United States
Environmental Protection
Agency
Office of Transportation and Air Quality EPA420-R-05-012
www.epa.gov/otaq/technology October 2005
Interim Report: New Powertrain
Technologies and Their
Projected Costs
-------
EPA420-R-05-012
October 2005
Interim Report: New Powertrain Technologies and
Their Projected Costs
Jeff Al son
Benjamin Ellies
David Ganss
Transportation and Climate Division
Office of Transportation and Air Quality
U.S. Environmental Protection Agency
NOTICE
This interim report presents technical analysis of issues using data that are currently
available to EPA. It does not represent final EPA decisions or positions. EPA
welcomes comments from interested parties, and will make appropriate
changes to this analysis as relevant information becomes available.
-------
Table of Contents
Table of Contents i
Abstract 1
Executive Summary 2
1. Introduction 6
1.1 Technologies Evaluated in This Report 6
1.2 Vehicle Classes 7
1.3 Technology-Specific Inputs 7
1.4 Common Assumptions Used in the Economic Comparisons 8
1.4.1 Economies of Scale 8
1.4.2 Retail Price Equivalent 9
1.4.3 Laboratory-to-Road Fuel Economy Adjustment 9
1.4.4 Vehicle Miles Traveled Profile 10
1.4.5 Fuel Price 10
1.4.6 Discount Rate 10
1.4.7 Operating Costs and Consumer Payback 11
1.4.7.1 Fuel Savings 11
1.4.7.2 Warranty and Maintenance Issues 11
1.4.7'.3 Brake Maintenance Savings 11
I A.I A Non-Brake Maintenance Issues 12
1.4.7.5 Potential Refueling Time Savings 12
1.4.8 Federal Tax Treatment 13
1.4.9 Market Externalities 13
1.5 Metrics for Economic Comparisons 13
References 15
2. Gasoline Vehicle Technology Package 16
2.1 Technology Description 16
2.1.1 Technologies Already in the Marketplace 17
2.1.2 NAS Technology Packages 18
2.1.3 NESCCAF Technology Packages 20
2.2 Technology-Specific Inputs 22
2.2.1 NAS Package Fuel Economy Improvement 22
2.2.2 NESCCAF Package Derived Fuel Economy Improvement 23
2.2.3 Incremental Retail Price 24
2.3 Economic Results 25
References 27
3. Diesel Engine 28
3.1 Technology Description 28
3.2 Technology-Specific Inputs 29
3.2.1 Fuel Economy Improvement 30
3.2.2 Incremental Retail Price 31
3.2.3 Federal Income Tax Deduction 33
References 35
4. Gasoline/Battery Hybrid 36
-------
4.1 Technology Description 36
4.1.1 Belt Starter-Generator (BSG) 37
4.1.2 Honda Integrated Motor Assist (IMA) 38
4.1.3 Toyota Hybrid Synergy Drive 39
4.1.4 GM Dual-Mode Hybrid System 40
4.1.5 Plug-in Hybrids 40
4.2 Technology-Specific Inputs 41
4.2.1 Fuel Economy Improvement 42
4.2.2 Incremental Retail Price 45
4.2.3 Battery Life and Cost 47
4.2.4 Electric Motor Development and Cost 48
4.2.5 Brake Maintenance 48
4.2.6 Federal Income Tax Deduction 48
4.3 Economic Results 49
References 50
5. Diesel/Battery Hybrid. 54
5.1 Technology Description 54
5.2 Technology-Specific Inputs 55
5.2.1 Fuel Economy Improvement 55
5.2.2 Incremental Retail Price 57
5.2.3 Federal Income Tax Deduction 57
5.3 Economic Results 57
References 59
Conclusions 60
Appendix A: Sample Consumer Payback and Savings Calculations 62
Appendix B: Diesel Aftertreatment Costs 66
Appendix C: Sensitivity of Consumer Payback to Fuel Price 68
Appendix D: Sensitivity of Consumer Payback to Retail Price Equivalent Factor. 70
Appendix E: External Reviewer Comments and Responses 72
E.I Economic Methodology and Assumptions 72
E.2 Gasoline Vehicle Technology Packages 74
E.3 Diesel Engines 74
E.4 Gasoline / Electric Hybrids 76
E.5 Diesel / Electric Hybrids 77
11
-------
Abstract
This interim report projects the cost effectiveness, from a consumer perspective, of four
technology strategies capable of improving new personal vehicle fuel economy over the
next decade: packages of individual gasoline vehicle technologies, advanced diesel
engines, gasoline electric hybrids, and diesel electric hybrids. These economic
projections are based on a future high-volume scenario where economies-of-scale for
these technologies are similar to those for conventional vehicles today. They do not
account for the higher manufacturer and consumer costs during a transition period.
Based on EPA's review of the technical literature, all of these technology packages are
projected to increase personal vehicle retail cost, ranging from around $1000 for a
gasoline vehicle package in a midsize car to about $6000 for a diesel electric hybrid in a
large SUV. But, by increasing vehicle fuel economy by 20% to 70%, these technologies
will also reduce vehicle operating costs (primarily fuel expenditures). This report
projects the consumer payback period, i.e., how many years it takes for a consumer to
recoup in discounted operating savings an amount equal to the higher initial cost of the
vehicle.
Based on a set of common economic assumptions, these technologies are projected to pay
back to consumers in 2 to 11 years. Since all of these technologies pay back in less than
the projected 14-year life of a vehicle, they would all provide net savings over a typical
vehicle lifetime. These discounted lifetime savings range from $300 for one of the
midsize car scenarios to over $4000 for some of the large SUV scenarios. In all cases,
the payback period is shorter and the lifetime savings are greater when the advanced
technologies are used in a large SUV rather than in a midsize car.
The assumed 14-year lifetime accounts for all the consumers who own the vehicle over
that timeframe. Individual consumers who buy an advanced technology vehicle and sell
the vehicle prior to the 14th year may or may not achieve payback depending on whether
vehicle resale value reflects future operating cost savings.
This report makes two important conclusions:
• Multiple powertrain technologies have the potential to offer personal vehicle fuel
economy improvements of 20% to 50% compared to today's gasoline vehicles;
diesel electric hybrids have the potential to increase fuel economy by 70%.
• All of these technology packages pay back to consumers collectively over a 14-
year timeframe, and many will pay back to individual consumers who own
vehicles for less than 14 years.
These results should not be taken to imply that these technologies will necessarily move
into the mainstream market in the near future. Decisions by manufacturers to invest in,
and consumers to buy, new technologies involve many factors well beyond the scope of
this paper. The point of this paper is not to predict future manufacturer or consumer
behavior, but rather to project the cost effectiveness if they do adopt new personal vehicle
technologies.
1
-------
Executive Summary
This interim study examines the cost-effectiveness of automotive powertrain technologies
with the potential for significantly improving new personal vehicle fuel economy in the
next 5 to 10 years. It relies on independent projections of fuel economy improvement
potential and incremental cost for individual technologies, and evaluates the technologies
on a common economic basis. This study uses two consumer metrics for economic
comparisons: the number of years that it would take for a consumer to pay back his or
her up front investment in the fuel economy technology with discounted operating cost
savings over time, and the net discounted consumer savings over a typical 14-year
vehicle lifetime.
The economic projections in this report are based on a future high-volume scenario where
the economies of scale and relative profit for the advanced technology vehicles approach
those for high-volume conventional vehicles today. Costs for new technologies will
undoubtedly be higher during a transition period when economies of scale will be much
lower and there will be a series of initial investments, but estimates of these transition
costs are beyond the scope of this paper. On the other hand, costs may ultimately be
lower than those projected here for any technology that achieves long-term market
maturity, as sustained market share would justify continued cost reduction that cannot be
predicted at this time.
The four technologies evaluated in this study are:
• various packages of "incremental" improvements to gasoline vehicles
• advanced diesel engines
• gasoline/battery hybrid vehicles
• diesel/battery hybrid vehicles
The first three technologies are, at least in part, already commercialized in multiple
personal vehicle models in one or more of the major world automotive markets.
This study evaluates the new powertrain technologies in two specific vehicle
applications: large sport utility vehicles (SUVs) with four-wheel drive, and midsize cars
with front-wheel drive. In general, this report assumes no change in vehicle size or 0-to-
60 mile per hour acceleration performance; however, some of the referenced literature
anticipates an increase in acceleration or torque performance for the diesel and hybrid
vehicles (which is consistent with current market trends). Assuming equal fuel tank size,
advanced technology vehicles will always provide increased vehicle range relative to
conventional vehicles.
This analysis requires both technology-specific inputs as well as a generic set of common
economic assumptions.
The primary technology-specific inputs are projections of fuel economy improvement
potential and incremental retail cost. EPA reviewed the technical literature and selected
technology projections by independent experts for each of the technologies. The two sets
-------
of technology projections for gasoline vehicle technology packages were derived from
studies by the National Academy of Sciences (NAS) and the Northeast States Center for a
Clean Air Future (NESCCAF). One set of diesel vehicle projections was based on work
done by FEV Engine Technology, Inc. and EPA, while the second was based on a study
by Oak Ridge National Laboratory (ORNL). The two sets of technology projections for
gasoline/battery hybrid vehicles were drawn from reports by the Electric Power Research
Institute (EPRI) and ORNL. Finally, EPA derived the technology projections for
diesel/battery hybrids based on information from several sources. In order to put all of
the cost projections on a comparable basis, EPA adjusted cost projections of the
independent studies to reflect the retail markup used by EPA in regulatory decisions.
Important technology-specific inputs are shown in the first three columns of Tables ES-1
through ES-4 (for Gasoline Vehicles, Advanced Diesel Vehicles, Gasoline/Battery
Hybrids, and Diesel/Battery Hybrids, respectively).
The technology packages are projected to improve fuel economy from 20% (NAS
gasoline technology package for the midsize car) to 72% (EPA diesel/battery hybrid for
the large SUV). The incremental prices of the various technology packages are predicted
to range from $712 (NAS gasoline technology package for the midsize car) to $5912
(EPA diesel/battery hybrid for the large SUV).
Table ES-1: Key Results for Gasoline Vehicles
Large
SUV
Midsize
Car
NAS
NESCCAF
NAS
NESCCAF
Fuel Economy
Improvement
(%)
42%
31%
20%
41%
CO2
Reduction
(%)
30%
24%
17%
29%
Vehicle Price
Increase*
($)
$1,467
$1,619
$712
$1,318
Consumer
Payback
(years)
1.8
2.5
3.8
3.9
Lifetime
Savings
($)
$4,386
$3,288
$897
$1,552
* Cost values adjusted to reflect use of EPA's 1.26 retail markup factor as discussed in Section 1.4.2.
Table ES-2: Key Results for Advanced Diesel Vehicles
Large
SUV
Midsize
Car
FEV/EPA
ORNL
FEV/EPA
ORNL
Fuel Economy
Improvement
(%)
41%
33%
40%
33%
CO2 Reduction
Vehicle Lifecycle1
(%) (%)
18%
14%
18%
14%
21%
16%
21%
16%
Vehicle
Price
Increase*
$1,760
$2,560
$1,252
$1,810
Consumer
Payback
(years)
2.1
4.1
3.8
7.7
Lifetime
Savings
($)
$4,284
$2,597
$1,563
$634
* Cost values adjusted to reflect use of EPA's 1.26 retail markup factor as discussed in Section 1.4.2.
1 This column adds the difference in diesel fuel production refining impacts to the vehicle CO2 reduction
figures. On a lifecycle basis, the total benefit of diesel engines is somewhat higher because there are higher
per-gallon energy losses for gasoline production than for diesel production.
3
-------
Table ES-3: Key Results for Gasoline/Battery Hybrid Vehicles
Large
SUV
Midsize
Car
EPRI
ORNL
EPRI
ORNL
Fuel Economy
Improvement
(%)
52%
35%
45%
40%
C02
Reduction
(%)
34%
26%
31%
29%
Vehicle Price
Increase*
($)
$4,464
$3,039
$2,500
$2,683
Consumer
Payback
(years)
5.0
4.1
7.4
9.5
Lifetime
Savings
($)
$3,179
$2,882
$934
$509
* Cost values adjusted to reflect use of EPA's 1.26 retail markup factor as discussed in Section 1.4.2.
Table ES-4: Key Results for Diesel/Battery Hybrid Vehicles
Large
SUV
Midsize
Car
EPA-
derived
EPA-
derived
Fuel Economy
Improvement
(%)
72%
71%
CO2 Reduction
Vehicle Lifecycle
(%) (%)
33%
33%
35%
35%
Vehicle Price
Increase*
($)
$5,912
$4,123
Consumer
Payback
(years)
5.8
11.4
Lifetime
Savings
($)
$3,321
$344
* Cost values adjusted to reflect use of EPA's 1.26 retail markup factor as discussed in Section 1.4.2.
To ensure methodological consistency in the economic comparisons (from a consumer
perspective of the various technologies), this study evaluates each technology on a
common economic basis with the following assumptions:
• economies-of-scale based on a high-volume, mature production scenario
• retail markup factor of 1.26
• downward laboratory-to-road fuel economy adjustment of 0.85
• 14-year vehicle miles traveled profile based on EPA's MOBILE6 emissions
model
• nominal gasoline and diesel fuel price of $2.25 per gallon
• discount rate of 7 percent per year
• equivalent operating costs except for fuel expenditures and, for hybrid
vehicles, brake maintenance expenditures
• no federal tax credit for hybrids or diesels
• no market externalities
The final two columns of Tables ES-1 through ES-4 show projections for the two most
important economic outputs of this analysis: consumer payback and net lifetime
consumer savings. Projections of the consumer paybacks for the various technologies
range from about 2 years (for both gasoline packages and the FEV/EPA diesel package
for the large SUV) to over 11 years (EPA diesel/battery hybrid package for the midsize
car). In every case, the analysis projects that the new technologies will have shorter
payback periods for an owner of a large SUV than for an owner of a midsize car.
Industry statements suggest that cost paybacks of 3-4 years or less are generally
-------
necessary to stimulate market-driven introduction of new technologies. Several of the
technologies appear to meet this threshold.
Since all of the technology packages have projected consumer payback periods of less
than 14 years, they also have projected net lifetime consumer savings as well. The
projected net lifetime savings range from $2600 to $4400 for large SUVs and from $300
to $1600 for midsize cars. These lifetime savings will accrue collectively to all
individual consumers who own the vehicle during the assumed 14-year lifetime.
Individual consumers who buy a new advanced technology vehicle and sell the vehicle
prior to the 14th year will realize smaller savings (and even net costs if they sell before the
payback period) unless vehicle resale value reflects the future savings associated with the
technology.
The actual fuel economy improvement and cost of emerging powertrain technologies will
not be known unless and until they are commercialized and sustain reasonable
economies-of-scale. Such comparisons are certain to change as these technologies
continue to be developed and refined. It is also likely that the best powertrain choices for
individual vehicle models will vary by manufacturer, vehicle class, and/or consumer
preferences with respect to vehicle attributes other than the economic metrics used in this
paper.
This report makes two important conclusions:
• Multiple powertrain technologies have the potential to offer personal vehicle fuel
economy improvements of 20% to 50%, and diesel electric hybrids have the
potential to increase fuel economy by 70%.
• All of these technology packages pay back to consumers collectively over a 14-
year timeframe, and many will pay back to individual consumers who own
vehicles for less than 14 years.
While no one can predict at this time which future technologies will be most popular, the
technologies studied in this paper are projected to be cost-effective, provide significant
fuel savings, and provide equivalent or better vehicle performance and utility.
These results should not be taken to imply that these technologies will necessarily move
into the mainstream market in the near future. Decisions by manufacturers to invest in,
and consumers to buy, new technologies involve many factors well beyond the scope of
this paper. The point of this paper is not to predict future manufacturer or consumer
behavior, but rather to project the cost effectiveness, on a collective consumer basis, if
they do adopt new personal vehicle technologies.
In August 2005, EPA asked 15 individuals to provide a technical review of a draft of this
report. As of October 12, 2005, EPA had received comments from 8 of these reviewers.
The most important comments, and EPA's responses to these comments, are summarized
in Appendix E. EPA welcomes additional comments on this interim report.
-------
1. Introduction
Both the automobile industry and the federal government have large research and
development programs to develop and evaluate new technologies for improving vehicle
fuel economy. However, there is much disagreement within the large body of literature
describing advanced vehicle technologies, not only with respect to substantive issues of
fuel economy improvement potential and cost, but also on methodological issues
involving economic assumptions used in the various analyses.
The purpose of this paper is to:
• summarize recent independent estimates of the likely fuel economy and cost
impacts of new automotive technologies that have the potential to be
commercialized in the next 5 to 10 years, and to
• place these estimates on a common economic basis to allow an economic
comparison (from a consumer perspective) of the various technologies based on
the best current technology projections.
1.1 Technologies Evaluated in This Report
This study examines four automotive powertrain technologies with the potential for
significantly improving new personal vehicle fuel economy in the near term.
The first three technologies in this study are, at least in part, already commercialized in
multiple personal vehicle models in one or more of the major world automotive markets:
various packages of "incremental" improvements to gasoline vehicles, advanced diesel
engines, and gasoline/battery hybrid vehicles. Many of the individual technologies in the
gasoline vehicle package have been incorporated into certain production vehicles,
particularly in the European and Japanese markets. One-half of new personal vehicle
sales in Europe now are diesel vehicles. Nine gasoline/battery hybrid models are on sale
in the U.S. market, and manufacturers have announced plans for several other models to
be introduced in the next 2 to 3 years.
The fourth technology—diesel/battery hybrids—is not currently commercialized in the
personal vehicle market anywhere in the world, but is under development and will likely
be considered for commercialization in the next decade.
Two technologies that are not part of this study are hydraulic hybrid vehicles and fuel cell
vehicles. EPA is optimistic about the potential of hydraulic hybrid and fuel cell vehicles
in the long term, but these technologies are still under development and no personal
vehicle manufacturer has yet made production commitments. Several private companies,
such as Eaton Corporation and Parker-Hannifm Corporation, are actively developing
hydraulic hybrid applications for heavy-duty applications. EPA is a leader in the
development of hydraulic hybrid technology, and recently provided detailed projections
on cost and fuel economy improvement for personal vehicle applications for hydraulic
hybrids. [Reference 1-1] Fuel cell vehicles are the subject of intense research and
-------
development within both the industry and the federal government's FreedomCar project,
but it will likely be some time before anyone can project future fuel cell vehicle cost with
confidence.
1.2 Vehicle Classes
This report focuses on two vehicle classes which, because of their high sales volumes,
have the potential to yield large aggregate fuel and carbon savings: large sport utility
vehicles (SUVs) with 4-wheel drive (e.g., Dodge Durango, Ford Expedition) and midsize
cars with front wheel drive (e.g., Chevrolet Malibu, Honda Accord). These two classes
alone represent over 25% of the overall personal vehicle market and a higher proportion
of overall fuel use and carbon emissions. [Reference 1-2] The impact of various
technologies on fuel economy and cost for these high-volume classes will translate to
other vehicle classes in varying degrees.
