Low-emission vehicle technologies are needed to mitigate rising greenhouse gas emissions from passenger light-duty vehicles (PLDVs). Policy incentives send a signal to consumers and car manufacturers to influence purchasing decisions and the adoption of low-emission vehicles. In this thesis, an innovative model formulation is developed to represent consumer group diversity by capturing different vehicle technologies and engine types. This thesis contributes to the existing literature by modelling and quantifying the impact of different policy measures across five countries, the US, the UK, Japan, China and India. I first explore how policy instruments, such as the annual registration tax, EV subsidy, fuel tax, EV mandate and fuel economy regulations, impact the diffusion of various PLDV technologies and CO2 emissions at different levels. Subsequently, by studying the interactions between policy instruments, I uncover the trade-off effect and reinforcement effect between the different policy incentives, and how the interactions between policy incentives influence the effectiveness and efficiency of policy instruments in reducing PLDV CO2 emissions in different countries. This research explores how income changes in different countries impact PLDV choice and the effectiveness of each policy instrument in reducing PLDV emissions. The findings of this research indicate that policy instrument effectiveness varies between countries and specifically depends on the levels of incentive, the design of the policy incentives and the existing markets for low emission vehicles. Financial incentives such as taxes and EV subsidies are more effective in China and the UK. Fuel economy regulation is more effective in the US, where, on average, engine sizes for conventional cars are large. While I find that there is a general trade-off effect between the financial incentives (i.e. the annual registration tax, fuel tax and EV subsidies), there is also a reinforcement effect between the EV mandate programme and all other policy incentives. Overall, I find that the income effect leads to a small increase in cumulative emissions from PLDVs in the UK, the US, Japan and India, due to the diffusion of luxury vehicles at the expense of small vehicles. In the case of China, I find that cumulative emissions from PLDVs decrease as income increases due to EV diffusion.