improving automobile fuel economy: new standards, new approaches

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Improving Automobile Fuel Economy: NewStandards, New Approaches

October 1991

OTA-E-504

NTIS order #PB92-115989



Recommended Citation:

U.S. Congress, Office of Technology Assssment, Improving Automobile Fuel Economy: New Standards, New Approaches, OTA-E-504 (Washington, DC: U.S. Government PrintingOffice, October 1991).

For sale by the U.S. Government Printing Office

Superintendent of Documents, Mail Stop: SSOP, Washington, DC 20402-9328

I SB N O -1 6 -0 3 5 9 2 0 - I



Foreword

Congress is again engaged in a vigorous debate about the future of U.S. energy policy. Key issuesin this debate are the ongoing problem of rising oil imports and their effect on national security, bal-ance of payments, emerging concerns about global climate change, and concerns about the health and

competitive stance of American industry.

A major policy option in the debate, raising the efficiency of the U.S. automobile fleet by increas-ing new car fuel economy standards, intersects all three key issues:

. Oil imports and national security. Automobiles consume about one quarter of all oil consumed

by the U.S. economy; light-duty vehicles (autos plus light trucks) account for nearly four tenthsof all U.S. oil consumption.

. Global warming. The U.S. light-duty fleet accounts for about 63 percent of U.S. transport emis- .

sions of C02and about 21 percent of total U.S. fossil F-fuel C0

2emissions. Thus, the fleet is

an obvious target for global warming mitigation programs.

. Competitiveness. Automobile sales and total expenditures represent an important part of theU.S. economy, with new car sales representing about 2 percent of the gross national product(GNP) and total auto expenditures about 10 percent of GNP

A variety of fuel economy bills and amendments have been introduced, ranging from Senate Ener-gy and Natural Resource’s S. 341, which leaves standard setting to the Secretary of Transportation, to

H.R. 446, which requires a 60-percent improvement in corporate average fuel economies by the 2001model year. In weighing the various proposals, Congress must grapple with several crucial issues, allcontroversial:

. Are regulations the wisest course for saving transportation energy?

. what levels of fuel economy are technically and economically feasible, by what dates?

. What form of standard will deliver high levels of fleet fuel economy with the least market distor-

tion?

. What types of safety impacts might be expected if high fuel economy levels are demanded, and

what measures would minimize any adverse impacts?

Inherent in all these issues is the need to sustain the health of the U.S. automotive industry.

This OTA report responds to a request by the Senate Committee on Energy and Natural Re-sources to examine the fuel economy potential of the U.S. fleet and to assist Congress in establishingnew fuel economy standards. In responding to this request, we addressed all but the first of the issueslisted above: we have not tried to determine whether new fuel economy standards would be inferior orsuperior to other means to improve fleet fuel economy or, in a broader context, to reduce oil use inhighway passenger travel. We recognize that a full examination of all options open to Congress shouldinclude the examination of a variety of conservation options including gasoline taxes, traffic controlplans, gas guzzler/gas sipper taxes and rebates, improvement of competing mass transportation sys-tems, and so forth. OTA expects to address these and other options in a future study on transportationenergy conservation.

/fzfA4A# -

J

JOHN H. GIBBONSU D i r e c t o r

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Gordon Allardyce (and associates)

Chrysler MotorsDonald Bischoff (and associates)National Highway Traffic

Safety Administration

Alex CristofaroU.S. Environmental Protection AgencyWashington, D.C.

Gregory DanaAssociation of InternationalAutomobile Manufacturers

John DeCiccoAmerican Council for an

Energy Efficient Economy

K.G. DuleepEnergy & Environmental Analysis, Inc.

Thomas J. FeahenyRochester Hills, Michigan

John GermanU.S. Environmental Protection AgencyAnn Arbor, Michigan

Dave GusheeCongressional Research Service

Karl HellmanU.S. Environmental Protection AgencyAnn Arbor, Michigan

Charles Ing (and associates)Toyota Motor Sales

Joseph Kennebec

Volkswagen of AmericaDaniel KhazzoomSan Jose State University

David Lee Kulp (and associates)Ford Motor Co.

Timothy C. MacCarthyNissan North America, Inc.