Based on representative vehicles in the 2002 model year federal fuel economy database,
the baseline large SUV vehicle is assumed to have a curb weight of about 5300 pounds, a
composite city/highway, laboratory fuel economy of 17.2 mpg, and an adjusted "label"
composite fuel economy of 14.6 mpg. The baseline midsize car is assumed to have a
curb weight of about 3200 pounds, a composite city/highway, laboratory fuel economy of
29.0 mpg, and an adjusted "label" composite fuel economy of 24.7 mpg.
This study assumes no change in vehicle size. In general, the report assumes no change
in vehicle performance as well, but sometimes diesels and hybrids are assumed to have
increased torque and/or acceleration performance consistent with recent market trends.
Gasoline/battery hybrid vehicles that involve engine downsizing would not retain the
same performance for certain low-frequency vehicle operating modes such as sustained
towing and sustained high-grade acceleration, but those hybrid designs that did retain the
base engine would retain these capabilities. Some of the technologies analyzed in this
paper will involve changes in vehicle weight (which affect fuel economy), due to direct
hardware changes inherent in the technologies. No use of lightweight materials is
assumed for any of the technology packages. Advanced technology vehicles will
generally provide increased vehicle range relative to conventional vehicles.
1.3 Technology-Specific Inputs
The primary technology-specific inputs are projections of fuel economy improvement
potential and incremental cost. A comprehensive review of the literature was carried out
and recent technology projections by independent experts were selected. Accordingly, it
is important to note that the technology-specific inputs of fuel economy improvement and
incremental cost for the individual technologies are from multiple sources.
Fuel economy improvement projections are for composite EPA city/highway driving
(based on the EPA city and highway driving cycles used for fuel economy testing), and
applies a weighting of 55% city driving and 45% highway driving. All analyses in this
report use consumer fuel economy estimates, i.e., laboratory or CAFE fuel economy
values reduced by 15% to account for laboratory-to-road shortfall.
7
-------
Cost projections are much more complex. The central cost input taken from independent
sources for each new technology is the incremental cost to the manufacturer, all other
things being equal, of the new technology relative to the baseline conventional gasoline
vehicle. This cost projection involves a myriad of design and manufacturing cost issues,
sometimes involving individual components that have not been commercialized in
personal vehicle applications. One important methodological issue is that studies often
make different assumptions about retail markup factors. As discussed in the next section,
this study uses a single consistent retail markup for all of the technologies, which means
that the incremental retail cost projections from individual studies in the literature are
sometimes adjusted in order to apply this consistent markup, thereby allowing this paper
to isolate meaningful cost differences of various technologies.
1.4 Common Assumptions Used in the Economic Comparisons
To ensure consistency in the comparison of the efficiency and cost projections for the
various technologies, this study evaluates each technology on a common economic basis
with the same set of economic assumptions. All economic assessments are made from
the perspective of the consumer(s) who would own and drive the vehicles, rather than
from the perspective of society at large. An economic analysis from a societal
perspective would require some changes in the economic assumptions, for example,
excluding economic impacts related to taxes, including societal costs and benefits
associated with externalities, and including possible impacts related to a potential
rebound effect (i.e., where lower driving costs may lead to greater travel).
1.4.1 Economies of Scale
Cost in the automotive industry is driven to large degree by economies-of-scale. Every
attempt was made in this study to rely exclusively on technology cost projections that
were based upon a mature, high-volume production environment where economies-of-
scale for new technologies are comparable to those for conventional technologies. The
central assumption is that the cost projections are for a longer-term scenario where the
economies-of-scale and relative profit for the advanced technology vehicles approach
those for high-volume conventional vehicles today. The rationale for this assumption is
threefold: 1) it allows an "apples and apples" comparison with conventional technology,
2) a valid long-term business case is a critical parameter for justifying investment in a
new technology, and 3) it is consistent with the cost assumptions in most technology
studies. It is important to note that these cost projections are not relevant to a transition
period where the advanced technology is initially commercialized and production
volumes are low. There can be significant transition costs associated with research and
development, engineering, retooling manufacturing facilities, and lower economies-of-
scale. In fact, in some cases, transition costs can be high enough to delay or prevent a
technology's introduction—especially if future expected price decreases due to
competition or other factors limit the lifetime profit potential of the technology. The
complexities of the transition period are beyond the scope of this paper.
On the other hand, in high-volume automotive manufacturing, once a technology
achieves market maturity there is a strong economic incentive to continually reduce cost.
-------
So, it is also quite possible that the actual costs may drop below this report's projected
cost estimates if and when any of these advanced technologies actually achieve market
maturity. The bottom line is that the cost projections in this study are most relevant to a
period 5-10 years beyond initial commercialization when economies-of-scale are reached.
1.4.2 Retail Price Equivalent
Cost in the automotive industry can be expressed in many different ways, some of which
are cost to manufacture, cost to an automaker buying a component from a supplier, or
retail price to a consumer. In calculations of consumer payback and lifetime consumer
savings, this report uses retail price to a consumer, and every effort is made to ensure that
all retail price projections are expressed in an equivalent manner. The starting point for
calculating a retail price projection in this report is the cost to a vehicle manufacturer of
buying a component from an automotive supplier (for which the price paid by the vehicle
manufacturer to the supplier already includes a "supplier markup" to account for
overhead and profit at the supplier level). For this projected cost, this study relies on
independent projections from the literature. A retail price equivalent (RPE) factor is used
to convert the cost of the component to the vehicle manufacturer to an incremental retail
price to take into account markup at the vehicle manufacturer and dealer levels. In cost-
benefit analyses of public policies, EPA uses a retail price equivalent factor of 1.26 for
light-duty vehicles, based on a study that was done for EPA that examined appropriate
values for manufacturer overhead, manufacturer profit, dealer interest expense, dealer
profit, and sales commissions. [Reference 1-3] Other recent studies have used RPEs of
1.4 or 1.6. Appendix D contains a sensitivity analysis of consumer payback time using
RPEs of 1.4 and 1.6. This study adjusts the incremental retail cost projections from other
studies in order to apply a consistent 1.26 retail markup.
1.4.3 Laboratory-to-Road Fuel Economy Adjustment
This report assumes that real world fuel economy is 85% of the composite city/highway
value obtained in laboratory testing using the EPA city and highway driving cycles. This
15% reduction reflects the adjustments that EPA uses for the fuel economy values it
provides to consumers via new vehicle labels, the Fuel Economy Guide, and the Green
Vehicle Guide website: a 10% reduction in city fuel economy and a 22% reduction in
highway fuel economy.
Accordingly, for purposes of the economic calculations, the baseline SUV vehicle in this
analysis is assumed to have a composite city/highway, real world fuel economy of 17.2
mpg (laboratory) times 0.85, or 14.6 mpg. The baseline midsize car is assumed to have a
composite city/highway, real world fuel economy of 29.0 mpg (laboratory) times 0.85, or
24.7 mpg.
EPA is currently evaluating the methods used to generate consumer label fuel economy
values. EPA has begun a collaborative process with stakeholders to update the current
methodology and plans to propose appropriate changes in the near future.
-------
1.4.4 Vehicle Miles Traveled Profile
This report adopts the vehicle miles traveled (VMT) profiles from EPA's MOBILE6
emissions model. Accordingly, this report assumes that large SUVs travel about 20,000
miles in the first year of operation, decreasing to 15,300 miles in the fifth year, 11,000
miles in the tenth year, and 8400 miles in the 14th year, which is the last year in the
profile, for a total of 188,000 miles. Midsize cars are assumed to travel 14,900 miles in
the first year of operation, decreasing to 12,200 miles in the fifth year, 9500 miles in the
tenth year, and 7700 miles in the 14th year, for a total of 153,000 miles.
These values do not include the effect of vehicle scrappage (which is appropriate when
analyzing from a societal perspective) because the goal here is to analyze the economic
impacts from a consumer perspective. By using a 14-year timeframe, the above
cumulative mileage values for both SUVs and midsize cars are slightly less than the
cumulative mileage values from MOBILE6 using a 30-year timeframe and scrappage
rates. Because this analysis is from a consumer, rather than from a societal, perspective,
no rebound effect is assumed.
1.4.5 Fuel Price
This report uses a nominal price of $2.25 per gallon for both gasoline and diesel fuel,
based on the national average in April 2005. [Reference 1-4] Fuel taxes are included in
the fuel price because the analysis is from a consumer perspective (as opposed to a
societal perspective, where transfer payments such as fuel taxes would be excluded).
Since fuel prices are volatile and an important assumption in the consumer payback
methodology, Appendix C contains a sensitivity analysis which shows the consumer
payback results for fuel prices ranging from $1.50 per gallon to $3.00 per gallon.
Nominal fuel prices less than $2.25 per gallon in the future would make fuel-saving
technologies less cost effective and nominal fuel prices greater than $2.25 per gallon in
the future would make these technologies more cost effective. As is the case for vehicle
costs, no future inflation is assumed.
1.4.6 Discount Rate
A discount rate recognizes that a dollar is worth more to a consumer today that it will be
to a consumer tomorrow. Since a consumer will pay the extra cost associated with new
fuel economy technology at the time of vehicle purchase, but will only monetarily benefit
from operating savings over time, use of a discount rate in economic calculations is
appropriate. This report uses a 7% discount rate as recommended by the Office of
Management and Budget for cost-benefit analysis. [Reference 1-5] Accordingly, the
savings in the second year are discounted by 1-0.93 or 7%, the savings in the third year
are discounted by 1-(0.93) to the second power or 13.5%. Savings in the 14th year are
discounted by 1-(0.93) to the 13th power, or 61%.
It should be noted that the Office of Management and Budget also recommends that a 3%
discount rate be used in cost-benefit analyses, particularly in those cases where public
policy primarily affects private consumer consumption as opposed to corporate cost of
capital. [Reference 1-6] Assuming a 3% discount rate would shorten the projected
10
-------
consumer payback periods and increase the lifetime consumer savings projections
relative to the projections in this paper that are based on a 7% discount rate.
1.4.7 Operating Costs and Consumer Payback
New powertrain technologies have the potential to affect a wide range of operating costs.
This study assumes that all operating costs remain constant, with two exceptions: fuel
expenditures for all advanced technologies due to higher vehicle fuel economy, and brake
maintenance expenditures for gasoline/battery hybrids due to regenerative braking which
will reduce the use and maintenance of friction brakes. Two other potential sources of
operating costs and consumer payback are not addressed in this report. They are the
potential for other maintenance cost increases or decreases associated with the new
technologies, and the monetized value to consumers of time saved from less refueling of
a vehicle with greater range.
1.4.7.1 Fuel Savings
The calculation of fuel savings is relatively straightforward. The addition of any new
fuel economy technology yields a higher real world fuel economy than the real world fuel
economies of the baseline vehicles given in Section 1.4.3. This higher real world fuel
economy reduces the number of gallons of fuel necessary to travel the number of miles
driven each year, taken from the MOBILE6 emissions model discussed in Section 1.4.4.
The fewer gallons of gasoline needed is multiplied by the $2.25 price per gallon
discussed in Section 1.4.5, which yields the total dollars saved by the consumer in that
year. All fuel savings beyond the first year are then discounted at 7% per year as
discussed in Section 1.4.6.
1.4.7.2 Warranty and Maintenance Issues
Warranty and maintenance costs can be placed in three categories: warranty, scheduled
maintenance, and non-scheduled maintenance. Warranty costs are borne by the
manufacturer and are included in the manufacturing cost increases in the original source
material. Scheduled maintenance costs are discussed in sections 1.4.73 and 1.4.7.4.
Non-scheduled maintenance items are repairs that are not covered under warranty, nor
are they part of normal, scheduled maintenance. A transmission that fails and requires a
rebuild is an example of non-scheduled maintenance. While non-scheduled maintenance
expenses can be large and can significantly impact consumer payback, they are by nature
unpredictable and so are not addressed in this paper.
1.4.7.3 Brake Maintenance Savings
The calculation of brake maintenance savings, relevant only for hybrid vehicles, is
somewhat more complex than fuel savings. Based on a review of the literature, the
baseline large SUV is assumed to have front brake maintenance performed four times
(replacing only pads twice and replacing both pads and rotors twice) and rear brake
maintenance two times (replacing only pads once and replacing both pads and rotors
once) over the 188,000 mile expected vehicle lifetime. Because of regenerative braking,
where some of the energy otherwise lost as heat in friction brakes will be captured
instead by the electric motor/generator and stored in the battery, hybrids will experience
11
-------
less friction brake wear. Electric hybrid large SUVs are assumed to have 50% less brake
wear on the front brakes and no change in the brake wear on the rear brakes. For the
electric hybrid SUVs, this assumption yields two front brake maintenance events
(replacing only pads once and replacing both pads and rotors once) and two rear brake
maintenance events (replacing only pads once and replacing both pads and rotors once).
The baseline midsize car is assumed to have front brake maintenance performed three
times (replacing only pads twice and replacing both pads and rotors once) and rear brake
maintenance once (replacing only pads). Electric hybrid midsize cars are also assumed to
have 50% less front brake wear, leading to one front brake maintenance event (replacing
only pads) and one rear brake maintenance event (replacing only pads). Typical costs
were assigned to these brake maintenance events based on surveys of prices by brake
shops in the literature. Brake maintenance savings were also discounted by the 7%
discount rate discussed in Section 1.4.6.
1.4.7.4 Non-Brake Maintenance Issues
Adopting new technologies for vehicles or making them more complex may potentially
increase maintenance and repair costs due simply to the fact that there are more failure
modes for more complex systems. In the case of the technologies discussed in this
report, there are not enough data yet to determine if there are any increased maintenance
costs associated with these technologies. Any possible maintenance cost impacts would
be expected to be small. In the case of electric hybrids, there is some anecdotal evidence
from a taxi fleet in Vancouver, BC (www.hybridcars.com/blogs/taxi) that the electric
drive systems and batteries are quite robust.
In some cases, advanced technologies may reduce routine maintenance costs. For
instance, a hybrid vehicle with a downsized engine may require less engine oil and
smaller filters, thus reducing maintenance costs. Also, a hybrid drive system can help
reduce load on the engine in situations where engine wear is accelerated, such as during
cold accelerations. This could result in lower maintenance and longer oil life.
Finally, many complex technologies introduced to motor vehicles have not increased
maintenance costs to any significant extent. Technologies such as anti-lock brakes,
electronic fuel injection, and electronically-controlled automatic transmissions have all
entered widespread use without increasing consumer maintenance expense once the
technology has matured. In the case of electronic fuel injection, consumer maintenance
expense has been significantly reduced.
Because of the uncertainty of any effects (positive and negative) these new technologies
would have on maintenance expenditures, no value is assumed in the economic analysis.
EPA will monitor new information as it becomes available and will add non-brake
maintenance into this analysis if appropriate.
1.4.7.5 Potential Refueling Time Savings
If, in adopting new technologies to improve personal vehicle fuel economy,
manufacturers decide to maintain fuel tank volume, dramatic increases in vehicle range
between fill-ups are possible. The time saved in fewer refueling stops has some value to
consumers. In an August 2005 Preliminary Regulatory Impact Analysis (PRIA) on a
12
-------
proposed new light truck CAFE rule, NHTSA cited a "value of travel time per vehicle
hour" of $21.90. NHTSA also assumed each refueling event lasts 5 minutes, so the value
to a consumer of saving one refueling event is $1.83. While this paper will not assume
any potential refueling time savings, EPA will consider this in future analyses.
1.4.8 Federal Tax Treatment
The Energy Policy Act of 2005 replaces the current $2000 federal income tax deduction
for the purchase of a hybrid electric vehicle [Reference 1-7] with a new federal income
tax credit for the purchase of a qualifying hybrid or diesel vehicle. This federal tax credit
will be phased out for each manufacturer after 60,000 units are sold and will be
completely unavailable after 2009 or 2010.
This paper is based on a high-volume scenario and therefore does not include the
temporary federal income tax credit. Of course, it is always possible that Congress will
revisit the issue in the future.
Some individual states also offer incentives to consumers who purchase advanced
technology vehicles, but this analysis assumes no favorable state tax treatment.
1.4.9 Market Externalities
Because all economic assessments in this paper are from the perspective of individual
consumers who own and drive vehicles (rather than from a societal perspective), this
study does not include any of the market externalities that could be considered in a
societal perspective. For example, benefits due to reductions in oil imports, greenhouse
gas emissions, or trade deficit, and potential impacts due to changes in vehicle
congestion, accidents, or noise are not evaluated.
1.5 Metrics for Economic Comparisons
This report uses two metrics for economic comparisons: consumer payback period and
net lifetime consumer savings. Consumer payback period is the number of years it takes
for discounted, future operating savings to offset the initial incremental cost of the
technology to the consumer. Lifetime consumer savings are the net savings that will
accrue to consumers over a 14-year vehicle lifetime, i.e., the difference between the
discounted lifetime operating savings and the incremental technology cost. The operating
savings associated with fuel economy technologies are primarily fuel savings, plus brake
maintenance savings associated with hybrid vehicles that use regenerative braking instead
of friction braking part of the time.
The calculation of both consumer payback and lifetime consumer savings are
straightforward, using a relatively simple set of spreadsheet calculations based on the
technology and economic inputs discussed above. Lifetime consumer savings is
calculated by summing all of the discounted fuel savings (and, if applicable, discounted
brake savings) and then subtracting the incremental retail price of the new technology,
resulting in a "net" consumer savings over the assumed 14-year life of the vehicle.
Consumer payback is expressed in years, and requires a year-by-year comparison of the
13
-------
discounted operating savings and the incremental retail price increase. The consumer
payback period is the year (or fraction of a year) where the cumulative, discounted
operating savings equals the incremental retail price increase. A more detailed
description and set of sample calculations are included in Appendix A.
14
-------
References
1-1 Progress Report on Clean and Efficient Automotive Technologies Under
Development at EPA. EPA Interim Technical Report, EPA420-R-04-002, January
2004, available at www.epa.gov/otaq/technology under Documents.
1-2 Light-Duty Automotive Technology and Fuel Economy Trends: 1975 Through
2003, Karl H. Hellman and Robert M. Heavenrich, U.S. EPA, April 2004, page 37.
http://www.epa.gov/otaq/fetrends.htm.
1-3 Update of EPA 's Motor Vehicle Emissions Control Equipment Retail Price
Equivalent (RPE) Calculation Formula. Jack Faucett Associates, contractor report for
EPA Office of Mobile Sources, 1985.
1-4 Gasoline and Diesel Fuel Update, U. S. Department of Energy/Energy Information
Administration, April 2005, www.eia.doe.gov.
1-5 Office of Management and Budget Circular A-94.
1-6 Office of Management and Budget Circular A-4, September 17, 2003.
1-7 IRS News Release No. IR-2002-64, May 21, 2002.
15
-------
2. Gasoline Vehicle Technology Package
2.1 Technology Description
Gasoline vehicles account for over 98% of U.S. personal vehicle sales. There are many
incremental improvements that could be made to today's gasoline vehicles that would
increase fuel economy without changing the vehicle's basic type of propulsion system,
general size, or performance. These improvements include changes in aerodynamic
characteristics, reduction in tire rolling resistance, operating efficiency gains in the
engine and transmission, and possibly materials substitution. Individually, these
improvements may only provide marginal increases in fuel economy. However,
combining several improvements in a package could provide a significant fuel economy
increase.
