Electric vehicles (EV) are emerging as a mobility solution to reduce emissions in the transportation sector. The studies environmental impact analysis of EVs in the literature are based on the average energy mix or pre-defined generation scenarios and construct policy recommendations with a cost minimization objective. However, the environmental performance of EVs depends on the source of the marginal electricity provided to the grid and single objective models do not provide a thorough analysis on the economic and environmental impacts of EVs. In this paper, these gaps are addressed by a four step methodology that analyzes the effects of EVs under different charging and market penetration scenarios. The methodology includes a bi-criteria optimization model representing the electricity market operations. The results from a real-life case analysis show that EVs decrease costs and emissions significantly compared to conventional vehicles. (C) 2016 Elsevier Ltd. All rights reserved.