James MackenzieWorld Resources Institute

Brian O’NeillInsurance Institute for Highway Safety

Philip PattersonU.S. Department of Energy

Marc RossUniversity of Michigan

Will SchroeerU.S. Environmental Protection AgencyWashington, D.C.

Harry Schwochert (and associates)General Motors Corp.

Eric StorkEric Stork & Associates

Michael P. WalshArlington, Virginia

Karl-Heinz ZiwicaBMW of North America

NOTE: OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the reviewers. Thereviewers do not, however, necessarily approve, disapprove, or endorse this report. OTA assumes full responsibility for thereport and the accuracy of its contents.



OTA Project Staff – Improving Automobile Fuel Economy:

New Standards, New Approaches

Lionel S. Johns, Assistant Director OTA Energy, Materials, and International Security Division

Peter D. Blair, Energy and Materials Program Manager

Project Staff

Steve Plotkin, Project Director

Contractor

K.G. DuleepEnergy & Environmental Analysis, Inc.

Administrative Staff

Lillian Chapman, Office Administrator

Linda Long, Administrative Secretary-

Phyllis Brumfield, Secretary

ContributorAndrew Moyad



Contents

Page

Chapter 1. Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ........ 1TRENDS IN FUEL ECONOMY mouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2HOW CAN AUTOMOBILE FUEL ECONOMY BE Improved? . . . . . . . . . . . . . . . . . . . . . . . . . . ....3WHAT IS THE FUEL ECONOMY POTENTIAL OF THE U.S. NEW CAR FLEET? .............5WHICH TYPE OF STANDARD IS BEST? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... ......8WHAT IS THE BEST SCHEDULE FOR NEW STANDARDS? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10NEW FUEL ECONOMY STANDARDS AND SAFETY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10FUEL SAVINGS FROM S. 279 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... 13REGULATION OF LIGHT-TRUCK FUEL ECONOMY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Chapter 2. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Chapter 3. Where Does Improved Fuel Efficiency Come From? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23A SPECIFIC EXAMPLE OF THE APPLICATION OF FUEL ECONOMYTECHNOLOGY: HONDA'S NEW CIVIC VTEC-E MODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . .....29

Chapter 4. Market-Driven Fuel Efficiency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Chapter S. Projecting Travel Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Chapter 6. Market-Driven Light-Duty Fuel Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43GOING BEYOND THE MARKET: IMPROVING NEW-CAR FUEL ECONOMY............... 43

Chapter 7. Technological Potential for Increased Fuel Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45ENGINEERING ANALYSES OF FUEL ECONOMY TECHNOLOGIESPERFORMED BY DOMESTIC AUTOMAKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .....47

STATISTICAL ANALYSES OF FUEL ECONOMY PERFORMANCE OFTECHNOLOGIES IN THE EXISTING FLEET . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. .. ... ... .....51

ARGUMENTS OF THE ENERGY CONSERVATION COMMUNITY . . . . . . . . . . . . . . . . . . . . . . . . . . 52THE EEA ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53LEDBETTER/ROSS ANALYSIS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... ....61WHO IS RIGHT? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Chapter 8. The Potential for Improving Fleet Fuel Economy by ChangingVehicle Buying Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

Chapter 9. Designing A New Fuel Economy Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ... ... .....73ESTABLISHING THE STRUCTURE OF NEW CAFE STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . 73DEFINING A FUEL ECONOMY TARGET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79SELECTING AND APPLYING AN ANALYSIS OF FUEL ECONOMY POTENTIAL ...........79CONSUMER PREFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .85DEALING WITH NEW TECHNOLOGIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86ECONOMIC PRESSURE ON THE INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88POTENTIAL EFFECT OF HIGHER FUEL ECONOMY STANDARDS ON

VEHICLE SAFETY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90FUEL SAVINGS OF S. 279 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... ... .....99

Chapter 10. Regulation of Light-Truck Fuel Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103FUEL ECONOMY POTENTIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103DEFINING INEFFECTIVE FORMAT FOR A LIGHT-TRUCK FUEL

ECONOMY STANDARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

vi



Contents –continued

Page

Appendix A. EEA’s Methodology to Calculate Fuel Economy Benefits of the Use of

Multiple Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107ENGINEERING MODEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108CALCULATION PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111FORECASTING METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113DATA SOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114REFERENCES FOR APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115

Box

2-A2-B4-A7-A7-B9-A9-B9-c9-D

Figure

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4-34-44-54-65-19-A-I9-B-19-1