For this report, two sources were referenced to generate an updated assessment of
potential gasoline vehicle technology improvements. These sources are the 2002
National Academy of Sciences (NAS) report, "Effectiveness and Impact of Corporate
Average Fuel Economy (CAFE) Standards" [Reference 2-1], and "Reducing Greenhouse
Gas Emissions from Light-Duty Motor Vehicles, " a 2004 report published by Northeast
States Center for a Clean Air Future (NESCCAF) [Reference 2-2]. Only technologies
that could be expected to meet future EPA emission standards and which did not have a
major negative impact on vehicle performance were included. The set of individual
technologies evaluated in the NAS report is listed in Table 2-1 (cars only).2 Note that the
figures for individual technologies are merely illustrative and their effects on combined
packages of technologies may vary.
NAS projected the fuel economy benefit and NESCCAF projected the greenhouse gas
(GHG) reductions that would result from combinations of these individual technologies,
each using their own analysis criteria and assumptions. EPA staff converted the
NESCCAF GHG reductions to fuel economy benefit in order to compare the results of
the two studies.3 This report uses the results from these technology packages.
2 This table was taken directly from the NAS reports (NAS Table 3-1).
3 Refer to Section 2.2.2 for further information on how fuel economy improvement was derived from
NESCCAF's projected GHG reductions.
16
-------
Table 2-1: NAS Technologies - Passenger Cars
Baseline: overhead cam, 4- valve, fixed timing,
roller finger follower.
Production-intent engine technology
Engine friction reduction
Low-friction lubricants
Variable valve timing
Variable valve lift and timing
Cylinder deactivation
Engine accessory improvement
Engine supercharging and downsizing
Production-intent transmission technology
Five-speed automatic transmission
Continuously variable transmission
Automatic transmission w/aggressive shift logic
Six-speed automatic transmission
Production-intent vehicle technology
Aero drag reduction
Improved rolling resistance
Safety technology
Safety weight increase
Emerging engine technology
Intake valve throttling
Camless valve actuation
Variable compression ratio
Emerging transmission technology
Automatic shift/manual transmission (AST/AMT)
Advanced CVTs —allows high torque
Emerging vehicle technology
42-V electrical system
Integrated starter/generator (idle off-restart)
Electric power steering
Vehicle weight reduction (5%)
Fuel
Consumption
Improvement
%
1-5
1
2-3
1-2
3-6
1-2
5-7
2-3
4-8
1-3
1-2
1-2
1-1.5
-3 to -4
3-6
5-10
2-6
3-5
0-2
1-2
4-7
1.5-2.5
3-4
Retail Price
Equivalent (RPE)
($)
Low
35
8
35
70
112
84
350
70
140
0
140
0
14
0
210
280
210
70
350
70
210
105
210
High
140
11
140
210
252
112
560
154
350
70
280
140
56
0
420
560
490
280
840
280
350
150
350
2.1.1 Technologies Already in the Marketplace
Table 2-2 provides examples of some of the advanced technologies listed in Table 2-1
that are already on some vehicles in the marketplace. These examples show that many of
these technologies are already in use.
17
-------
Table 2-2: Examples of Advanced Gasoline Engine and Vehicle Technologies
Already in the Marketplace
(late-model vehicles)
Technology4
Variable Valve
Lift & Timing
Gas Direct
Injection (S)
Boosting
Cylinder
Deactivation
Electric Power
Steering
Automatic
6-Speed Trans.
CVT
Automated
Manual Trans.
Sample Manufacturers (Models)
Honda, Toyota, BMW
Audi (A3, A4, A6), Isuzu (Rodeo), Mazda (Speed 6)
Audi, Dodge (Neon SRT), VW (Jetta), Saab, Subaru
(Outback), Volvo (S40), Buick (Regal), Nissan (Xterra)
Chevrolet (Trailblazer, Impala SS), DaimlerChrysler*,
Honda (Odyssey, Pilot, Hybrid Accord)
Saturn (Vue), Chevrolet (Equinox, Malibu, Cobalt),
Honda (Civic)
Ford (Fusion), Audi, BMW, Jaguar, VW
Honda (Civic), Ford (Five Hundred, Freestyle)
Nissan (Murano)
Audi (A3, TT), VW (Beetle, Jetta)
* all vehicles equipped with "Hemi" V8 engines - includes Dodge Ram, Durango, Chrysler 300C
2.1.2 NAS Technology Packages
For each vehicle class, NAS studied two "cost-efficient" packages reflecting different
consumer payback periods and discount rates. The NAS "Case 1" 14-year payback
scenario was selected for use in this report since it better represents the full lifetime of a
vehicle and the perspective of those consumers that might own their vehicle for its full
lifetime. EPA staff attempted to determine the cost-efficient package content by
replicating the cost-efficiency methodology outlined in the NAS report. The technologies
presumed to meet the criteria5 of the cost-efficient package for the 14-year payback are
listed in Tables 2-3 (Large SUV) and 2-4 (Midsize Car).
Many technologies listed in Tables 2-3 and 2-4 represent further advancements beyond
what is typical of today's vehicles. Current vehicles benefit from some degree of
improvement in aerodynamic drag, lower rolling resistance, and lower frictional losses
compared to vehicles of the past. The listed items represent a significant further
improvement potential for most of the fleet.6
4 Notes on table nomenclature: Gas Direct Injection (S) - stoichiometric; CVT - continuously variable
transmission.
5 NAS assumed that all technologies identified in its "Path 3" were candidates for a cost-efficient package.
Cost efficient technologies were determined using an "incremental marginal" approach, where only those
individual technologies that can pay for themselves (via discounted savings in fuel consumption) over the
14-year lifetime are included. For further details, refer to Chapter 4 of the NAS report.
6Although some of these technologies do exist in the marketplace (as indicated in Table 2-2), they are not
yet mainstream technology (with the exception of multi-valve overhead camshafts).
18
-------
Table 2-3: NAS "14-Year, Cost-Efficient" Technology Package
For Large SUV with Gasoline Engine7
Efficiency
Loss
Mechanism
Friction
Losses
Pumping
Losses
Transmission
Losses
Accessory
Losses
Vehicle
Losses
Production-Intent or Emerging Technology
Low friction lubricants
Engine friction reduction
Multi-valve, overhead camshaft
Variable valve timing
Camless valve actuation
5 -speed automatic transmission with
Automated manual transmission
Engine accessory improvement
Electric power steering
42 volt electrical system
Improved rolling resistance
Aerodynamic drag reduction
Integrated starter / generator (idle off)8
Table 2-4: NAS "14-Year, Cost-Efficient" Technology Package
For Midsize Car with Gasoline Engine
Efficiency
Loss
Mechanism
Friction
Losses
Pumping
Losses
Transmission
Losses
Accessory
Losses
Vehicle
Losses
Production-Intent or Emerging Technology
Low friction lubricants
Engine friction reduction
Variable valve timing
Multi-valve, overhead camshaft
Continuously variable transmission
(none)
Improved rolling resistance
Aerodynamic drag reduction
7 Technologies have been sorted by "efficiency loss mechanism" on a thermodynamic basis.
8 Idling the engine is defined in this context as a vehicle loss, because none of the engine output is being
used to propel the vehicle. Integrated starter/generators provide this idle-off capability.
19
-------
2.1.3 NESCCAF Technology Packages
NESCCAF's technology packages are based primarily on analysis by AVL Powertrain
Engineering, Inc., a leading international automobile industry consultant specializing in
technology development. AVL used its CRUISE vehicle simulation model to evaluate
10-15 different vehicle technology packages for each car or truck class. EPA selected
three of the NESCCAF packages within each vehicle class with the following criteria in
mind:
a) include a mix of lower cost / lower fuel economy benefit and higher cost /
higher fuel economy benefit options, that is representative of the average cost
effectiveness of all of the technology packages,
b) include a variety of different technologies, and
c) consider a feasibility timeframe of 5 to 10 years.
The three NESCCAF technology packages selected for each vehicle class are
summarized in Tables 2-5 and 2-6, below.
Table 2-5: Three NESCCAF Technology Packages Selected By EPA
For Large SUV with Gasoline Engine9'10
Loss Area
Indicated
Efficiency
Friction
Losses
Pumping
Losses
Transmission
Losses
Accessory
Losses
Vehicle
Losses
Option 1
Gas Direct Injection (S)
Low friction lubricants
Engine friction reduction
Variable valve timing (C)
Cylinder deactivation
6-speed + automated manual
transmission
Aggressive shift logic
Improved alternator
EH power steering
Improved rolling resistance
Aerodynamic drag reduction
Option 2
Low friction lubricants
Engine friction reduction
Variable valve timing (C)
Variable valve lift (D)
Cylinder deactivation
6-speed auto transmission
Aggressive shift logic
Early TC lockup
Electric accessories
EH power steering
Improved rolling resistance
Aerodynamic drag reduction
Integrated starter/generator
Option 3
Gas Direct Injection (S)
Low friction lubricants
Engine friction reduction
Camless valve actuation (EH)
6-speed + automated manual
transmission
Aggressive shift logic
Improved alternator
EH power steering
Improved rolling resistance
Aerodynamic drag reduction
9NESCCAF did not specify a Large SUV category in its report. NESCCAF's definition of Large Truck,
for purposes of projected fuel consumption improvements, is assumed to be comparable to a Large SUV.
10Notes on nomenclature for Tables 2-5 and 2-6: Gas Direct Injection - S (stoichiometric); Variable valve
timing - C (coordinated), I (intake valve only), D (dual, independent control); Variable valve lift - D
(discrete); Camless valve actuation - EH (electrohydraulic); Power steering - EH (electrohydraulic), TC -
torque converter
20
-------
Note that all of the NESCCAF gasoline vehicle technology packages in Tables 2-5 and 2-
6 (though not all of the packages in the original NESCCAF study) include the following
technologies:
• Friction reduction (low friction lubricants, engine friction reduction)
• Valve timing capability, often including deactivation or lift flexibility
• 6 speed transmission gearing
• Power steering improvements
• Vehicle loss reduction (tires and aero drag reduction)
• Efficient air conditioning
EPA believes that, within the next decade, gas direct injection will be feasible, with the
possibility that HCCI (homogeneous charge compression ignition) or turbocharging may
be suitable to select packages. Automated manual transmissions and camless valve
actuation also offer significant opportunities. These assumptions are reflected in the
subset of NESCCAF packages chosen for this analysis.
Table 2-6: Three NESCCAF Technology Packages Selected By EPA
For Midsize Car with Gasoline Engine11
Loss Area
Indicated
Efficiency
Friction
Losses
Pumping
Losses
Transmission
Losses
Accessory
Losses
Vehicle
Losses
Option 1
Gas Direct Injection (S)
Low friction lubricants
Engine friction reduction
Variable valve timing (D)
Turbocharging/downsizing
6-speed auto transmission
Aggressive shift logic
Early TC lockup
Electric power steering
Electric accessories
Efficient air conditioning
Improved rolling resistance
Aerodynamic drag reduction
Integrated starter / generator
Option 2
Gas Direct Injection (S)
Low friction lubricants
Engine friction reduction
Camless valve actuation (EH)
6-speed + automated manual
transmission
Aggressive shift logic
Improved alternator
Electric power steering
Efficient air conditioning
Improved rolling resistance
Aerodynamic drag reduction
Option 3
Gas HCCI
Low friction lubricants
Engine friction reduction
Variable valve timing (I)
Variable valve lift (D)
6-speed + automated manual
transmission
Aggressive shift logic
Improved alternator
Electric power steering
Efficient air conditioning
Improved rolling resistance
Aerodynamic drag reduction
11 The NESCCAF report did not include a midsize car category. However, the Large Car analysis is
assumed to be applicable and is the source for the midsize car category in this report. NESCCAF cited a
typical "Large Car" as a Ford Taurus.
21
-------
2.2 Technology-Specific Inputs
2.2.1 NAS Package Fuel Economy Improvement
The NAS study reports fuel consumption savings for each of the technologies included in
their cost-efficient packages. The NAS committee estimated the fuel consumption
savings after considering information from manufacturers, consultants, other studies, and
presentations at public meetings.
NAS determined the overall fuel consumption savings for each of the 14-year cost-
efficient packages and applied it to their base fuel economy for each of the vehicle
classes under consideration. Table 2-7 provides the fuel economy values for the 14-year
cost-efficient packages. This table is directly excerpted from Table 4.2 in the NAS report.
Three fuel economies for the cost-efficient packages are given representing the effect of a
low estimate of fuel savings, average fuel savings, and a high estimate of fuel savings.
This report uses the average fuel economy values from NAS.
It is important to emphasize that NAS did not perform any manufacturer-specific
technology analysis. All of the NAS projections represent industry-average estimates.
Accordingly, it is not possible to use the NAS projections to forecast the average fuel
economy improvement potential for an individual manufacturer or model, as each
manufacturer and model has a unique technology baseline.
Table 2-7: NAS Fuel Economy and Costs for 14-Year, Cost-Efficient Package"
Low Cost/High mpg
Vehicle Class
Cars
Subcompact
Compact
Midsize
Large
Light trucks
Small SUVs
Mid SUVs
Large SUVs
Minivans
Small pickups
Large pickups
Base
mpgb
31.3
30.1
27.1
24.8
24.1
21.0
17.2
23.0
23.2
18.5
Base
Adjusted0
30.2
29.1
26.2
23.9
23.3
20.3
16.6
22.2
22.4
17.9
FE
mpg, (%)
38.0 (21)
37.1 (23)
35.4 (31)
34.0 (37)
32.5 (35)
30.2 (44)
25.7 (49)
32.0 (39)
32.3 (39)
27.4 (48)
Cost
($)
588
640
854
1,023
993
1,248
1,578
1,108
1,091
1,427
Savings
($)
1,018
1,121
1,499
1,859
1,833
2,441
3,198
2,069
2,063
2,928
Average
FE
mpg, (%)
35.1 (12)
34.3 (14)
32.6 (20)
31.4 (27)
30.0 (25)
28.0 (34)
24.5 (42)
29.7 (29)
29.9 (29)
25.5 (38)
High Cost /Low mpg
Cost
($)
502
561
791
985
959
1,254
1,629
1,079
1,067
1,450
Savings
($)
694
788
1,140
1,494
1,460
2,057
2,910
1,703
1,688
2,531
FE
mpg, (%)
31.7(1)
31.0 (3)
29.5 (9)
28.6 (15)
27.4 (14)
25.8 (23)
23.2 (35)
27.3 (19)
27.4 (18)
23.7 (28)
Cost
($)
215
290
554
813
781
1,163
1,643
949
933
1,409
Savings
($)
234
322
651
1,023
974
1,589
2,589
1,259
1,224
2,078
"Other assumptions see Reference 8
bBase is before downward adjustment of -3.5 percent for future safety and emissions standards
'Base after adjustment for future safety and emissions standards (-3.5 percent)
The fuel economy improvements derived from NAS for use in the payback calculations
of this report are given in Table 2-8. Values in Table 2-8 are the average fuel economy
values from Table 4-2 of the NAS report excerpted above, with the addition of calculated
CO2 reduction.
22
-------
Table 2-8: Percent Fuel Economy Improvement
for the NAS Gasoline Technology Packages
Vehicle
Class
Large SUV
Midsize Car
NAS Base
Fuel Economy
(mpg)12
17.2
27.1
NAS 14-year
Cost-Efficient
Package FE
(mpg)
24.5
32.6
Fuel Economy
Improvement
(%)
42%
20%
Tailpipe CO2
Reduction
(%)
30%
17%
2.2.2 NESCCAF Package Derived Fuel Economy Improvement
NESCCAF projected CO2-equivalent exhaust emissions reductions for each of its
technology packages. For the three technology packages that EPA selected for each
class, EPA converted these CO2 emissions reductions into fuel economy improvement,
and both tailpipe CO2 and fuel economy projections are shown in Tables 2-9 and 2-10
for the large SUV and midsize car scenarios, respectively. Note that the cost and fuel
savings estimates for the consumer payback analysis are calculated by averaging the three
large SUV and midsize car technology package options discussed above.
Table 2-9: EPA's Projected Fuel Economy Improvement Calculated for the
NESCCAF Gasoline Technology Packages - Large SUV
13
Package
Option 1
Option 2
Option 3
Average
Package CO2
Emissions14
(g/mi)
418
380
383
394
Tailpipe CO2
Reduction
(%)
19%
26%
26%
24%
Fuel Economy
Improvement
(%)
23%
36%
35%
31%
Included in the package analysis is a reduction in CO2 emissions due to a more efficient
air conditioning system (e.g., incorporating a variable displacement compressor).
Because the NESCCAF analysis includes CO2-equivalent emissions from reductions that
do not impact fuel economy (such as air conditioner refrigerant leakage), some
adjustments had to be made to the NESCCAF baseline and package CO2 emissions
projections to properly reflect only tailpipe CO2.
12 These are laboratory/unadjusted mileage figures. For EPA's economic analysis, the standard -15%
correction factor was applied to the baseline to determine real-world savings.
13
Adjusted baseline CO2 emissions for large SUV (NESCCAF Large Truck) = 516 g/mi.
' From Table 3-8 in the NESCCAF report.
23
-------
The following adjustments were made to isolate tailpipe CO2 emissions from the baseline
and package projections:
• 8.5 g/mi and 0.4 g/mi of A/C direct refrigerant CO2-equivalent emissions were
subtracted from the baselines and advanced technology packages, respectively
• A/C efficiency gains were originally modeled based on use of R-152a, which
included a higher efficiency due to the refrigerant. Because no change to the working
fluid is assumed by EPA, an associated 5% CO2 efficiency improvement was
removed from the "Alternative A/C System" estimates in Table 3-1 of the NESCCAF
report. The resulting adjustments to Large Car and Large Truck advanced technology
packages are +0.4 g/mi and +0.6 g/mi, respectively.
• These two adjustments to the advanced technology packages approximately balance
out, therefore, no adjustment was made to the advanced technology packages.
• Baseline CO2 emissions rates were adjusted as follows: the Large Truck was adjusted
from 525 g/mi down to 516 g/mi, and the Large Car was adjusted from 357 g/mi
down to 348 g/mi.
Table 2-10: EPA's Projected Fuel Economy Improvement Calculated for the
NESCCAF Gasoline Technology Packages - Midsize Car
15
Package
Option 1
Option 2
Option 3
Average
Package CO2
Emissions16
(g/mi)
225
243
274
247
Tailpipe CO2
Reduction
(%)
35%
30%
21%
29%
Fuel Economy
Improvement
(%)
55%
43%
27%
41%
2.2.3 Incremental Retail Price
The NAS Committee estimated a range of costs for the various technologies. The NAS
estimated the technology costs after considering information from manufacturers, their
suppliers and published references.
NAS determined the combined cost of all the technologies in the 14-year, cost-efficient
package. These costs are given in Table 2-7 and are taken directly from the NAS report.
NESCCAF's cost estimates were originally supplied by Martec International, a market
research consulting firm. They are listed in Table 2-11, below. Costs for the Large SUV
and Midsize Car were based on Tables 3-8 and 3-4, respectively, in the NESCCAF
report. A $31 adjustment was deducted from each advanced technology package cost
estimate to eliminate costs associated with the alternative A/C refrigerant R-152a
'Baseline CO2 emissions for midsize car (NESCCAF Large Car) = 348 g/mi
3 From Table 3-4 in the NESCCAF report.
24
-------
(originally modeled in the packages). Similarly to the fuel economy calculations, cost
estimates for the EPA-selected NESCCAF packages were averaged for each vehicle
category.
