A method to analyze the demand of electricity and the reduction of CO2 emission and oil consumption by PHEV is established. Using the performance of PHEV optimized by EPRI and an estimation on the pattern of driving and charging in Japan, the following results are obtained. The electric demand for PHEV60 (which has 60 mile EV range) and PHEV20 (which has 20 mile EV range) is evaluated at 79.3 billion kWh and 41.2 billion kWh, respectively, in case that all vehicles in Japan (80 million cars) would be replaced by PHEV. The load leveling effect on the Japanese grid, which is hypothetically considered as one electric grid system, is evaluated at about 30 million kW, in case that all vehicles in Japan are replaced by PHEV60 and charged in the midnight. However, when the charge of PHEVs starts in the evening, that effect is not obtained. The reduction of CO2 emission results in 64 million ton by the averaged CO2 emissions intensity (emissions per unit of user end electricity) in Japan, and 98 million ton by electricity from the nonfossil power plant such as nuclear energy or renewable one. Those values are equivalent to 25% and 38% of CO2 emission from the transport sector in Japan in 2003. Hence, non-fossil power plant enhances the reduction of CO2 emission by the PHEV introduction.