9-2

9-3

9-4

A-1A-2

BoxesPage

The U.S. Light-Duty Fleet Energy Security, and Global Warming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Corporate Average Fuel Economy (CAFE) Standards and Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . 21Potential for Reductions in On-Road Fuel Economy From Changing Driving patterns . . . . . . . . . . . . 36“Constant Performance’’and Evaluating Fuel Economy Potential . . . . . . . . . . . . . . . . . . . . . . . . . .....46Fleshing Out the Maximum Technology Scenario: Transforming the Ford Taurus. . . . . . . . . . . . . . . . . 59Measuring Interior Volume for Application to a Volume-Based Standard . . . . . . . . . . . . . . . . . . . . . . . 74What Accounts for the Difference in CAFE Among Different Automakers? . . . . . . . . . . . . . . . . . . . . 76The OTA Scenario for 2001: Max Technology Without Enforced Early Retirements . . . . . . . . . . . . . . 82CAFE Fines and the Availability of Mileage Credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

Figures Page

U.S. Oil Consumption Under Alternate Scenarios-With or WithoutHigher Fuel Economy Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

U.S. Oil Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Trends in U.S. Auto Fuel Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31Auto Fuel Costs vs. Total Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Sales of Light Trucks As a Percent of All Light-Duty Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32New-Car Performance O-to-60-mph Acceleration Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33Interior Volume of New Cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Gasoline Price With Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35Passenger Car VMT Growth, 1936-89 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40Fuel Consumption and Volume, 1990 Sedans and Wagons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75Size-Class-Weighted Fuel Economy for 1988 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....77Change in Level of Compliance With the Type of FuelEconomy Standard Proposed

by Mercedes-Benz, BMW, and Porsche if Curbweight and Torque Are Reduced . . . . . . . . . . . . . . . 78Typical Market Penetration Profile of New Technology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87

Relationship Between Deaths Per 10,000 Registered Cars and Fuel Economy,1985-87 Four-Door Models . . . . . . . . . . . . . . . . . .; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93U.S. Oil Consumption Under Alternate Scenarios-With or Without Higher

Fuel Economy Standards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102Vehicle Resistance in Coastdown Test . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109Proportion of Engine Friction Due to Valve Train . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

vii



Contents – continued

Table

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7-3

7-47-57-67-77-87-97-1o7-117-127-13

Tables Page

Fuel Economy Technologies and Design Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Scenarios of Automotive Fuel Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Comparison of the Civic VTEC-E and DX Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30Passenger-Car Fuel Economy Projections: Assessment of Technology Potential

at Hypothetical Usage Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 48Passenger-Car Fuel Economy Projections: Assessment of Technology Potential

at Hypothetical Usage Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .......... 49Domestic Industry Analyses of OTA Technology Assessment: Fuel Economy

Benefit of Each Technology at OTA Penetration Increase Where Possible . . . . . . . . . . . . . . . . . . . . 50Developed and Near-Term Fuel Economy Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52High-Efficiency Automobile Prototypes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Future Technologies for Improving Light-Duty Vehicle Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53Projection of U.S. Domestic Manufacturers Fuel Economy 1995 Product Plan Case . . . . . . . . . . . . . . 55Import Manufacturers Fuel Economy Five Largest Japanese Manufacturers Only. . . . . . . . . . . . . . . . 551995 Product Plan U.S. Domestic Auto Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 561995 product Plan Import Manufacturers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56Technology Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56Potential Domestic Car Fuel Economy in 2001 Under Alternative Scenarios . . . . . . . . . . . . . . . . . . . . 57Import Manufacturers Fuel Economy in 2001 Five Largest Japanese Manufacturers Only . . . . . . . . . 57

7-B-1 Comparison of Vehicle Technologies in 1990 and 20011 ... .... .. .. .. .. .. ... ... ...:.... ... ...60

7-147-157-168-18-29-1

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A-4A-5

Fleet Fuel Economy in 2010 at Different Risk Levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60Assumptions on Technologies at Different Risk Levels for the Year 2010 . . . . . . . . . . . . . . . . . . . . . . . 61Fuel Economy Technologies at Different Risk Levels for the Year 2010 . . . . . . . . . . . . . . . . ... ......62Hypothetical Shifts in Weight Class Market Shares for the1990 U.S. Auto Fleet . . . . . . . . . . . . . . . . . 70“Best inWeight Class” Analysis, 1990 Model Cars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70Potential Domestic Car Fuel Economy in 2001 Underproduce Plan and Regulatory

Pressure scenarios . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81Technology Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107Technology/Energy Use Relationship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111Fuel Economy Cycle Characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

Estimated Fuel Consumption Sensitivity Coefficients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112EEA's Estimates of Incremental Retail Price of Fuel Economy Technology . . . . . . . . . . . . . . . . . . . . . 114

. . .