Table 2-11: NESCCAF Technology Costs
For the Gasoline Technology Packages
Large SUV
Package
Option 1
Option 2
Option 3
Average
Incremental
Cost ($)
$859
$2399
$2140
$1799
Midsize Car
Package
Option 1
Option 2
Option 3
Average
Incremental
Cost ($)
$1827
$1447
$1118
$1464
Both NAS and NESCCAF's average retail costs included a consistent retail price markup
factor of 1.4. As discussed in Section 1.4.2, retail costs were changed to reflect the 1.26
retail price mark-up used for all analyses in this report. The resulting retail prices for the
packages are listed in Table 2-12.
Table 2-12: EPA-Adjusted Incremental Retail Prices for the
Gasoline Technology Packages
Vehicle
Class
Large
SUV
Midsize
Car
Scenario
NAS
NESCCAF
NAS
NESCCAF
Referenced
Retail Price
$1629
$1799
$791
$1464
EPA-Adjusted
Retail Price
$1467
$1619
$712
$1318
2.3 Economic Results
Based on the technology-specific efficiency projections in Section 2.2, the incremental
retail price projections discussed in Section 2.2.3 and the economic assumptions
described in Section 1.4, Table 2-13 gives the consumer payback period and lifetime
consumer savings for large SUV and midsize car for both the NAS and NESCCAF
technology scenarios.
25
-------
Table 2-13: Cost Effectiveness for Gasoline Technology Packages
(From a consumer perspective)
Vehicle
Class
Large
SUV
Midsize
Car
Scenario
NAS
NESCCAF
NAS
NESCCAF
Consumer
Payback
(yrs)
1.8
2.5
3.8
3.9
Discounted
Fuel
Savings
$5,853
$4,908
$1,609
$2,869
Incremental
Vehicle
Price
$1,467
$1,619
$712
$1,318
Lifetime
Consumer
Savings
$4,386
$3,288
$897
$1,552
EPA's projections of consumer payback for the NAS and NESCCAF technology
packages appear comparable in terms of magnitude. The payback period for large SUVs
is projected to be about 2 years, and the payback period for midsize cars is projected at
about 4 years.
26
-------
References
2-1. Effectiveness and Impact of Corporate Average Fuel Economy (CAFE)
Standards. National Research Council/National Academy of Sciences, 2002.
2-2. Reducing Greenhouse Gas Emissions from Light-Duty Motor Vehicles. Northeast
States Center for a Clean Air Future, September, 2004.
27
-------
3. Diesel Engine
3.1 Technology Description
Diesel engines have been in commercial use since the early days of the automobile
industry. Diesel engines utilize a combustion cycle quite distinct from that of gasoline-
fueled, Otto-cycle engines that dominate the U.S. personal vehicle market today.
Conventional diesel engines have the following characteristics: direct cylinder fuel
injection (i.e., diesel fuel is not premixed with air prior to combustion), compression
ignition (combustion is initiated by the injection of diesel fuel into the hot, compressed
charge-air), little or no intake air throttling, high air-to-fuel ratios, and high compression
ratios. Compared to gasoline engines of similar size, diesel engines typically are more
costly, more durable, and more efficient. This section will only consider the efficiency
benefits associated with diesel engines alone, although it is important to recognize that
some of the technologies considered in Section 2 (such as more efficient transmissions,
accessories, tires, and aerodynamics) could also be included in a broader "diesel vehicle
package."
With all other things being equal, today's diesel engines are projected to achieve up to
40% higher fuel economy than today's gasoline engines, which is equivalent to about a
29% savings in fuel consumption. Since diesel fuel contains about 15% more energy and
carbon than an equal volume of gasoline, a vehicle mile traveled with a diesel engine that
has 40% higher fuel economy should reduce vehicle energy consumption and carbon
emissions by about 18%. On a life-cycle basis, the total benefit of diesel engines is
somewhat higher because there are higher per gallon energy losses for gasoline
production than for diesel fuel production.
While diesel engines dominate the heavy-duty truck market and have made significant
inroads into the medium-duty market as well, the only personal vehicles available with a
diesel engine option in the U.S. market in the last few years were the Volkswagen New
Beetle, Golf and Jetta, with typical annual sales of about 20,000 units representing a
market share of less than 0.2%. But, several new diesel models have been introduced
into the US market in 2004 and 2005: Volkswagen Passat, Mercedes E320, and Jeep
Liberty. European automobile manufacturers have been at the forefront of recent
advances in diesel engines for use in personal vehicles due to the fact that diesel engines
now account for about 50% of all new car sales in Europe.
However, diesel combustion has in the past resulted in higher levels of oxides of nitrogen
(NOx) and particulate matter (PM) emissions. Higher levels of NOx and PM emissions
are due in part to the fact that aftertreatment solutions have been much more difficult for
diesel engines than for gasoline engines. Increasing evidence suggests that automakers
will be able to design diesel vehicles that can comply with the Tier 2 emission standards
later this decade. U.S. and Japanese-based automobile companies are investing in diesel
engine research and development, driven in part by the demand for diesels in Europe, but
also by the possibility that diesel engines may return to the U.S. personal vehicle market.
28
-------
At this time, the primary path towards compliance with EPA's Tier 2 standards in the
future involves reducing engine-out emissions and advances in diesel emissions control
aftertreatment. All diesel emissions control aftertreatment packages include some type of
PM trap. Diesel NOx emissions control systems are more complex and multiple
compliance approaches are under development, including NOx adsorption catalysts and
urea/Selective Catalytic Reduction (SCR) technology.
In April 2002, EPA tested a prototype Toyota Avensis, a compact diesel car that Toyota
was developing for the European market. [Reference 3-1] This vehicle used a DPNR
(diesel particulate-NOx reduction) emission aftertreatment system that included both a
particulate trap and a NOx adsorber. This low-mileage prototype met the Tier 2 bin 5
emission levels of 0.07 grams per mile NOx and 0.01 grams per mile PM. EPA has
tested other low-mileage prototype diesel vehicles that have also met Tier 2 emission
levels. While challenges remain with respect to both maintaining catalyst efficiency at
high mileage and meeting EPA Supplementary Federal Test Procedure emission
standards, there appear to be no fundamental barriers to the development and introduction
of advanced diesel emission controls. Volkswagen recently announced plans to market a
Tier 2 bin 5 compliant Jetta in the U.S. market by the 2007 model year. [Reference 3-2]
Some manufacturers are also developing SCR technology that injects urea into the
exhaust to promote the catalytic reduction of NOx emissions. EPA is in discussions with
manufacturers about potential compliance strategies that would ensure that the on-board
urea supply is maintained so that SCR-equipped vehicles will always meet NOx emission
standards in use.
EPA is also evaluating unique diesel engine concepts under its Clean Automotive
Technology program with a goal of identifying a clean diesel engine combustion concept
that could simultaneously be extremely efficient, clean, and cost effective. Results
suggest the potential for a diesel engine design, using innovative air, fuel, and
combustion management and conventional PM trap aftertreatment, which might be able
to achieve Tier 2 bin 5 NOx levels without the need for NOx aftertreatment. [References
3-3 and 3-4] EPA is working with several manufacturers to continue to develop and
refine this clean diesel combustion technology. EPA has publicly announced clean diesel
combustion partnerships with International Truck and Engine Corporation [Reference 3-
5] and Ford Motor Company. [Reference 3-6]
3.2 Technology-Specific Inputs
This report utilizes two sets of technology-specific inputs for diesel vehicles. The first
set relies on the results of a study by FEV Engine Technology, Inc., a major engine
design and consulting company, for all of the technology-specific assumptions for diesel
engines. [Reference 3-7] Diesel emission aftertreatment system costs were developed
separately by EPA and combined with the engine cost assumptions by FEV.
The second set of diesel vehicle projections is from a recent report published by Oak
Ridge National Laboratory (ORNL), based on technology forecasts by K.G. Duleep, a
vehicle technology expert with Energy and Environmental Analysis, Inc. who surveyed
technology experts from automakers, suppliers, and government. [Reference 3-8]
29
-------
It is important to note that the diesel vehicles analyzed in this report include all of the
direct changes that would be necessary to support a diesel engine, including emissions
aftertreatment, but do not include any of the non-engine technologies that are part of the
gasoline vehicle packages in Section 2 and which could also be applied to diesel vehicles
(such as more efficient transmissions, accessories, tires, and aerodynamics). Broader
diesel packages, with these additional technologies, would increase both the projected
fuel economy improvement and the projected retail cost.
3.2.1 Fuel Economy Improvement
FEV used a detailed vehicle simulation model to identify designs involving gasoline and
diesel engines in both large SUV and midsize car applications that yielded comparable
vehicle performance (defined by several different acceleration metrics) and range. The
FEV simulation model projected that, for equivalent performance, a diesel engine in a
large SUV would have 6% higher peak power, 22% higher maximum torque, and 3%
higher vehicle weight (about 180 pounds), would yield a 41% improvement in vehicle
fuel economy and an 18% reduction in tailpipe CO217, all relative to a baseline gasoline-
fueled large SUV. Similarly, the FEV model projected that, for equivalent performance,
a diesel engine in a midsize car would have 15% lower peak power, 54% higher
maximum torque, and 3% higher vehicle weight (about 90 pounds), and would yield a
39.5% improvement in vehicle fuel economy (with a corresponding 18% decrease in
tailpipe CO2), all relative to a baseline gasoline-fueled midsize car. Because the
production of diesel fuel has a lower energy requirement than that for gasoline, the
lifecycle CO2 savings are about 2% higher than the tailpipe CO2 savings.
The ORNL report projects that, in the long term, diesel vehicles will provide a 33%
improvement in vehicle fuel economy, and a 13.5% decrease in tailpipe CO2, along with
a 25% increase in torque, relative to comparable gasoline vehicles. These results are
summarized in Table 3-1.
Table 3-1: FEV/EPA and ORNL Projection of Performance, Fuel Economy, and
CO2 Emissions for Diesel Engines Relative to Gasoline Engines
Vehicle
Class
Large
SUV
Midsize
Car
Scenario
FEV/EPA
ORNL
FEV/EPA
ORNL
Power
+6%
-15%
Torque
+22%
+25%
+54%
+25%
Fuel
Economy
+41%
+33%
+39.5%
+33%
Tailpipe
CO2
-18%
-14%
-18%
-14%
Lifecycle
CO2
-21%
-16%
-20%
-16%
Other sources for projected fuel economy improvement potential for diesel vehicles
include current vehicle offerings and manufacturer statements. Model-specific
17 Tailpipe CO2 reduction per gallon for diesels is somewhat lower than the corresponding reduction in fuel
consumption due to the fact that diesel fuel has about 15% greater total carbon content per gallon than
gasoline. This figure does not include any diesel refining differences between gasoline and diesel.
30
-------
comparisons of gasoline and diesel vehicles yield a wide range of fuel economy
improvements. These comparisons are not particularly helpful, however, both because
there are often significant performance differences between diesel and gasoline versions
of the same model. Public statements by vehicle manufacturers typically support the 33-
40% range from the FEV/EPA and ORNL scenarios. [References 3-9, 3-10, and 3-11]
3.2.2 Incremental Retail Price
The incremental retail price for a personal vehicle with a diesel engine is determined by
three factors:
• incremental manufacturing cost of the diesel engine and associated vehicle
systems
• incremental cost of diesel emission control aftertreatment
• retail price equivalent factor discussed in Section 1.4.2
For the FEV/EPA scenario, the FEV report provides a detailed listing of approximately
30 individual modifications for a diesel engine powertrain and related vehicle systems
relative to a baseline gasoline vehicle.
FEV provided two estimates for these incremental manufacturing costs, one based on
"current production costs" and one based on "mature production costs." This report uses
the FEV mature cost projections, consistent with the objective of this report to consider
costs in a long term, high-volume environment where economies of scale for new
technologies are similar to those for today's conventional technologies. FEV's
underlying assumption for its mature cost projections are that the costs of high-pressure
common rail fuel injection and variable geometry turbocharging may be able to be
reduced by 30% from current values. Table 3-2, below, shows the major components
that would have to be added, deleted, or modified for a vehicle to accommodate a diesel
engine powertrain, along with FEV's projections of the associated savings or costs, for
both the large SUV and midsize car scenarios. FEV projected that the incremental
manufacturing cost of a diesel engine in a mature market is $1042 for a large SUV and
$739 for a midsize car.
It is generally accepted that, based on current state-of-the-art engine technology, emission
control systems for diesel vehicles complying with EPA's Tier 2 emission standards will
be more expensive than those for comparable gasoline vehicles. The FEV report did not
address this issue. There is a major industry effort underway to develop viable and cost-
effective diesel engine emission control systems and multiple compliance pathways are
under development. While it is impossible at this time to predict the precise design and
future cost of such systems with any certainty, Appendix B provides EPA's best estimate
of the incremental manufacturing cost of diesel emission aftertreatment systems based on
the best information currently available: $355 for a large SUV and $255 for a midsize
car. EPA assumes there would be no overall fuel economy penalty for diesel vehicles
with aftertreatment emission control systems. While EPA believes it is likely that there
will be some increase in fuel consumption due to the operation of diesel aftertreatment
emission controls, EPA believes that overall diesel vehicle fuel economy will be
unchanged, due to engine optimization and other changes. EPA is monitoring progress in
this area and will modify these projections as more information becomes available.
31
-------
Table 3-2: Incremental Diesel Engine Cost Projections for Mature Scenario
(FEV/EPA Scenario)
Component(s)
Add high-pressure, common rail diesel fuel injection system
Delete gasoline fuel injection system
Add variable geometry turbocharger
Delete gasoline ignition system
Delete fuel pump and other changes to fuel system
Enhance powertrain mounting system
Other engine changes
Add air intercooler, ducts, and sensor
Larger battery and starter, add glow plugs
Delete exhaust gas oxygen sensor
Add supplemental heater
Modify transmission
Enhance sound insulation package
Smaller radiator
Total
Large
SUV
$980
-$245
$175
-$120
-$94
$87
$80
$80
$72
-$60
$50
$25
$25
-$13
$1,042
Midsize
Car
$630
-$165
$126
-$75
-$75
$107
$70
$55
$50
-$30
$15
$25
$10
-$4
$739
This study applies the EPA retail price equivalent factor of 1.26 to both the incremental
manufacturing cost of the diesel engine and the incremental manufacturing cost of diesel
emissions aftertreatment to get an aggregate incremental retail price, shown in Table 3-3
for a large SUV and in Table 3-4 for a midsize car.
Table 3-3: Incremental Retail Price for Large SUV with Diesel Engine
(FEV/EPA Scenario)
Component
Engine
Aftertreatment
Total
Source
FEV
EPA
Incremental
Manufacturing
Price
$1,042
$355
Incremental
Retail
Price
$1,313
$447
$1,760
32
-------
Table 3-4: Incremental Retail Price for Midsize Car with Diesel Engine
(FEV/EPA Scenario)
Component
Engine
Aftertreatment
Total
Source
FEV
EPA
Incremental
Manufacturing
Price
$739
$255
Incremental
Retail
Price
$931
$321
$1,252
For the ORNL scenario, Table 3-5 gives the total (engine and aftertreatment) incremental
costs for a diesel vehicle relative to a gasoline vehicle. The ORNL values are based on a
retail price equivalent markup of 1.6 18. As discussed in Section 1.4.2, the ORNL cost
values were adjusted to reflect the 1.26 markup factor that was used elsewhere in this
report. The adjusted values are also shown in Table 3-5.
Table 3-5: Incremental Retail Price for Diesel Engine Package
(ORNL Scenario)
Vehicle
Class
Large SUV
Midsize Car
ORNL
Retail Price
$3,250
$2,300
EPA-Adjusted
Retail Price
$2,560
$1,810
3.2.3 Federal Income Tax Deduction
As discussed in Section 1.4.8, the Energy Policy Act of 2005 allows for tax credits for
qualifying diesel vehicles. However, these credits begin to phase out for each
manufacturer after 60,000 units are sold, and will not be available after December 31,
2010. Since the scope of this report concerns high-volume scenarios in a 5-10 year
timeframe, this tax credit is assumed to be unavailable.
ORNL RPE factor per phone conservation with K.G. Duleep Feb 15, 2005.
33
-------
3.3 Economic Results
Based on the technology-specific efficiency and cost projections discussed in Section 3.2
and the economic assumptions described in Section 1.4, Table 3-6 gives the payback
period and vehicle lifetime savings for both a large SUV and a midsize car for both the
FEV/EPA and ORNL scenarios.
Table 3-6: Cost Effectiveness for Vehicles with Diesel Engine
(from a consumer perspective)
Vehicle
Class
Large
SUV
Midsize
Car
Scenario
FEV/EPA
ORNL
FEV/EPA
ORNL
Consumer
Payback
(yrs)
2.1
4.1
3.8
7.7
Discounted
Fuel
Savings
$6,044
$5,157
$2,815
$2,444
Incremental
Vehicle
Price
$1,760
$2,560
$1,252
$1,810
Lifetime
Consumer
Savings
$4,284
$2,597
$1,563
$634
34
-------
References
3-1 Testing of the Toyota Avensis DPNR at U.S. EPA-NVFEL. Joseph McDonald and
Byron Bunker, U.S. EPA, Society of Automotive Engineers Paper 2002-01-2877.
3-2 "Volkswagen: 2007 U.S. EPA Bin 5 Diesel Car Coming" Diesel Fuel News.
October 10, 2005.
3-3 Assessing New Diesel Technologies. Charles L. Gray, Jr., U.S. EPA, presentation
before the Massachusetts Institute of Technology Light Duty Diesel Workshop,
November 20, 2002.
3-4 A Path to More Sustainable Transportation. David Haugen, U.S. EPA,
presentation at the 10th Annual Diesel Engine Emissions Reduction Conference,
August 29, 2004, available at www.epa.gov/otaq/technology under Engine
Research.
3-5 EPA and International Truck to Develop Clean Diesel Combustion Technology.
EPA-420-F-04-036, May 2004, available at www.epa.gov/otaq/technology under
Partnerships.
3-6 EPA and Ford to Develop Clean Diesel Combustion Technology. EPA-420-F-05-
007, January 2005, available at www.epa.gov/otaq/technology under Partnerships.
3-7 Cost and Fuel Economy Comparison of Diesel and Gasoline Power trains in
Passenger Cars and Light Trucks. FEV Engine Technology, Inc., contractor
report prepared for U.S. EPA, January 28, 2003.
3-8 Future Potential of Hybrid and Diesel Powertrains in the U.S. Light-Duty Vehicle
Market. David Greene, Oak Ridge National Laboratory, K.G. Duleep, Energy
and Environmental Analysis, and Walter McManus, JD Power and Associates,
August 2004.
3-9 Clean Diesels Dispel Outdated 'Dirty" Image. General Motors website at
www.gm.com, July 30, 2002.
3-10 Diesel Finds Liberty in North America. Automotive Engineering Magazine.,
January 2003.
