That argument can be made about the tax incentives.

However, regulations about emissions are intrinsically something we want, and we shouldn’t hold back on that just because gas cars can’t get to the level of emissions we need.

When the oil industry doesn’t have to pay to clean up their externalities we already don’t have a free market. You break it you pay. Fixing the externalities by incentivizing better technology is at minimum a correction to the market.