Vlll



Chapter 1

Executive Summary

BACKGROUND

In the nearly two decades since the first oilshock in 1973, both regulatory pressure (the En-ergy Policy and Conservation Act of 1975 and itsnew-car fuel economy standards) and market

forces drove fuel economy of the U.S. new carfleet from 14 miles per gallon (mpg) to 28 mpg,

l

saving about 2 million barrels per day (mmbd) of oil that would have been used had fuel economyremained at 1975 levels at today’s level of driv-ing.2 Although gradual retirement of older, lessefficient cars and their replacement with newones continue to raise overall efficiency of the

fleet, new car fuel economy has plateaued, andoverall fleet efficiency will also plateau unless newcar fuel economy once again begins to rise. Be-cause demand for auto travel continues to grow,gasoline use must also increase if fleet efficiencystagnates.

Although there is no current shortage of oil andworld reserve levels are high, the prospect of ris-ing gasoline demand is profoundly disturbing tonational policymakers. The United States has

just concluded a war that it was brought into, atleast in part, by its own and its allies’ dependenceon Middle Eastern oil. Falling U.S. oil productionand gradually rising demand will expose oureconomy to greater risks. Further, even withoutsupply disruptions, increased gasoline demand

means an ever rising pressure on our balance of payments: purchase of foreign oil now representsthe major component of our large internationaltrade deficit. Finally, continued high levels of

gasoline consumption help perpetuate the UnitedStates’ massive emissions of carbon dioxide, theprimary “greenhouse” gas, at a time when thenations of the world are pledging to cut back ongreenhouse emissions.

Congress has responded to trends in gasolinedemand and auto fuel economy by introducinglegislative proposals designed to boost fuel econ-omy of the U.S. fleet, primarily by setting new andmore stringent standards for Corporate AverageFuel Economies (CAFE) of automakers sellinginto U.S. markets. Senator Richard Bryan’s bill(S.279), calling for a 20-percent improvement ineach company’s new car fleet average (over a 1988baseline) by 1996* and 40 percent by 2001 (yield-

ing overall averages of 34 and 40 mpg, respective-ly), was one of the first of the 102d Congress, butother bills introduced offer different standardsand approaches. S.279 and the other bills havegenerated substantial controversy: the key issue(aside from the obvious question of whether anynew fuel economy standard is a sensible nationalpolicy) is what increase in fuel economy is techni-

cally and economically feasible. The relativemerit of alternative regulatory structures—e.g.,level standard, uniform percentage increase,standards based on vehicle interior volumes, andso forth—represents an important issue as well.

This report, requested by the Senate Energyand Natural Resources Committee, examines themajor issues associated with developing new fuel

economy standards. It builds on work that OTAconducted for its recently delivered report, Ener-

gy Technology Choices: Shaping Our Future, re-

quested by the House Energy and Commerce

1A ~ea~ured in EpA laboratory tests using th e EPIA test cycle and assuming 55 percent city/45 percent highway sPlit According ‘0‘PA)

actual on-road values are likely to be about 15 percent less than these test values. Unless stated otherwise, all fuel economy values in this reportare EPA values.

21975 fuel use~975 - X 1988 Vh4T = ~ ~;”:’!l:o:b:iles x 1.43 trillion miles

= 6.28 mmbdversus 4.24 mmbd actual 1988 automobile oil use. Data from Oak Ridge National Laboratoy, Transpotiation Eneqy Data Book.” Edition 11, ORNUi649. NOTE: Had new car fuel economy actualiy remained at the 1975 level of 15.8 mpg, the level of driving might not havegrown as much as it did, and the real fuel savings would have been less than calculated here.

*In this report, references to particular years in the context of new car fuel economy goals or levels of attainment denote model years, notcalendar years.