3-11 Future Technology Diesel: Reducing Particulate Matter (Black Carbon)
Emissions. Marti Maricq, presentation before the California Air Resources
Board's International Vehicle Technology Symposium, March 11, 2003.
35
-------
4. Gasoline/Battery Hybrid
4.1 Technology Description
Gasoline/battery hybrid vehicles, often referred to as hybrid electric (HEV) or electric
hybrid vehicles, are now not only a commercial reality, but are also achieving key market
milestones on the way to mainstream acceptance: multiple offerings by multiple
manufacturers, waiting lists for many models, and projected sales of 100,000 for the
Toyota Prius in 2005. The Prius has been on sale since 1997 (in Japan), is now in its
second generation in the U.S. and is offered in more than 20 countries around the world.
In 2005, Toyota introduced into the U.S. market hybrid versions of the Lexus RX330 and
Toyota Highlander. Honda offers the Insight and hybrid electric versions of its popular
Civic and Accord sedans. Ford introduced the first HEV sport utility in the Escape in
2004, and GM, Chrysler, and Nissan are preparing to launch HEV vehicles in 2007-2008.
Gasoline/battery hybrid sales in the U.S. in 2004 totaled over 85,000, and J.D. Power has
forecast 2005 HEV sales of 222,000. Electric hybrid sales will likely continue to increase
as the remaining large manufacturers introduce hybrids in the U.S. in the next few years.
Electric hybridization of a vehicle creates the opportunity to improve fuel economy in
three different areas:
• The gasoline engine can be optimized (through downsizing, or other control
techniques) to operate at or near its most efficient point more of the time.
• Some of the energy normally lost as heat while braking can be captured and
stored in the battery for later use.
• The engine is turned off when it is not needed, such as when the vehicle is
coasting or when stopped.
On the other hand, adding one or more electric motors, associated control circuitry, and a
battery pack increases vehicle weight and cost. These costs tend to be incurred at the
time of vehicle purchase, while the savings garnered by using less fuel and the reduced
need for brake maintenance accrue over time.
In general, there are two types of gasoline/battery hybrids—series HEV and parallel
HEV. In the series hybrid design, the wheels are driven only by the electric motor that
derives its power from onboard batteries and the electric generator which, in turn, is
driven by a small engine. Series HEVs were a popular concept with automakers in the
early to mid 1990s, but inherent problems with cost and efficiency under heavy load
conditions have caused them to fall out of favor. There is still some interest, however,
and as technology improves, they may yet see some production applications.
In a parallel hybrid design, both the electric motor and the gasoline engine are connected
to the wheels and operate individually in parallel, depending on vehicle load and control
strategy. Typically, in a parallel design, the gasoline engine provides power for cruising
and the electric motor supplies the additional power required for acceleration and short
hill climbing. The electric motor also enables regenerative braking. All current
production HEVs are parallel designs (although the current Toyota and Ford systems
36
-------
have characteristics of both series and parallel designs, and have been called series-
parallel).
Within the class of parallel hybrids, there are two major approaches used today. These
approaches have been dubbed "full" and "mild" (although these terms do not fully
describe their attributes). The so-called "full" hybrids are typified by the Toyota Prius
and Ford Escape. Full hybrids are capable of being propelled by the electric motor only
while the engine is stopped. Under most conditions, the electric motors of full hybrid
designs can propel the vehicle at speeds up to 15-25 mph. The so-called "mild" hybrids,
on the other hand, require the engine to be turning whenever the vehicle is moving
(although combustion does not necessarily need to occur). Honda's Integrated Motor
Assist (IMA) system used on their HEVs is an example of this type of system. The term
"mild" hybrid can be misleading. Honda's Insight meets the definition of a mild hybrid,
but is the most fuel-efficient car sold in the U.S. due to a combination of hybridization,
light weight, and other modifications.
An HEVs design and control strategy defines the amount of efficiency benefit from each
of the three main HEV efficiency-related benefits discussed earlier. Some HEV designs,
like the Honda Accord and Lexus RX400h, do not use engine downsizing, and some very
mild hybrids may not even take advantage of regenerative braking. Other HEVs, like the
Ford Escape, exploit all three features to make impressive fuel efficiency gains. Table 4-1
shows the expected range of benefits from each HEV feature.
Table 4-1: Expected FE Benefits of HEV Features
Feature
Idle Off
Regenerative Braking
Engine Optimization/Downsizing
Usage
All HEVs
Most HEVs
Some HEVs
FE benefit
5-8%
5-20%
5-15%
[Reference 4-1]
There are many ways to incorporate HEV technology into a gasoline-fueled vehicle. The
HEVs in production today use one of three different approaches. These approaches will
be discussed below. In addition, there is an approach being developed by GM and
DaimlerChrysler and is planned for introduction in 2007-2008.
4.1.1 Belt Starter-Generator (BSG)
Belt Starter-Generator (BSG) systems, while incapable of significant launch assist, are
still being produced and additional applications are under development (Toyota's
Japanese market Crown sedan is one example). BSG systems have smaller electric
motors and less battery capacity. BSG systems replace the conventional belt-driven
alternator with a belt-driven, higher power starter-alternator. This adds idle-stop
capability and possibly some limited regeneration capability. Originally meant to
augment 42 volt electrical systems, BSG systems are somewhat less attractive now that
manufacturers are less interested in adopting 42V systems. However, some
37
-------
manufacturers are still planning BSG systems on some small cars and SUVs. GM will be
introducing a BSG system on the Saturn Vue SUV. [Reference 4-2].
n
J
Figure 4-1: Schematic of BSG System [Reference 4-3]
4.1.2 Honda Integrated Motor Assist (IMA)
Honda's Integrated Motor Assist (IMA) utilizes a thin axial electric motor bolted to the
engine's crankshaft and connected to the transmission through a torque converter or
clutch. This electric motor acts as both a motor for helping to launch the vehicle and a
generator for recovering energy while slowing down. It also acts as the starter for the
engine and the electrical system's main generator. Since it is rigidly fixed to the engine,
if the motor turns, the engine must turn also, but combustion does not necessarily need to
occur. The Civic Hybrid also uses cylinder deactivation on three of its four cylinders
during decelerations. (The 2006 Civic Hybrid features an improved system that uses
cylinder deactivation on all four cylinders for decelerations and some cruise conditions.)
The Accord also has cylinder deactivation, but it is on one bank of the V-6 engine and
activates during cruise conditions as well as decelerations.
o
n
Figure 4-2: Schematic of Honda IMA System [Reference 4-3]
The IMA system is relatively low cost and easy to adapt to conventional vehicles,
provided there is enough room to package the necessary battery pack, cabling, and power
electronics. Packaging space is also a concern for the physically longer engine-motor-
transmission assembly. Also, the limitation of not having the capability to propel the
vehicle without the engine running may result in somewhat lower efficiency gains than
could be possible with a true full hybrid design. However, in practice, the Honda system
38
-------
is highly efficient and compares very well to the Toyota Prius which is more expensive to
manufacture. On the other hand, it is an impractical approach for so-called Plug-in HEVs
that have a greater capability to operate on all electric power.
Continental's Integrated Starter-Alternator-Damper (ISAD) is a system quite similar to
Honda's IMA. ISAD is in limited production in the Chevrolet Silverado, GMC Sierra,
and Dodge Ram. These pickups are very mild hybrid designs, operating at 42 volts, and
mainly add idle-stop capability. The main selling point of these designs is integrated AC
power generation for contractors, campers and others.
4.1.3 Toyota Hybrid Synergy Drive
Toyota's Hybrid Synergy Drive system as used in the Prius is a completely different
approach than Honda's IMA system. The heart of this system is called the Power Split
system, developed by Aisin and Toyota. Versions of it are also used in the Lexus
RX400h, Toyota Highlander and Ford Escape. The Power Split system replaces the
vehicle's transmission with a single planetary gear and a motor/generator. A second,
more powerful motor/generator is permanently connected to the vehicle's final drive and
always turns with the wheels. The planetary gear splits the engine's torque between the
first motor/generator and the drive motor. The first motor/generator uses its engine
torque to either charge the battery or supply additional power to the drive motor. The
speed of the first motor-generator determines the relative speed of the engine to the
wheels. In this way, the planetary gear allows the engine to operate completely
independently of vehicle speed, much like a CVT.
[ o
o
I
Figure 4-3: Schematic of Aisin/Toyota Power Split System [Reference 4-3]
The Power Split system allows for outstanding fuel economy in city driving. The vehicle
also avoids the cost of a conventional transmission, replacing it with a much simpler
single planetary and motor/generator. However, it is less efficient at highway speeds due
to the requirement that the first motor/generator must be constantly spinning at a
relatively high speed to maintain the correct ratio. Also, load capacity is limited to the
first motor/generator's capacity to resist the reaction torque of the drive train.
A version of Toyota's Power Split system is also used in the Lexus RX400h and Toyota
Highlander sport utility vehicles. This version has more powerful motor/generators to
39
-------
handle higher loads and also adds a third motor/generator on the rear axle of four-wheel-
drive models. This provides the vehicle with four wheel drive capability and four wheel
regenerative braking capability. Ford's eCVT system used in the hybrid Escape is
another version of the Power Split system but four-wheel-drive models use a
conventional transfer case and drive shaft to power the rear wheels.
4.1.4 GM Dual-Mode Hybrid System
GM and DaimlerChrylser have formed a joint venture (recently joined by BMW) to
develop a new HEV system based on HEV transmission technology originally developed
by GM's Allison Transmission Division for heavy-duty vehicles like city buses. This
technology uses an adaptation of a conventional stepped-ratio automatic transmission by
replacing some of the transmission clutches with two electric motors, which makes the
transmission act like a CVT. Like Toyota's Power Split design, these motors control the
ratio of engine speed to vehicle speed. Clutches allow the motors to be bypassed, which
improves both the transmission's torque capacity for heavy-duty applications and fuel
economy at highway speeds. This transmission will be incorporated in new full-size
HEV SUVs from GM and DaimlerChrysler in 2007 or 2008.
o
Figure 4-4: Schematic of GM-DCX HEV System [Reference 4-4]
4.1.5 Plug-in Hybrids
An offshoot of full hybrid technology presently garnering much attention is the so-called
Plug-in Hybrid, or PHEV. PHEVs are, to date, mainly modifications of the Toyota Prius.
Because the Prius is capable of electric-operation (albeit at low speeds and for only short
distances), some individuals and organizations are modifying them by adding larger
battery packs and add-on control units. The modifications allow significant all-electric
range at near-highway speeds in the all-electric mode. There is currently a demonstration
project in Austin, TX under the direction of the Austin city council.
(http ://www.austinenergy.com)
40
-------
A PHEV could be capable of running a large amount of its miles in all-electric mode
which could have significant positive air quality effects in urban areas in addition to
providing significant fuel savings to its owner. As the batteries become depleted, they
can either be recharged by plugging into a standard electrical outlet, or by the engine,
which switches on automatically to provide both motive power and battery charging. If
the PHEV's design and duty cycle are well-matched, it would only need to use its engine
during long trips or during heavy acceleration.
While PHEVs are capable of higher fuel economy than "conventional" HEVs, there are
some challenges that must be overcome. Battery size (and cost) increases with increased
all-electric range. The electric motor must also increase in size and power to cover more
of the operating map. These changes require more packaging space in the vehicle and
will increase weight. Also, consumer acceptance of PHEVs must be better understood.
Since consumers would be required to plug the vehicles in to take full advantage of the
all-electric range, the willingness of the vehicle owner to do this must be evaluated.
There are other issues too: evaporative emissions must be controlled in a vehicle that
could potentially not experience engine running for extended periods of time to purge
vapors, the control system becomes more complex as the system must make more
decisions about how much battery power to save, and standardized test procedures would
be more complex because of uncertainty in the amount of expected driving between
recharging events. [Reference 4-5]
This chapter only analyzes non-PHEV vehicles, both because they are commercially
available and because they are currently the most cost-effective of the electric hybrid
designs.
4.2 Technology-Specific Inputs
This section discusses the fuel efficiency benefits of electric hybridization as well as the
cost of HEV systems. It relies primarily on a series of studies sponsored by the Electric
Power Research Institute (EPRI), [References 4-6, 4-7, 4-8] and an August 2004 study by
Oak Ridge National Laboratory (ORNL) [Reference 4-9] for estimates of the fuel
economy benefits and cost impacts of electric hybridization.
Since 1999, under the auspices of EPRI, the Hybrid Electric Vehicle Working Group, a
consortium including General Motors, Ford, the California Air Resource Board, the
University of California at Davis, the Department of Energy and others have published a
series of reports analyzing electric hybrid issues. These studies include vehicle modeling,
cost modeling, consumer acceptance modeling, and an examination of commercialization
issues.
The EPRI working group has compared various gasoline/battery hybrid designs with
equivalent conventional vehicles. The guiding principle in establishing the key
performance parameters was that all electric hybrid vehicles had to be based on a
conventional vehicle body, had to have similar roadload characteristics (aerodynamic
drag, tire rolling resistance, and curb weight excluding any weight changes directly due
to the electric hybrid powertrain), and had to closely approximate the main performance
characteristics of a conventional vehicle (O-to-60 mph acceleration, top speed, and range).
41
-------
The EPRI reports estimate the benefits and costs of gasoline/battery hybrid technology
applied to a compact car, a midsize car, a midsize SUV, and a large SUV. This study
only uses the EPRI results for the midsize car and large SUV, to be consistent with the
remainder of the paper.
The ORNL study is a study of market potential of hybrid powertrains in the US market
and so weighs customer acceptance of HEVs heavily in its analysis. This study uses
estimates that future HEVs will feature an increase in performance of between 10 and 20
percent in addition to more modest fuel economy gains (relative to the EPRI projections)
of 35% to 40%. This seems to be consistent with current HEV marketing trends which
are emphasizing performance with an attendant fuel economy gain. Newer HEVs
entering the market (e.g. Honda Accord, Lexus RX400h, and Toyota Highlander) feature
hybrid systems with no engine downsizing. Future products from Toyota like the Lexus
GS450 sport sedan will also offer full-size engines in addition to full HEV powertrains.
4.2.1 Fuel Economy Improvement
The EPRI reports model gasoline/battery hybrid component and vehicle characteristics
with the ADVISOR computer model developed by the National Renewable Energy
Laboratory (NREL) [Reference 4-10] with support from the Department of Energy.
Based on the ADVISOR mpg results shown in Table 4-2, EPRI projects that
gasoline/battery hybrids will achieve 52% better fuel economy in large SUVs and 45%
greater fuel economy in midsize cars relative to comparable non-hybrid vehicles. The
corresponding decrease in tailpipe CO2 emissions is 34% for large SUVs and 31% for
midsize cars.
Table 4-2: EPRI Projections of Fuel Economy Improvement
for Gasoline/Battery Hybrids
Baseline gasoline vehicle
Gasoline-battery hybrid
Fuel economy increase
Tailpipe CO2 decrease
Large SUV
18.2 mpg
27.6 mpg
52%
34%
Midsize Car
28.9 mpg
41.9 mpg
45%
31%
[Reference 4-11]
ORNL's study is an analysis of market potential of hybrid and diesel vehicles using a
consumer choice model. Inputs to the model are a best-guess scenario of HEV
introductions from 2008 through 2012 and a 2004 study by K. G. Duleep [Reference 4-3]
that indicates manufacturers will use hybridization to improve performance as well as
fuel economy. This study does not isolate the fuel economy effect of hybridization, but it
does reflect current marketing trends in HEVs that emphasize improved performance
along with improved fuel economy. The ORNL report indicates that mild hybridization
using a system like Honda's IMA can result in an increase in torque of 15%, an increase
42
-------
in fuel economy of 20%, and a CO2 reduction of 17% . Similarly, full hybridization of a
car or light truck like a smaller SUV will result in a torque increase of 20% and fuel
economy gain of 40% with a CO2 reduction of 29%. Full hybridization of a larger light
truck will lead to a 15% torque increase and 35% fuel economy increase with a
corresponding CO2 decrease of 26%.
Table 4-3: ORNL Projection of Fuel Economy and Torque Improvement for HEVs
Hybrid System
Idle Stop
IS AD
IMA
Full (car and small light truck)
Full (large light truck)
Torque
Increase
0%
10%
15%
20%
15%
FE
Increase
7.5%
12.5%
20%
40%
35%
Tailpipe CO2
Decrease
7%
11%
17%
29%
26%
[Reference 4-12]
The reasonableness of the EPRI and ORNL estimates can be evaluated by analyzing the
fuel economy benefit of HEVs on the market today that also have a non-HEV version on
sale. Currently these products are: Honda Civic CVT, Honda Civic with manual
transmission, Honda Accord, Ford Escape, Mercury Mariner, Lexus RX400h, and Toyota
Highlander. These comparisons are shown in Table 4-4.
Comparing the Civic Hybrid to its non-hybrid counterpart, one can see that the HEV
version gains 28% or 23% fuel economy, depending on whether it is equipped with a
CVT or manual transmission. This vehicle shows somewhat less benefit than the EPRI
estimates for a midsize car. This is because the conventional Civic used for comparison
is already highly fuel efficient and offers such features as a lean burn engine. In fact,
comparing the Civic Hybrid to a "more conventional" version of the Civic results in a
fuel economy benefit of 46% and 40% for CVT and manual transmission, respectively,
which is in excellent agreement with the EPRI estimates. The ORNL estimate of 20% FE
gain with the addition of an IMA system is in relatively good agreement with the
production Civic versions available, especially considering that Honda chose to improve
torque minimally with hybridization on these models.
43
-------
Table 4-4: A Comparison of EPA Fuel Economy Label Values of Vehicles Available
with Both Conventional and Hybrid Drivetrains
2005 Honda Civic
CVT
CV: 1.7L Lean, CVT
HEV: 1.3L Lean, CVT
2005 Honda Civic
MTX
CV: 1.7L Lean, 5 man
HEV: l.SLLean, 5 man
Honda Accord
CV: 3.0L, 5 Auto
HEV3.0L, 5 Auto
Ford Escape/
Mercury Mariner
4X4
CV: 3.0L, 4 Auto
HEV: 2.3L, CVT
Ford Escape/
Mercury Mariner
4X2
CV: 3.0L, 4 Auto
HEV: 2.3L, CVT
Lexus RX 400h /
Highlander 4X4
CV: 3.3L, 5 Auto
HEV: 3.3L, Power Split
Toyota Highlander
4X2
CV: 3.3L, 5 Auto
HEV: 3.3L, Power Split
Adjusted (Label) Fuel Economy
Conv. Powertrain
City
35
36
21
18
20
18
19
HWY
40
44
30
22
25
24
25
Comp
37.1
39.2
24.3
19.6
22.0
20.3
21.3
HEV Powertrain
City
48
46
29
33
36
31
33
HWY
47
51
37
29
31
27
28
Comp
47.5
48.1
32.1
31.1
33.6
29.1
30.5
% Improvement
City
37%
28%
38%
83%
80%
72%
74%
HWY
18%
16%
23%
32%
24%
13%
12%
Comp
28%
23%
32%
58%
53%
43%
43%
Notes
All versions of Civic
shown here have lean burn
engines. Comparing Civic
Hybrid to non-lean-burn,
non-VTEC Civic yields a
46% and 40% difference
for CVT and MTX HEVs
respectively.
