life cycle assessment (LCA) for a pyrite battery suitable for EV applications, and design efficient regionally targeted subsidies using a modified cascading diffusion model which minimizes the social costs (MSC) of driving EVs in place of gasoline vehicles (GVs). Different policy scenarios targeting the well-to-wheel cycle are explored to examine the impacts of greater EV penetration in the U.S. light duty vehicle (LDV) fleet from now to 2055. Our results show that having 50% of the feet demands fulfilled by BEVs as a result of technology advances can reduce the emissions from the LDV sector significantly, but the reductions in economy-wide emissions are smaller. LCA is conducted on a newly developed solid-state lithium pyrite battery to understand the impacts of vehicle cycle. The results show that the cumulative energy demand (CED) and global warming potential (GWP) impacts associated with battery production are significantly lower than well-to-wheel energy consumption and emissions. The comparison between impacts of pyrite and Li-ion batteries are limited to GWP and CED, and the impacts of pyrite battery are comparable to those of LIBs. To design more efficient subsidies for the purchase of EVs, we augment the cascading diffusion model, which designs the minimum subsidy based on customers direct willingness-to-pay, to minimize the social cost (subsidy minus external benefits) by incorporating regionally differentiated air quality and climate externalities from EVs. The results show that the environmental externalities from driving EVs in place of GVs vary significantly across the regions. When the environmental externalities are incorporated into the U.S. regional market curves, the most favorable region to start the cascading diffusion changes. Subsidies designed based on the MSC model are slightly higher than those from the original model, but their social cost is significantly lower.