An indisputable fact about our planet is that its atmospheric temperature has risen dramatically during the past century. Combustion of fossil fuels and their subsequent greenhouse gas emissions are thought to be the main contributors to recent changes within the Earth’s ecosystem. The transportation sector and electricity generating power plants are each responsible for approximately one-third of these emissions. Shifting towards a cleaner and renewable resources to generate electricity is believed to omit a big portion of polluting substances. Improvements in vehicles’ fuel efficiency and the introduction of alternative fuels besides strategic plans to control travel demand are among the most promising approaches to alleviate emissions from the transportation sector. Recent technology advancements, however, drew much attention to the production and manufacturing of alternative fuel vehicles, electric vehicles in particular. Since these vehicles use electricity as part of or all their powertrain, assessing the amount of emissions they produce is closely tied to the cleanliness of the electricity source. In order for a valid comparison to be made between internal combustion and electric vehicles, hence, a life cycle assessment procedure needs to be followed from production stages to terminal life of vehicles. Involvement of numerous affecting factors during the lifetime of a vehicle on one hand, and the ambiguity in the exact source of electricity used to charge electric vehicles on the other hand bring about more complexities. The latter case is more commonly known as the marginal grid problem, which deals with how a combination of sources used to generate electricity can influence the life cycle emissions. There are also other concerns regarding the growth in fuel-efficient and electric vehicles. Transportation planners argue that new developments in the vehicle industry may attract more people to owning and driving cars. This phenomenon which is better known as a rebound effect not only will result in increased traffic congestion, but it can also outpace the environmental benefits from utilizing electric vehicles. Moreover, since fuel taxes comprise the majority of Highway Trust Funds, alternative ways to compensate for state and federal revenues should be devised. This paper is an attempt to review the existing literature to better elaborate on the role of the transportation sector in controlling climate change threats. More specifically, issues around the use of electric vehicles and how they can contribute to more environmentally friendly communities are discussed.