Accord Hybrid uses no
engine downsizing, but has
cylinder deactivation on the
rear bank of cylinders.
Escape HEV is optimized
for fuel economy using
engine downsizing,
Atkinson cycle, etc.
Towing capacity is
reduced. 4X4 versions use
mechanical rear drive.
The RX400h and
Highlander use no engine
downsizing, and have the
same towing capacity as
the conventional version.
4X4 versions use electric
rear drive.
Data from the 2005 Fuel Economy Guide, Honda.com, and Toyota.com
The Honda Accord, Lexus RX400h, and Toyota Highlander are three examples of HEVs
where hybridization was used as a performance enhancement. These models add HEV
systems to vehicles without engine downsizing, although the Accord does utilize cylinder
deactivation on three of its six cylinders. The Accord system offers an increase in torque
of about 10% and a fuel economy benefit of 32% over the conventional version.
[Reference 4-13] This FE benefit exceeds the ORNL estimate of 20% for IMA systems.
However, this difference is reasonable when considering that the torque improvement in
the Accord is less, and that the addition of cylinder deactivation will help fuel economy.
The Highlander and RX400h fuel economy gain of 43% is in excellent agreement with
ORNL's estimate of 40% for a full hybrid system in a smaller light truck.
Finally, Ford's Escape features a full hybrid system and engine downsizing. Ford
compares this vehicle to the V6 version of the Escape, and in so doing, the Escape HEV
gains 58% fuel economy for the 4X4 model and 53% for the 4X2 model. This result is in
reasonable agreement with the EPRI estimate of a 52% FE gain for a large SUV.
Comparing a conventional Escape 4X2 with the four cylinder engine option to the Escape
4X2 HEV shows a difference of 44% fuel economy. This more closely reflects the effect
of hybridization, but still includes the Atkinson cycle engine and transmission
44
-------
differences, which add to the HEV's overall efficiency. It should be noted that the
Escape hybrid has significantly lower towing capacity than the conventional V6 Escape.
In summary, the literature and market experience seem to support both the EPRI and
ORNL projections of the fuel economy improvement due to battery hybridization. The
vehicles that use hybridization as a performance enhancement show fuel economy gains
in good agreement with the ORNL results, while the more "performance neutral" hybrids
show good agreement with the EPRI study for fuel economy gains. This section will
analyze two scenarios for cost and consumer payback, using both the ORNL and EPRI
fuel economy and cost estimates.
4.2.2 Incremental Retail Price
EPRI assumed that gasoline/battery hybrids use the same bodies as conventional vehicles.
Glider19 costs were estimated by deleting dealer and manufacturer markups from the
typical conventional vehicle Manufacturer's Suggested Retail Price (MSRP) and
subtracting the costs of the conventional vehicle drivetrain. EPRI then added the
drivetrain-specific component costs back in and used the vehicle retail price equivalent
(RPE) as the basis for estimating the costs of both electric hybrids and their
corresponding conventional vehicles.
Two different methods were used by EPRI to estimate RPEs. In the first method, all
components were assumed to be built by the vehicle manufacturer. Component costs
were estimated as the cost of labor and materials for each component with both
manufacturer and dealer markups added. In the second method, some components were
assumed to be built by the vehicle manufacturer and some were assumed to be purchased
from a supplier. Both manufacturer and dealer markups were applied to components that
were built by the manufacturer. A single, smaller markup covering manufacturer and
dealer mark-ups and development costs was applied to the electric components (motor,
controller, and battery) which were assumed to be purchased from a supplier. In both
cases, generally, component costs took into account technological advancements that
could be foreseen or considered likely to occur by 2010 and that applied at production
volumes of 100,000 vehicles per year. Also, both methods assumed that batteries are one
of the largest cost components and a reduced mark-up was applied. [Reference 4-14]
Table 4-5 shows the major gasoline/battery vehicle components identified by EPRI, as
well as the component costs developed by EPRI for midsize cars. [Reference 4-15]
Using data from the EPRI report [Reference 4-16] and the individual markup factors
listed in EPRI's first report, [Reference 4-17] it was possible to back calculate total
component costs for the large SUVs, but not the individual component costs. These costs
are also shown in Table 4-5.
19
A Glider is defined as a vehicle without its engine and transmission. It includes all other body, chassis,
and interior components.
45
-------
Table 4-5: EPRI Incremental Manufacturing Costs of Major Components
for the Gasoline/Battery Hybrid Vehicle
Component
Engine Downsizing
Exhaust System
Smaller Transmission
APM
Electric Motor
Power Inverter
Electronics Thermal
Energy Batteries/ Thermal
Pack Tray /Hardware
Miscellaneous
Total
Large SUV
$3,543
Midsize Car
-$863
-$50
-$420
$130
$797
$478
$114
$1,263
$620
-$85
$1,984
The same 1.26 RPE used in the analysis of the other drivetrains discussed in this report
was then applied in order to put the analysis of gasoline/battery hybrid vehicles on the
same economic footing with the remainder of this paper. The results are shown in Table
4-6.
Table 4-6: EPA-Adjusted Incremental Retail Price for Gasoline/Battery Hybrids
(EPRI Scenario)
Vehicle
Class
Large SUV
Midsize Car
Incremental
Manufacturing
Price
$3,543
$1,984
Incremental
Retail
Price
$4,464
$2,500
ORNL's report contains cost estimates that are somewhat different than EPRI's. Using a
variety of manufacturer and supplier information [Reference 4-18], ORNL concluded full
hybridization costs in 2012 would be $3,320 for small cars, $3,920 for midsize and large
cars, and $4,100 for large trucks.
The midsize and large car class in the ORNL report presumably covers a very large
segment of the market, with curb weights ranging from approximately 3,100 Ibs up to
well over 4,000 Ibs. The car portion of this EPA study focuses on hybridization of
midsize cars which are at the lighter end of the ORNL midsize and large car class (such
46
-------
as the Honda Accord). Therefore, for the purposes of this study, an average of the ORNL
small car and ORNL midsize and large car costs, or $3,620, will be used.
The large SUV case in the ORNL scenario will use the $4,100 RPE as assumed for large
trucks.
Table 4-7 below shows the ORNL costs removing ORNL's RPE factor of 1.7 [Reference
4-19] to generate an incremental manufacturing price. Then, they are re-adjusted back up
using the EPA incremental RPE of 1.26. This normalizes the ORNL and EPRI prices to
the same retail price equivalent assumption.
Table 4-7: Adjusted Incremental Retail Price for Gasoline/Battery Hybrids
(ORNL Scenario)
Vehicle
Class
Large SUV
Midsize Car
Incremental
Manufacturing
Price
$2,411
$2,129
Incremental
Retail
Price
$3,039
$2,683
[Reference 4-20]
4.2.3 Battery Life and Cost
This study assumes that battery packs will not have to be replaced during the fourteen
year life of the vehicle. This is an important assumption, as battery replacement could
add a major consumer expense. However, field experience has shown battery life to be
better than expected even just a few years ago, and this battery life assumption seems
appropriate.
EPRI's treatment of this issue has evolved in its series of reports. In its 2001 report,
EPRI stated that "The consumer cost of [a non-PHEV] battery replacement is estimated
between $1,500 to $2,000 if the batteries have a salvage value. ... If vehicle lifetimes
were extended to 15 years or 150,000 miles, it is likely that all HEV designs will require
battery replacements within this extended vehicle lifetime." In its 2002 report, EPRI
stated that "because of the battery, the vehicle life assumption was limited to 100,000
miles and not 10 years of life." By 2003, EPRI had come to believe that significant
progress had been made in battery development. They cite as evidence that five year old
Toyota RAV/4 EVs, in real world driving, have traveled over 100,000 miles on the
original NiMH battery pack with no appreciable degradation in battery performance or
vehicle range and are projected to last for 130,000 to 150,000 miles. [Reference 4-21]
Currently, Toyota offers an 8-year, 100,000-mile warranty on hybrid-related components,
including the battery, battery control module, hybrid control module and inverter with
converter. [Reference 4-22] Honda currently covers its hybrid systems with an eight-
year, 80,000-mile warranty. Ford offers an eight-year, 100,000 mile warranty on its
hybrid systems.
47
-------
Panasonic has recently stated that current NiMH battery technology has a 98-99% chance
of surviving ten years and a estimated 90% survivability rate at 14-15 years [Reference 4-
23]. Therefore it seems likely that by 2010, batteries will easily last the expected
fourteen years /150,000 miles. Of course, if a battery pack does have to be replaced, it
would have a deleterious effect on both consumer payback and lifetime vehicle savings if
it is not covered by the manufacturer's warranty.
HEV battery costs are dropping rapidly. Panasonic claims that NiMH battery costs (per
kW) have decreased 50% from the first generation Prius to the second generation Prius.
This could put current battery costs at around $40/kW. Over the next five years,
Panasonic forecasts an additional cost decrease of 30%-40%, which includes increased
production volumes. [Reference 4-24] However, rising material costs due to greater
demand, may reduce these savings.
Lithium-Ion batteries are still undergoing intense development, since they promise
significantly more energy density than NiMH batteries and potential lower overall cost.
The problem with Li-Ion in vehicle applications has been short life and safety. However,
the French company Saft has recently shown Li-Ion battery technology with an expected
life of fifteen years [Reference 4-25]. Also, many battery companies are developing
materials with less potential for thermal runaway. Nevertheless, it is still somewhat early
to determine if Li-Ion technology will be in volume production in 2010.
4.2.4 Electric Motor Development and Cost
Like batteries, electric motor costs are also declining due to improved technology and
higher production volumes. For HEVs, permanent magnet (PM) motors are generally
preferred due to higher efficiency and lower controller costs. However, PM motors are
significantly more expensive than induction motors even including their lower controller
costs. PM motor costs are declining more quickly than induction motor costs and so the
price gap is decreasing. Toyota says that motor costs have come down about 40% over
the last five years, and now approach commodity levels. [Reference 4-26]
Additionally, Hitachi is developing significantly more powerful and lighter weight
electric motors. By 2010, the total motor-controller cost for a 60 kW motor could be
about $800, or about one half the cost of current motors. [Reference 4-27]
4.2.5 Brake Maintenance
As discussed in Section 1.4.7'.3, electric hybrid vehicles will have reduced brake
maintenance expenditures. This analysis adopts the EPRI assumption that the overall
brake wear on a gasoline/battery hybrid vehicle will be reduced by 50% on the front
brakes and by 0% on the rear brakes, relative to a conventional vehicle. [Reference 4-28]
This yields a discounted lifetime brake maintenance savings of $533 for the large SUV
and $377 for the midsize car.
4.2.6 Federal Income Tax Deduction
As discussed in Section 1.4.8, the Energy Policy Act of 2005 allows for tax credits for
hybrid electric vehicles. However, these credits begin to phase out for each manufacturer
48
-------
after 60,000 units are sold, and will not be available after December 31, 2009. Since the
scope of this report concerns high-volume scenarios in a 5-10 year timeframe, this tax
credit is assumed to be unavailable.
4.3 Economic Results
Based on the technology-specific efficiency and cost projections discussed in Section 4.2
and the economic assumptions described in Section 1.4, Tables 4-8 (EPRI) and 4-9
(ORNL) show the vehicle lifetime savings and the number of years that it is expected to
take until the vehicle's initial cost increase is offset by discounted savings on fuel and
brake maintenance.
Table 4-8: Cost Effectiveness for Gasoline/Battery Hybrid Vehicles
(EPRI Scenario)
Incremental Vehicle Price
Fuel Economy Gain
Tailpipe CO2 decrease
Discounted Fuel Savings
Discounted Brake Savings
Lifetime Savings
Payback Period
Large SUV
$4,464
52%
34%
$7,111
$533
$3,179
5.0 years
Midsize Car
$2,500
45%
31%
$3,057
$377
$934
7.4 years
Table 4-9: Cost Effectiveness for Gasoline/Battery Hybrid Vehicles
(ORNL Scenario)
Incremental Vehicle Price
Fuel Economy Gain
Tailpipe CO2 decrease
Discounted Fuel Savings
Discounted Brake Savings
Lifetime Savings
Payback Period
Large SUV
$3,039
35%
26%
$5,389
$533
$2,882
4.1 years
Midsize Car
$2,683
40%
29%
$2,815
$377
$509
9.5 years
The above results show that for a large SUV, the EPA-adjusted EPRI and ORNL
estimates indicate the possibility of full payback of the incremental retail price of a full
HEV in 5.0 years and 4.1 years, respectively. The payback period for midsize cars is
somewhat longer, at 7.4 to 9.5 years. These payback periods assume there is no federal
tax credit available to consumers as the high-volume scenario shown here would result in
the phase-out of the credit.
49
-------
References
4-1 Hybrid Powered Vehicles. John M. German, 2003, SAE International,
Warrendale, PA; pp 22-25
4-2 "Analysis of Hybrid Technology." K. G. Duleep, November 2003; Energy and
Environmental Analysis, Inc, Arlington, VA; p. 9
4-3 "A Comparative Study of the Production Applications of Hybrid Electric
Powertrains." Harry L. Husted, Delphi Corporation, SAE Technical Paper 2003-
01-2307
4-4 "Electrically Variable Transmission with Selective Input Split; Neutral and
Reverse Modes." US Patent 20020142876, Hargitt, et. al.
4-5 "Comparing the Benefits and Impacts of Hybrid Electric Vehicle Options."
Electric Power Research Institute, Palo Alto, CA: 2002. 1006892
4-6 Assessment of Current Knowledge of Hybrid Vehicle Characteristics and Impacts.
Electric Power Research Institute, Palo Alto, CA: 1999. TR-113201
4-7 Comparing the Benefits and Impacts of Hybrid Electric Vehicle Options. Electric
Power Research Institute, Palo Alto, CA: 2001. 1000349
4-8 Comparing the Benefits and Impacts of Hybrid Electric Vehicle Options for
Compact Sedan and Sport Utility Vehicles. Electric Power Research Institute, Palo
Alto, CA: 2002. 1006892
4-9 "Future Potential of Hybrid and Diesel Powertrains in the U. S. Light-Duty
Vehicle Market." Oak Ridge National Laboratory, August 2004, ORNL/TM-
2004/181
4-10 "ADVISOR Paves Road to Faster Vehicle Evaluation and Testing." Office of
Energy Efficiency and Renewable Energy/DOE,
http://www.ott.doe.gov/pdfs/advisor.pdf, April, 1999.
4-11 Comparing the Benefits and Impacts of Hybrid Electric Vehicle Options. Electric
Power Research Institute, Palo Alto, CA: 2001. 1000349; p. 3-28
4-11 (cont.) Comparing the Benefits and Impacts of Hybrid Electric Vehicle Options for
Compact Sedan and Sport Utility Vehicles. Electric Power Research Institute, Palo
Alto, CA: 2002. 1006892, p. A-5
4-12 "Future Potential of Hybrid and Diesel Powertrains in the U. S. Light-Duty
Vehicle Market." Oak Ridge National Laboratory, August 2004, ORNL/TM-
2004/181, p.9
50
-------
4-13 www.honda.com, 2005 Accord Hybrid Specifications
4-14 Battery module mark-ups are 50% of battery module costs not to exceed $800.
4-15 Comparing the Benefits and Impacts of Hybrid Electric Vehicle Option. Electric
Power Research Institute, Palo Alto, CA: 2001. 1000349; Appendix C, Table C-2,
Component Costs for the Base Case Vehicles.
4-16 Comparing the Benefits and Impacts of Hybrid Electric Vehicle Options for
Compact Sedan and Sport Utility Vehicles. Electric Power Research Institute, Palo
Alto, CA: 2002. 1006892; Appendix A, Table A-17, Full-Size SUV Component
Retail Price Equivalent Average for Base and ANL Methods
4-17 Comparing the Benefits and Impacts of Hybrid Electric Vehicle Options. Electric
Power Research Institute, Palo Alto, CA: 2001. 1000349; Table C-8, Functions
Used for Estimating HEV Component Costs.
4-18 "Analysis of Hybrid Technology." K. G. Duleep, November 2003; Energy and
Environmental Analysis, Inc, Arlington, VA;
4-19 ORNL RPE factor per phone conversation with K.G. Duleep Feb 15, 2005
4-20 "Future Potential of Hybrid and Diesel Powertrains in the U. S. Light-Duty
Vehicle Market." Oak Ridge National Laboratory, August 2004, ORNL/TM-
2004/181, p.10
4-21 Advanced Batteries for Electric-Drive Vehicles: A Technology and Cost-
Effectiveness Assessment for Battery Electric, Power Assist Hybrid Electric, and
Plug-in Hybrid Electric Vehicles. Electric Power Research Institute, Palo Alto,
CA: 2003. 1001577, Preprint Report, Version 16, March 25, 2003.
4-22 "Prius Warranty." Toyota,
http://www.tovota.com/html/shop/vehicles/warranty.html
4-23 "Analysis of Hybrid Technology." K. G. Duleep, November 2003; Energy and
Environmental Analysis, Inc, Arlington, VA; p. 6
4-24 "Analysis of Hybrid Technology." K. G. Duleep, November 2003; Energy and
Environmental Analysis, Inc, Arlington, VA; p. 6
4-25 "Analysis of Hybrid Technology." K. G. Duleep, November 2003; Energy and
Environmental Analysis, Inc, Arlington, VA; p. 8
4-26 "Analysis of Hybrid Technology." K. G. Duleep, November 2003; Energy and
Environmental Analysis, Inc, Arlington, VA; p. 4
4-27 "Analysis of Hybrid Technology." K. G. Duleep, November 2003; Energy and
Environmental Analysis, Inc, Arlington, VA; p. 4
51
-------
4-28 Advanced Batteries for Electric-Drive Vehicles: A Technology and Cost-
Effectiveness Assessment for Battery Electric, Power Assist Hybrid Electric, and
Plug-in Hybrid Electric Vehicles. Electric Power Research Institute, Palo Alto,
CA: 2003. 1001577, Version 16, March 25, 2003.
52
-------
53
-------
5. Diesel/Battery Hybrid
5.1 Technology Description
Diesel hybrid electric vehicles seek to combine the engine efficiency gains of a diesel
engine with the other powertrain efficiency gains of a hybrid electric vehicle (HEV)
system. Diesel HEV and gasoline HEV system definitions will be quite similar except
that a diesel engine's different torque characteristics as compared to a gasoline engine
may affect the amount of engine downsizing that is practical.
There is currently only one diesel HEV personal vehicle sold today (in very limited
numbers to fleet customers only)—the Dodge Ram Contractor's Special. This pickup is a
version of the Ram 2500/3500 truck with the Cummins turbo-diesel engine. This vehicle
adds an integrated starter-alternator-damper between the engine and transmission. The
vehicle features idle-stop capability and regenerative braking. However, it does not offer
launch assist. Although it is technically a mild hybrid, its main attraction is the ability to
generate AC power at a jobsite, cabin, or during an emergency. DaimlerChrysler claims
a 15% fuel economy benefit with this system. [Reference 5-1]
In addition to the Ram, there are also some heavy-duty diesel HEVs in operation. These
include city buses and delivery vehicles. Heavy-duty applications are not reviewed in
this report.