-1-



2 q Improving Automobile Fuel Economy: New Standards, New Approaches

Committee and its Subcommittee on Energy andPower. The Energy and Natural Resources Com-mittee’s request asked us to focus on the 10- to15-year timeframe defined by current legislativeinitiatives for increased automobile fuel econo-my; in light of this short timeframe, our analysisof fuel economy potential accepts the generalconcept of the automobile and light truck looselydefined by the types and performance of vehiclesin today’s fleet. We note that this focus leaves outthe potential to rethink the nature of our personal

transportation system and to possibly design analtered system of significantly higher fuel effi-ciency. OTA has considered this strategy of changing the nature of personal transportation inthe United States in our 1986 report on Technolo-

gy in the American Economic Transition. In addi-tion, we will revisit the long-term question of U.S.transportation energy efficiency in an ongoing

assessment, U.S. Energy Efficiency: Past Trends and Future Opportunities.

TRENDS IN FUEL ECONOMYAND USE

Energy analysts agree that without significantchanges in market conditions or governmentpolicy, increases in the fuel efficiency of the U.S.new car fleet will not match the pace of the lateseventies and early eighties. Most improvementsduring the next decade will come from diffusionof technologies already introduced into the newcar fleet; and much of the potential fuel economybenefit may be foregone in order to improve per-formance (most efficiency technologies can be

used instead to improve acceleration or to raisetop speeds).3

These trends stem from the lack of strong mar-ket pressures for improved fuel economy. In theUnited States, unlike most other industrial coun-tries, fuel cost is a smaller part of total automo-

bile operating expense than previously: gasolineprices in inflation-adjusted dollars are at early1970s levels, and, when improved fuel economy is

accounted for, fuel cost per mile is at its lowestpoint. Surveys have documented that most con-sumers are not demanding higher fuel economyin vehicles they purchase.

There are other signs that the market is notsupporting reduced gasoline use:

consumers have been turning in growing

numbers to less efficient light trucks forpassenger vehicles: between 1970 and 1985,light-truck miles tripled while auto milesgrew by only 38 percent;

automakers are building, and consumersare buying, increasingly powerful cars: aver-age O-to-60 mph acceleration times of theU.S. auto fleet have decreased in every yearsince 1982, at a cost of more than 2 mpg inaverage fuel economy;

consumers increasingly order options thatreduce fuel efficiency, such as air-condi-tioning, power accessories, and fourwheeldrive;

new emission and safety standards are like-

ly to have an adverse effect on fuel economy;and

the growing number of autos creates trafficcongestion that lowers on-road efficiency of the fleet.

OTA estimates that a continuation of currenttrends—which is likely if public policies do not

change and oil prices remain stable (andlow)–will lead to a 1995 U.S. new car fleet fueleconomy of about 29 mpg. If oil prices increaselater in the decades and automotive engineersseek optimum fuel economy benefits from tech-nologies they install, we project a rise in new-carfuel economy to 33 mpg in 2001; lower prices or

3Byfailing to reduce engine displacement or increase axle ratios to compensate for reduced loads or increased engine output, instead using theincreased powerfload ratio to improve performance.

4J D Powen has documented fuel economy’s drop from first to eighth place over the period 1980-87 as a factor U.S. c o n s u m e r s c o n s i d e r in. .

selecting a new car.s(_jasoline price assumed to be about $1.50/gallon (1991$) in 2001.



Chapter l–Executive Summary q 3

less-than-optimal designs could lead to fuel econ-omy levels well below this value.

Modest increases in new-car fuel economy, andthe implied slower rate of increase in total fleetfuel economy, are particularly worrisome be-cause greater demand for highway passengertravel is expected to continue, though at a slowerrate than in the past. This does not bode well forattempts to reduce highway fuel use.

Except during brief slowdowns due to oil priceshocks and gasoline supply problems, highwaytravel demand has grown at a remarkably stablerate—about 3 percent per year. Many recent pro-

jections indicate much lower growth rates—be-tween 1.5 and 2.0 percent per year. These expecta-tions are based on a slowdown in the growth of women in the workforce, primarily because of approaching saturation; the passing of the babyboom; and possible saturation of annual mileageamong adults (employed adult males between 25and 54 years of age already spend an average of 1.5 hours per day in their cars).