Although diesel hybrid-electric personal vehicles are not a real market reality yet,
automakers appear to be very interested in the technology as evidenced by several recent
concept vehicles featuring diesel HEV systems. In 2005, both Ford and GM showed
concept vehicles in Detroit with diesel HEV powertrains, but with different approaches.
The GM concept was a version of the Opel Astra small car with a 1.7L diesel engine and
GM's Advanced Hybrid System 2. The Ford concept, called Meta One, is an SUV with a
twin-turbo diesel V-6 and electric hybridization. It offers a total of 427 Ib-ft of torque.
But while biased for performance, Meta One is PZEV emissions-capable using selective
catalytic reduction (SCR). [Reference 5-2] Mercedes-Benz, also has shown a prototype
diesel HEV version of its S-Class large sedan and Vision Grand Sports Tourer wagon.
This powertrain consists of a diesel V8 and hybrid system which is tuned mainly for
improved performance, but also offers improved fuel economy and reduced emissions.
[Reference 5-3]
More important, Volkswagen has recently announced plans to produce in Europe a diesel
HEV version of its Golf compact car in 2006. This vehicle has a 1.4L, 3-cylinder
supercharged diesel and a 15 kW electric motor mated to a twin clutch electronically-
controlled manual transmission. VW claims a 25% increase in fuel economy over a
conventional diesel Golf. [Reference 5-4]
In the near-to-mid term, hybridization may be an excellent enabler for automakers to
introduce cleaner diesel technologies. Some cleaner-diesel technologies are sensitive to
engine operating conditions and are less effective under moderately or highly transient
54
-------
conditions. An HEV powertrain can help smooth out transitions, effectively decoupling
the engine from the rest of the drivetrain.
One specific technology where hybridization could be especially useful is with
homogeneous charge compression ignition (HCCI) engines. HCCI is a promising
technology which can, in some embodiments, combine the lower costs of port-fuel
injection gasoline engine intake systems with the higher thermal efficiency of diesel
engines. HCCI engines are currently challenged by transients and a hybrid drive system
could mitigate the transient effects, allowing opportunities to lower the cost of the HCCI
hardware while enabling diesel-like thermal efficiencies.
Currently, diesel engine costs are too high to make diesel HEVs cost effective. However,
as diesels gain wider acceptance in the marketplace and economies of scale help reduce
production costs, diesel HEVs will likely be introduced. Lower costs of batteries,
motors, and other HEV components will also help offset the additional cost of
conventional high-pressure injection diesel engines, and an HEV system's capability of
managing powertrain transitions will help the diesel engine reduce emissions.
Given the emerging interest by manufacturers, and the inherent synergies of diesel
engines with electric hybrid technology, EPA is optimistic about the future
commercialization of diesel HEVs.
5.2 Technology-Specific Inputs
This section discusses the fuel economy and costs of diesel HEV systems. While EPA is
not aware of any independent studies of the fuel economy and costs of diesel HEV
systems, some estimates can be made using studies of gasoline HEV systems and diesel
engines, as well as statements made by automakers either studying diesel HEV
technology, or readying it for production. Additionally, there is a recent MIT study that
discusses the fuel economy potential of diesel electric hybrids in a fifteen year timeframe
[Reference 5-5]. EPA will monitor developments with diesel hybrids and will modify
these projections as more information becomes available.
This analysis is clearly not as rigorous as the others in this report. But we believe this
method is conservative in that it does not account for any of the natural synergies of
combining diesel and HEV technologies. Such synergies include possibly lower engine
costs due to the HEV system's ability to dampen transient effects, thereby reducing
emission control issues, and possible engine downsizing opportunities.
5.2.1 Fuel Economy Improvement
Currently, the best source of information for the fuel economy benefit of diesel
hybridization alone comes from the manufacturers that are developing the technology.
VW and GM both claim a 25% fuel economy increase over a conventional diesel vehicle
of the same type with engine downsizing. [References 5-4, 5-6] Mercedes-Benz claims a
15%-20% fuel economy increase over a conventional diesel vehicle with no engine
downsizing [Reference 5-7]. The MIT study mentioned above implies that a 30%
reduction in fuel consumption is possible in the hybridization of a diesel vehicle. This
55
-------
fuel consumption savings converts to a fuel economy increase of around 40% at the
higher base fuel economy level the MIT report assumes, due largely to decreased vehicle
weight. For the purposes of this analysis, a 25% fuel economy improvement in addition
to the diesel fuel economy improvement will be used to calculate the overall diesel HEV
benefit. It is assumed that some engine downsizing will be used in diesel HEVs and,
consistent with other sections of this report, no vehicle weight reduction is assumed.
Tables 5-1 and 5-2 summarize the results from Chapters 3 and 4, and calculate the
possible total diesel HEV benefit assuming an additional 25% fuel economy increase due
to hybridization.
Since the industry sources state the diesel HEV benefit to be 25% above a comparable
diesel vehicle, the diesel vehicle fuel economy must first be calculated by multiplying the
baseline conventional vehicle fuel economy by the assumed benefit of the diesel engine.
Then, this new diesel baseline is multiplied by the assumed 25% diesel HEV gain to yield
the total fuel economy improvement. For each vehicle type, the two source studies are
averaged because they will be used with the combined cost data from the diesel and
gasoline HEV sections. This cost data is averaged because it comes from different
sources in some cases.
Table 5-1: Projected Cumulative FE Benefit of Diesel HEV System for Large SUV
(Baseline Fuel Economy of 14.6 MPG)
FEV/EPA
ORNL
Average
Diesel
FE
benefit
41%
33%
37%
CO2 decrease
Tailpipe Lifecycle
18%
14%
16%
21%
16%
19%
Diesel
FE
(mpg)
20.6
19.4
20.0
Assumed
HEV
benefit
25%
25%
Diesel
HEVFE
(mpg)
25.8
24.3
25.1
Total
FE
benefit
77%
66%
72%
Total CO2 decrease
Tailpipe Lifecycle
35%
31%
33%
37%
33%
35%
Table 5-2: Projected Cumulative FE Benefit of Diesel HEV System for Midsize Car
(Baseline Fuel Economy of 24.7 MPG).
FEV/EPA
ORNL
Average
Diesel
FE
benefit
40%
33%
37%
CO2 decrease
Tailpipe Lifecycle
18%
14%
16%
21%
16%
19%
Diesel
FE
(mpg)
34.6
32.8
33.7
Assumed
HEV
benefit
25%
25%
Diesel
HEVFE
(mpg)
43.3
41.0
42.2
Total
FE
benefit
75%
66%
71%
Total CO2 decrease
Tailpipe Lifecycle
34%
31%
33%
36%
33%
35%
The above tables show that adding a 25% improvement to a diesel vehicle to approximate
the effect of hybridization yields an average total diesel HEV fuel economy improvement
of 72% for the full size SUV and 71% for the midsize car. The corresponding tailpipe
CO2 decrease of 33% and lifecycle CO2 average decrease of 35% is the same for both
56
-------
the large SUV and midsize car. Because the production of diesel fuel has a lower energy
requirement than that for gasoline, the CO2 savings over the complete lifecycle are about
2% higher than the tailpipe CO2 savings.
5.2.2 Incremental Retail Price
Diesel HEV costs are difficult to identify with any great certainty since this technology is
still in its infancy. However, since the HEV system costs are similar to those of a
gasoline HEV, and the diesel engine is at least nominally similar, this report will use a
sum of the costs for a diesel engine and gasoline HEV system to estimate diesel HEV
costs roughly. This approach is somewhat conservative in that it does not account for
some diesel engine and control system cost savings that may be possible due to electric
hybridization.
Since the studies cited in Chapters 3 and 4 of this report deal only with a single
technology, diesel or gasoline HEV, the prices will be averaged for each technology
before they are summed. A summary of the studies and their incremental retail prices
appears below:
Table 5-3: Projected Incremental Retail Prices for Diesel HEV
Source
FEV/EPA
ORNL
EPRI
average
Large SUV
Diesel
$1,760
$2,560
—
$2,160
Gas HEV
—
$3,039
$4,464
$3,752
Diesel
HEV
$5,912
Midsize Car
Diesel
$1,252
$1,810
—
$1,531
Gas HEV
—
$2,683
$2,500
$2,592
Diesel
HEV
$4,123
Summing the averages of the incremental retail prices of the diesel engine and gasoline
HEV packages yields an estimated incremental retail price for diesel HEV of $5,912 for
the large SUV and $4,123 for the midsize car. These prices will be used in the economic
analysis for consumer payback.
Since a diesel HEV would likely share most of its HEV system components with gasoline
HEVs, the costs of batteries, electric motors, and other HEV-specific components will be
similar to those of gasoline HEVs. See Sections 4.2.3 and 4.2.4 for a discussion of these
components. Additionally, diesel HEVs would benefit from the same reduced brake
maintenance as gasoline HEVs.
5.2.3 Federal Income Tax Deduction
As discussed in Section 1.4.8, the Energy Policy Act of 2005 allows for tax credits for
hybrid electric and diesel vehicles. However, these credits begin to phase out for each
manufacturer after 60,000 units are sold, and will not be available after 2009 or 2010.
Since the scope of this report concerns high-volume scenarios in a five to ten year
timeframe, this tax credit is assumed to be unavailable.
5.3 Economic Results
57
-------
Based on the above estimates of fuel efficiency and cost, and the economic assumptions
described in Section 1.4, Table 5-4 shows the vehicle lifetime savings and number of
years required to offset the estimated initial cost of a diesel HEV due to discounted
savings on fuel and brake maintenance.
The analysis indicates that the incremental investment in a large SUV diesel hybrid can
potentially pay back to the consumer in 5.8 years and offer a $3,321 total lifetime
savings. A midsize car diesel HEV could pay back to the consumer in about 11 years.
These results do not include the effect of any federal tax credit.
Table 5-4: Cost Effectiveness for Diesel/Battery Hybrid Vehicles
Incremental Vehicle Price
Fuel Economy Gain
Tailpipe CO2 decrease
Lifecycle CO2 decrease
Discounted Fuel Savings
Discounted Brake Savings
Lifetime Savings
Payback Period
Large SUV
$5,912
72%
33%
35%
$8,701
$533
$3,321
5.8 years
Midsize Car
$4,123
71%
33%
35%
$4,091
$377
$344
11.4 years
58
-------
References
5-1 http://media.daimlerchrysler.com
5-2 http://www.media.ford.com
5-3 http://www.daimlerchrysler.com
5-4 Hybrid and Electric Vehicle Progress, May 1, 2005
5-5 The Performance of Future ICE and Fuel Cell Powered Vehicles and Their
Potential Fleet Impact: Heywood, Weiss, Schafer, Bassene, Natarajan;
Laboratory for Energy and the Environment; Massachusetts Institute of
Technology; 2004
5-6 http://www.media.gm.com
5-7 http://www.daimlerchrysler.com
59
-------
Conclusions
This report integrates existing technical literature on the projected fuel efficiency
improvement potential and cost of advanced powertrains and applies a common
economic analysis to determine their cost effectiveness - from a collective consumer
perspective over the typical vehicle lifetime. The technology packages are:
• packages of individual gasoline vehicle technologies
• advanced diesel engines
• gasoline electric hybrids
• diesel electric hybrids
The report makes the following projections:
1) These technologies would result in substantial improvements in new personal
vehicle fuel economy
Compared to a baseline gasoline-engine powered vehicle typical of today's vehicles,
potential fuel economy improvements ranged from 20% to 70%. The lower end of the
range applied modifications to existing gasoline engine-powered vehicles. Maximum
fuel economy improvement would be achieved via a diesel hybrid drivetrain. These fuel
economy improvements can be achieved with no loss in vehicle performance or size.
2) All of these technology packages are projected to result in a net cost benefit to
owner(s) over a 14-year vehicle lifetime as the cumulative operating cost savings
more than offset the higher initial vehicle purchase price
All of these technologies will increase new vehicle purchase price. Projected increases in
vehicle cost ranged from around $1000 for an advanced gasoline engine package in a
midsize car to about $6000 for a diesel electric hybrid in a large SUV.
Consumers of large SUVs could recover the additional cost of new technologies within 2
to 6 years, and are projected to save between $2600 and $4400 over the lifetime of the
vehicle. Consumers of midsize cars could recover costs within 4 to 11 years, and are
projected save between $300 and $1600 over the vehicle's lifetime.
In general, applying technology to vehicles with the lowest base fuel economy results in
the greatest net benefits. The payback and lifetime savings potential is greater for large
SUVs than for midsize cars, based on their higher base operating costs.
These results should not be taken to imply that these technologies will necessarily move
into the mainstream market in the near future. Decisions by manufacturers to invest in,
and consumers to buy, new technologies involve many factors well beyond the scope of
this paper, including transition costs which will be higher than the long-term equilibrium
costs evaluated in this paper. The point of this paper is not to predict future manufacturer
or consumer behavior, but rather to project the cost effectiveness if they do adopt new
personal vehicle technologies.
60
-------
61
-------
Appendix A: Sample Consumer Payback and Savings
Calculations
Included below are examples of the spreadsheets used to determine lifetime consumer
savings for advanced gasoline technology SUVs.
Assumptions
FE
Baseline
14.62
Discount
Rate
7%
Gas
Price
2.25
Package
Cost
1463
Fuel Cons
Baseline
0.068
% FC
Irnprvmt
28.2%
Delta
Fuel Cons
0.019
New FE
20.36
NAS - Laige SUV Package Savings
Year
n
1
2
3
4
5
6
7
8
9
10
11
12
13
14
EOL
MOBILES
VMT
19,978
18,695
17,494
16,371
15,319
14,335
13,414
12,553
1 1 ,746
10,992
10,286
9,625
9,007
8,428
188,243
Investment
Balance
1,463
595
-163
-826
-1 ,406
-1,913
-2,357
-2,745
-3,084
-3,381
-3,640
-3,867
-4,065
-4,239
$4,391
Current Yr
Savings $
$867
$758
$663
$580
$507
$444
$388
$339
$297
$259
$227
$198
$174
$152
Cum.
Savings $
$867
$1 ,625
$2,288
$2,868
$3,376
$3,819
$4,207
$4,546
$4,843
$5,103
$5,329
$5,528
$5,702
$5,853
Total Savings
Payback
Time (yrs)
1.79
Definitions and equations:
"Total Savings", Stotai, is the projected discounted total savings to the consumer if the
vehicle was driven at the given mileage schedule for the expected 14-year life of the
vehicle. This is expressed as the sum of the discounted annual savings less the initial
package cost of the vehicle, or:
62
-------
Where:
The package cost, Cp, refers to the incremental retail price (as determined for
advanced gasoline packages, diesel engines, gas electric hybrids and diesel
electric hybrids in Sections 2.2.3, 3.2.2, 4.2.2, and 5.2.2, respectively).
Sj is the annual discounted fuel savings for year i (calculated as the product of gas
price, reduction in fuel consumption, and miles traveled). Mathematically, annual
fuel savings is expressed as:
_ VMTt (mi] * Pgas ($/gal) * AFC(gal/mi)
and
is the MOBILE6 predicted vehicle miles traveled for year i;
• raise is the discount rate;
• Pgas is the fuel price;
• AFC is delta fuel consumption - the reduction in the amount of fuel
consumed, per mile, due to the efficiency gain of the new technology.
AFC is defined as:
AFC (galI mi] = * (% FC improvement)
F J-J !-.„„„
So, for year 4 in the spreadsheet above,
_ I637l(mi)*2.25($/gal)*0.0l9(gal/mi) _ tfgon
-------
"Investment Balance" refers to the net amount of additional cost (positive) or savings
(negative) that the consumer has realized at the start of a given year i. It is expressed as
the difference between the package cost and the cumulative savings realized through year
Current Year Savings is defined as the discounted savings due to reduced fuel
consumption (and brake maintenance savings, in the case of hybrids) for that given year.
The Payback Time was determined by interpolating between the years in which the
investment balance sign changed from positive to negative. Because year i is defined as
the beginning of a year, the time elapsed is offset one row.
The last full column, "Cumulative Savings" is the sum of all savings realized by the
vehicle through the end of year i, and includes both fuel savings and brake savings
(hybrids).
64
-------
65
-------
Appendix B: Diesel Aftertreatment Costs
This appendix describes the methodology used to determine manufacturer aftertreatment
cost projections for the FEV-EPA diesel packages described in Section 3. It explains the
rationale for the projections first discussed in the report, "Progress Report on Clean and
Efficient Automotive Technologies Under Development at EPA: Interim Technical
Report" (EPA420-R-04-002, January 2004), in which EPA provides an estimate of the
incremental cost of exhaust emission control for a light-duty diesel engine compared to a
conventional gasoline engine of similar performance. The cost comparison was made for
a system similar to the Toyota Diesel Particulate NOx Reduction (DPNR) system
described in "Testing of the Toyota Avensis DPNR at the U.S. EPA-NVFEL," SAE
Technical Paper No. 2002-01-287720 and a similar performing gasoline 3-way catalyst
system. The costs were derived from data provided by emission control system
manufacturers, vehicle manufacturers, and engine manufacturers as summarized in a
series of EPA reports.21'22'23'24
The following table summarizes the various components of differential cost and the
resultant incremental costs for diesel engines when compared to a gasoline engine.
Table Bl: Incremental Manufacturing Cost of a Diesel Emission Control System
(Relative to a Conventional Gasoline 3-Way Catalyst System)
Approximate Rated Power
Catalyst Volume (Diesel/Si)
Substrate Cost Difference (wall-flow vs.
flow-through)
OBD and Regeneration System Cost
Difference
Coatings (PGM and Adsorbant) Cost
Difference
Estimated System Cost Difference
2.5L TDI Diesel
vs. 3.0L Gasoline
ISObhp
3.8L/3.0L
$130
$100
$25
$255
4.5L TDI Diesel
vs. 5.4L gasoline
260 bhp
6.8L/5.4L
$210
$100
$45
$355
Notes: The diesel catalyst system was
catalyst 1.0 times engine swept volume.
assumed to be sized at 1.5 times engine swept volume and SI
70
J. McDonald, B. Bunker, "Testing of the Toyota Avensis DPNR at the U.S. EPA-NVFEL", SAE
Technical Paper No. 2002-01-2877
21 "Estimating NOx Adsorber and Diesel Particulate Filter Costs", EPA Air Docket A-99-06, Document
Number II-B-29, May 15, 2000.
22 "Estimated Economic Impact of New Emission Standards for Heavy-Duty On-Highway Engines", March
1997, EPA 420-R-97-009.
23 "Cost Estimates for Heavy-Duty Gasoline Vehicles", EPA Air Docket A-99-06, Document Number II-A-
13, September 1998.
24 "Economic Analysis of Diesel Aftertreatment System Changes Made Possible by Reduction of Diesel
Fuel Sulfur Content", EPA Air Docket A-99-06, Document Number II-A-28, December 1999.
66
-------
The difference in cost between wall-flow (DPNR-type) and flow through (gasoline 3-
way) catalyst substrates accounts for half or more of the difference in the costs of the
emission control systems expected for clean light-duty diesel technology in comparison
to SI exhaust emission controls at Tier 2/LEV II emission levels.
The materials used for many wall-flow substrates are similar to the materials used for
flow-through substrates (cordierite). The primary difference for the increased cost of
wall-flow substrates is due to differences in manufacturing costs, particularly the
processes for plugging alternating substrate cells. The price of producing wall-flow
substrates should decrease towards the price of comparably-sized flow-through substrates
as production processes are put into place to supply sufficient volumes of substrates for
levels of production more in line with the levels necessary to supply significant numbers
of light-duty diesel vehicles.
The price difference for the On-Board Diagnostics (OBD) and PM/NOx/SOx
regeneration system includes the use of a wide-range oxygen sensor (versus the switching
sensor used for SI applications) for control, the need for direct exhaust injection for
regeneration, and the need for a differential pressure sensor in the exhaust for OBD and
PM regeneration control. For this analysis, we projected that platinum group metal
(PGM) loading would converge to a similar level in the long-term for NOx storage
catalysts and gasoline 3-way catalysts at a ratio of 50 g/ft3. Hence, the cost difference in
the coatings for a DPNR-like system is caused by the larger catalyst volume and the
resulting higher PGM content (NOx adsorbant material makes up ~$1 or less of the cost
per device). PGM costs were based on the average prices of Platinum and Rhodium over
the first 2 quarters of 2002 (Pt: $520/troy-oz., Rh: $931/troy-oz.).
67
-------
Appendix C: Sensitivity of Consumer Payback to Fuel
Price
The following tables show the sensitivity of payback time to fuel price, which was
assumed to be $2.25 per gallon in the main body of the paper. As illustrated below, fuel
prices under $2.00 per gallon would yield payback periods in excess of 14 years for the
most expensive packages, whereas $3.00 fuel would reduce payback time of most
packages to 5 years or less.
Table Cl: Years to Payback Advanced Gasoline Packages at Various Fuel Prices
Package
NAS-Large SUV
NAS-Midsize Car
NESCCAF-Large SUV
NESCCAF-Midsize Car
$1.50
2.9
6.5
4.1
6.9
$2.00
2.0
4.4
2.8
4.6
$2.25
1.8
3.8
2.5
3.9
$2.50
1.6
3.3
2.2
3.5
$3.00
1.3
2.7
1.8
2.8
Table C2: Years to Payback Diesel Packages at Various Fuel Prices
Package
FEV-EPA Large SUV
FEV-EPA Midsize Car
ORNL-Large SUV
ORNL-Midsize Car
$1.50
3.5
6.6
7.5
>14
$2.00
2.4
4.4
4.8
9.5
$2.25
2.1
3.8
4.1
7.7
$2.50
1.9
3.3
3.6
6.6
$3.00
1.5
2.7
2.8
5.1
Table C3: Years to Payback Gasoline Hybrid Packages at Various Fuel Prices
Package
EPRI-Large SUV
EPRI-Midsize Car
ORNL-Large SUV
ORNL-Midsize Car
$1.50
9.3
>14
7.0
>14
$2.00
6.0
9.0
4.8
11.6
$2.25
5.0
7.4
4.1
9.5
$2.50
4.3
6.3
3.7
8.1
$3.00
3.6
5.3
3.1
6.1
Table C4: Years to Payback Diesel Hybrid Packages at Various Fuel Prices
Package
EPA-derived Large SUV
EPA-derived Midsize Car
$1.50
11.5
>14
$2.00
6.8
>14
$2.25
5.8
11.4
$2.50
5.0
9.5
$3.00
3.9
7.1
68
-------
69
-------
Appendix D: Sensitivity of Consumer Payback to Retail
Price Equivalent Factor
Tables Dl through D4 show sensitivity of consumer payback to changes in assumed
RPE. While EPA uses a 1.26 RPE in its regulatory analyses, other recent technology
studies have typically used RPEs of 1.4 or 1.6. As illustrated below, a higher RPE
increases the initial consumer investment cost and the time to payback with discounted
operating savings. Packages with lower payback times are relatively less affected by
higher RPEs.
Table Dl: Years to Payback Advanced Gasoline Packages at Various RPE
Package
NAS-Large SUV
NAS-Midsize Car
NESCCAF-Large SUV
NESCCAF-Midsize Car
RPE = 1.26
1.8
3.8
2.5
3.9
RPE = 1.4
2.0
4.3
2.8
4.5
RPE = 1.6
2.4
5.1
3.3
5.4
Table D2: Years to Payback Diesel Packages at Various RPE
Package
FEV-EPA Large SUV
FEV-EPA Midsize Car
ORNL-Large SUV
ORNL-Midsize Car
RPE = 1.26
2.1
3.8
4.1
7.7
RPE = 1.4
2.4
4.3
4.7
9.3
RPE = 1.6
2.8
5.2
5.7
12.1
Table D3: Years to Payback Gasoline Hybrid Packages at Various RPE
Package
EPRI-Large SUV
EPRI-Midsize Car
ORNL-Large SUV
ORNL-Midsize Car
RPE = 1.26
5.0
7.4
4.1
9.5
RPE = 1.4
5.9
9.0
4.8
11.7
RPE = 1.6
7.2
11.4
6.0
>14
Table D4: Years to Payback Diesel Hybrid Packages at Various RPE
Package
EPA-derived Large SUV
EPA-derived Midsize Car
RPE = 1.26
5.7
11.2
RPE = 1.4
6.7
>14
RPE = 1.6
8.5
>14
70
-------
71
-------
Appendix E: External Reviewer Comments and
Responses
A preliminary draft of this report was distributed to 15 external organizations for their
technical review. The organizations included other federal agencies, state agencies,
automobile manufacturers, automotive suppliers, industry experts, and non-profit
organizations. Comments were received from 8 reviewers. Details of the technical
reviews have been kept confidential to allow for an objective and honest critique of the
material. This report has been improved by the collective time and effort invested by all
of the draft report reviewers. EPA would like to thank each of them for their candor and
insight. This is an interim report and additional comments are welcome.
This section summarizes the most substantial comments and EPA's response to each of
them.
E.I Economic Methodology and Assumptions
Market limitations of consumer payback
Several reviewers emphasized that good consumer payback does not necessarily mean
that there will be a business case, i.e., that manufacturers will invest in, or that consumers
will buy, a new technology. One reviewer stated that "Over 14years a motor vehicle
may be owned by four or five owners, but only the first is concerned about the payback of
an increased initial cost for improved fuel economy... .when customers are attempting to
consider a vehicle and its increased cost in terms of 'cost effectiveness,' they almost
always use a time period of approximately four years and 50,000 miles." Another
reviewer cited one specific example, "U.S. consumers haven't broadly accepteddiesels
to date, what's going to change that in the future? "
EPA completely agrees that consumer payback is only one relevant factor, and likely a
small factor in past decision making by manufacturers and consumers alike. This paper
is not predicting future manufacturer or consumer behavior, but simply projecting the
cost effectiveness, on a collective consumer basis, if manufacturers and consumers do
decide to adopt new personal vehicle technologies. Additional language has been added
in the Abstract, Executive Summary, and Conclusions to clarify this distinction.
Transition costs
Multiple reviewers pointed out that the focus on a long-term, high-volume scenario
ignored the very real transition costs that can be an important barrier for automobile
manufacturers. Further, one commenter pointed out that "individual, smaller-line
manufacturers at lower levels will not experience those same cost savings " as larger
manufacturers.
EPA agrees that transition costs are real and important. Since, as explained in Section
1.4.1, short-term transition costs are both temporary and complex, it was beyond the
scope of this paper to address them. Text has been added in the Abstract, Executive
Summary, Section 1.4.1, and Conclusions to clarify this important assumption.
72
-------
Retail price equivalent ("retail markup")
Several reviewers suggested that the 1.26 retail price equivalent (RPE) markup factor was
too low.
One commenter questioned which aspects of cost (variable or total) were reflected in the
manufacturer's cited component cost. "Our own analysis shows that the typical 1.6 to
1.7 factor is reasonable as the multiplier for variable cost to RPE, whereas the 1.26 looks
closer to (but still lower than) our multiplier for variable + fixed cost to RPE... I
recommend that EPA use the costs and benefits unchanged from the referenced reports to
avoid charges of 'cherry picking' the results from the studies, or alternatively, provide
additional discussion of this issue in the report. "
Another reviewer said the 1.26 RPE "seems far too low" and suggested that a value of 1.7
"is a much more representative RPE"
A third commenter stated that the 1.26 factor "is low by most manufacturer standards.
Some assessment of sensitivity or elasticity should be done."
We retained the RPE factor of 1.26 that EPA uses for regulatory development, but we did
add a sensitivity analysis of payback using RPEs of 1.4 and 1.6. This analysis appears in
Appendix D.
Maintenance costs
Several commenters pointed out that EPA accounted for one type of maintenance
savings—reduced brake maintenance for hybrid vehicles—but did not account for
additional maintenance costs that might be associated with new technologies. One
commenter stated that the "Assumption that maintenance will be the same or better for
hybrids is not proven. Also, maintenance for diesel aftertreatment may be significantly
higher. " A second commenter raised the possibility that some hybrid vehicles might
require replacement of the battery pack.
EPA agrees that this is a legitimate issue for further study, and text was added in Sections
1.4.7.2 and 1.4.7.4 to reflect this. Brake savings for hybrids are the one type of
maintenance where the difference with conventional vehicles is both significant and
certain. Other maintenance items are not well understood at this time, and were not
included. EPA will continue to monitor real world data on this issue and will revise the
analysis as appropriate.
Consumer value of less refueling time
One commenter noted that increased fuel economy would reduce frequency of refueling
events (and a corresponding monetized time savings). The value to consumers of saving
time refueling is not included in the analysis; however, as noted in Section 1.4.7.5, EPA
will consider this in future analyses.
Selection of large SUV and midsize car classes
One commenter noted that the selection of vehicle class may influence the result of the
study if the selected classes are more or less responsive to new technologies than a class
that was not studied. " ...do some technologies work better for one class of vehicles that
73
-------
is not represented in the analysis... while others work better for another class of vehicle
that is represented....?" Naturally, some individual technologies benefit certain vehicle
classes more than others. EPA's analysis selected two high-volume classes that cover the
range of vehicle classes, with the assumption that any technological advances could yield
large aggregate fuel and carbon savings. It is acknowledged in Section 1.2 that the
impact of various technologies on fuel economy and cost for these selected classes will
translate to other vehicle classes in varying degrees.
E.2 Gasoline Vehicle Technology Packages
Sources for core technology projections
One concern was over "the exclusive use of the NAS andNESCCAF study results for
[advanced gasoline technology package] data.... Technology developers conducted both
studies, which raises conflict-of-interest issues and obvious bias in promoting high
benefit estimates and low cost estimates for some new engine technologies they are
developing. Referencing other studies, or providing some evidence of unbiased choice of
technology cost-benefit estimates would be useful, especially since the actual benefit
numbers for the technology packages are not likely to change significantly. "
EPA selected the NAS and NESCCAF studies because we believe they are the most
credible peer-reviewed analyses in the literature. The fact that technology developers
authored both reports can be both a weakness and a strength, a weakness in terms of
possible bias and a strength in terms of technology expertise. EPA will continue to
monitor the literature, but at this time still considers these two studies to be the most
authoritative on the subject.
Better description of NAS technology packages
Multiple commenters requested further clarification on how the technology content in the
NAS cost-efficient gasoline packages (both Midsize Car and Large SUV) was
established. EPA attempted to replicate the methodology used in the NAS study for
determining these cost-efficient technologies. A more detailed description of the NAS
cost-efficient methodology is available in Chapter 4 of the NAS report.
To clarify, the list of NAS technologies presented in this report (as Tables 2-3 and 2-4)
are presumed to represent the cost-efficient packages established by NAS, and are merely
illustrative for EPA's purposes. All EPA economic analysis was performed on NAS fuel
economy improvement and cost projections cited directly from NAS, Table 4-2.
E.3 Diesel Engines
Diesel vehicle technology uncertainties
One commenter strongly recommended that the report "clearly note the uncertainty
associated with all the technologies (particularly diesel and diesel hybrids)... huge
uncertainty as to whether diesels can meet emission standards, and whether diesel hybrid
costs and emissions can be reduced....we believe that it is widely accepted that
significant hurdles toward Tier 2, Bin 5 compliance remain....Durability andin-use
emissions performance are still unproven. "
74
-------
Based on monitoring of the progress by automakers, testing of automaker prototypes, the
introduction of low-sulfur diesel fuel in 2006, and confidential discussions with
automakers and other researchers, EPA is confident that diesel vehicles will be able to
meet Tier 2, Bin 5 in the near future. Volkswagen recently announced plans to market a
Tier 2, Bin 5 compliant Jetta in the U.S. by the 2007 model year.
Diesel engine costs
One reviewer suggested that the diesel cost estimates were fairly realistic: "As far as the
base engine cost estimate it looks like you have done a good job of comparing the gas vs
diesel at a component level... "
Diesel engine fuel economy projections
EPA received two comments. One reviewer asked that we "cite the reference for the
source of the claim that today's diesel engines achieve 40% higher fuel economy than
today's gasoline engines. " A second commenter supported the range of 33-40% diesel
fuel economy improvement, "Actual certification data plotted across all gasoline and
diesel vehicles sold in Europe provides technical proof of this benefit. Furthermore, as
the vehicle weight increases, the percent improvement continues to increase, which
suggests that the actual benefits in the U.S. could be more than 40%. "
The second commenter above responds to the first commenter. The sources for the 33-
40% fuel economy improvement are the FEV and Oak Ridge National Laboratory studies
referenced in Section 3 of the report. EPA continues to believe that these are credible
projections for the fuel economy improvement associated with diesel vehicles, all other
things being equal.
Diesel aftertreatment costs
Several reviewers took issue with the projected costs for diesel aftertreatment. One
commenter stated, "Of all of the information that I saw in your report, the one that was
most striking to me was the underestimate of the aftertreatment. If you modify that, I
believe you will be in line with where the diesel industry is today as it wrestles with
reducing the aftertreatment costs.... I would say that the aftertreatment increase over a
gas engine is at least $1000... " Further communication with this commenter clarified
that this estimate would be for "volumes up to 100,000 units," and that the commenter
would expect lower costs at higher unit volumes. A second reviewer said "This is an
extremely low estimate. The precious metal alone will exceed this cost estimate. Such an
overly optimistic [assumption] could appear biased toward diesel. "
EPA has added Appendix B to explain the methodology for the diesel aftertreatment cost
projections. The manufacturer cost projections have been increased from $282 for the
large SUV and $218 for the midsize car to $355 for the large SUV and $255 for the
midsize car. With the 1.26 markup factor, these manufacturer cost projections translate
to retail price projections of $447 for the large SUV and $321 for the midsize car. As
discussed in Section 3.2.2, Tier 2 NOx emissions aftertreatment for diesels is an area of
intense development and EPA is aware of cost estimates that are both higher and lower
than the projections. EPA is monitoring the progress in this area closely and will update
costs as the information becomes more solid.
75
-------
Diesel aftertreatment fuel economy penalty
The same reviewers also challenged EPA's assumption that there would be no fuel
economy penalty associated with diesel aftertreatment. One commenter stated
unequivocally that, "This is not true as even diesel paniculate filters alone must be
regenerated with somewhat rich operation, so there is always an influence on fuel
economy which can be 1-5% in some cases. " Another said, "Diesel aftertreatment
systems are likely to reduce fuel economy. "
EPA has clarified the assumption that there will be no overall fuel economy penalty with
diesel vehicles that have aftertreatment emission control systems. EPA believes it is
likely that there will be some increase in fuel consumption related to the operation of
diesel aftertreatment emission controls, but that overall diesel vehicle fuel economy, due
to engine optimization and other changes, will be unchanged. EPA will monitor
developments and make appropriate changes as more information becomes available.
Other fuel-saving technologies that could be included in the diesel vehicle package
One commenter questioned the lack of non-engine technologies, that were included in the
gasoline vehicle technology packages, in the diesel technology packages. Technologies
such as advanced transmissions, lower rolling resistance tires, and improved
aerodynamics were not included in the diesel packages because they were not part of the
FEV and Oak Ridge National Laboratory reports which were the primary sources for the
core diesel technology projections. But, EPA agrees that non-engine technologies such
as these could in fact be included in a broader diesel package, and EPA will consider
including these technologies in future analyses.
E.4 Gasoline / Electric Hybrids
Gasoline hybrid fuel economy projections
One reviewer stated that the projections for fuel economy improvement for the midsize
car "look reasonable " but that the 52% fuel economy improvement potential for large
SUVs from the EPRI study "is way too high" and that the 35% improvement projection
from the Oak Ridge National Laboratory (ORNL) study is "still higher than OEMs
expect."
This is a significant comment, as it is clear that this reviewer believes that the fuel
economy improvement potential for gasoline hybrids is much less for large SUVs than
for midsize cars, but the reviewer provided no quantitative estimates. EPA uses the
projections from the EPRI and ORNL studies, which provide the core technology
projections for hybrid vehicles. EPA will continue to monitor new work in this area and
will modify the fuel economy projections for hybrid vehicles as more information
becomes available.
On-road hybrid vehicle fuel economy adjustment factor
Several reviewers noted that EPA used the same 0.85 fuel economy adjustment factor, to
convert EPA laboratory fuel economy values to real world fuel economy estimates, for all
technologies and suggested that this adjustment may be too generous for hybrid vehicles.
76
-------
EPA has publicly announced that we are reviewing the current methodology for
calculating fuel economy labels and we expect to propose a new methodology by the end
of 2005. Once EPA adopts a new fuel economy labeling methodology, we intend to
revise this analysis to be consistent with the new approach. It is also possible that further
development and refinement of hybrid technology may be able to reduce any higher real
world fuel economy shortfall that current hybrid owners may be experiencing.
Definition and classification of hybrid vehicle designs
One reviewer expressed concern with how EPA defined, classified, and named different
types of hybrid vehicles and suggested alternative approaches.
EPA retained its hybrid vehicle definitions and classifications. EPA recognizes that
different manufacturers use different definitions of what a hybrid vehicle is, and that
there are debates over terms like "full," "mild", and "assist" hybrids. EPA tried to choose
equitable terms that reflect the different perspectives in the industry, and encourages the
individual manufacturers and industry associations to resolve these issues as soon as
possible.
Other fuel-saving technologies that could be included in the hybrid vehicle package
One commenter pointed out that certain technologies (such as tires and aerodynamics)
that were included in the gasoline vehicle technology packages could also be included in
the hybrid technology packages. It is clear that many of the gasoline hybrids currently on
the U.S. market in fact have some of these improvements. EPA agrees that non-engine
technologies such as these could in fact be included in a broader hybrid package, and
EPA will consider including these technologies in future analyses.
E.5 Diesel / Electric Hybrids
Diesel hybrid fuel economy projections
Two comments were received on this topic. One reviewer stated that "this section seems
much more optimistic than current information would suggest.....remember, there is still
no product. " A second reviewer inquired about the diesel hybrid fuel economy
improvement projections made in the report, and how they compared to a recent study by
MIT.
EPA recognizes that the projections for diesel hybrids are much more speculative than
those for other technologies in the report, because of less research and development,
much less information in the technical literature, and the lack of any diesel hybrid
personal vehicles on the market. Interestingly, the diesel hybrid fuel economy
improvements predicted by MIT were more optimistic than those estimated by EPA. See
Section 5.2.1 for more discussion of this topic. EPA will monitor developments and
make changes as appropriate in future analyses.
77
------- |