In OTA’s view, these projections appear rea-sonable but not robust—we believe growth ratesfor highway travel demand could range between

1 and 3 percent, and possibly below 1 percent if gasoline costs were to escalate rapidly or gasolinesupply to become a problem. If the projectionsprove correct, however, U.S. gasoline use wouldstill continue to rise, even if new-car fuel economyfollows our more optimistic projections (29 and33 mpg in 1995 and 2001, respectively); for thiscase, though, the rate of growth in gasoline usewould be only about 0.3 percent per year. Thisleveling in fuel use would roughly match U.S.experience of the past decade and a half (but withdifferent causes). Between 1973 and 1987, petro-leum consumption of the light-duty fleet in-creased only 7.6 percent—an increase of about0.5 percent/year—though this occurred whiletravel demand increased much faster than it isexpected to in the future.

Evaluations of likely future trends in traveldemand and fuel use must recognize that thedemand for travel responds inversely to changesin travel costs—if variable costs decline, travel

demand will increase. A consequence of this rela-tionship is that improvements in fleet fuel econo-

my—which will reduce “per mile” fuel costs —willpromote some extra driving. Although there is noconsensus on the magnitude of this “rebound”effect, policymakers should expect fuel savingsfrom improved fuel economy to be reduced byperhaps 10 or 20 percent from the savings thatwould occur had the amount of driving beenunaffected.

HOW CAN AUTOMOBILE FUEL

ECONOMY BE IMPROVED?

An automobile’s fuel use is controlled by twofactors: the loads on it created by its use; and theefficiency with which it transforms fuel into thework needed to overcome the loads. The loads are

the inertial load (when accelerating and climbinggrades), air resistance, and the rolling resistanceof the tires. Although the magnitude of the loadsis partly dependent on the way the car is drivenand the terrain, lowering a vehicle’s weight,smoothing its shape, and reducing tire rollingresistance will reduce the loads on the vehicle andits fuel consumption. Improving efficiency in-

volves reducing friction in the drivetrain; reduc-ing auxiliary loads with improved air-condition-ing, more efficient power steering, etc.; reducingpumping losses, that is, energy needed to pumpair and fuel into the cylinder and push out theproducts of combustion; and so forth. Althoughmodern automobiles have achieved substantialsophistication and efficiency, numerous opportu-

nities to improve fuel economy remain. Table 1-1lists key technologies and design improvementsthat will do so.

Aside from improving technology, materials,and design, fuel economy can be raised by mak-ing an automobile smaller in interior space (withan associated decrease in total size and weight) orless powerful. Most current proposals for higher

fuel economy standards are predicated on thebelief that the standards can be attained withoutmajor changes in vehicle size and power, thoughmost or all presume that recent trends towardhigher horsepower cannot be allowed to continue.



4 . Improving Automobile Fuel Economy: New Standards, New Approaches

Table 1-1 -Fuel Economy Technologies and Design Improvements

Weight reduction. Includes three strategies: substitution of

lighter weight materials (e.g., aluminum or plastic for steel); im-provement of packaging efficiency, i.e., redesign of drivetrain orinterior space to eliminate wasted space; and technologicalchange that eliminates the need for certain types of equipment orreduces the size of equipment.

Aerodynamic drag reduction. Primarily involves reducing thedrag coefficient by smoothing out the basic shape of the vehicle,raking the windshield, eliminating unnecessary protrusions, con-trolling airflow under the vehicle (and smoothing out the under-side), reducing frontal area, etc.

Front wheel drlve. Shifting from rear to front wheel drive, which

allows: mounting engines transversely, reducing the length of theengine compartment; eliminating me transmission tunnel, whichprovides important packaging efficiency gains in the passengercompartment; and eliminating the weight of the propeller shaftand rear differential and drive axle. Now in wide use.

Overhead cam engines. OHC engines are more efficient thantheir predecessor pushrod (overhead valve, OHV) enginesthrough their lower weight, higher output per unit displacement,lower engine friction, and improved placement of intake and ex-haust ports.

Four valve per cylinder engines. Adding two extra valves to

each cylinder improves an engine’s ability to feed air and fuel tothe cylinder and discharge exhaust, increasing horsepower/unitdisplacement. Higher fuel economy is achieved by downsizingthe engine; the greater valve area also reduces pumping losses,and the more compact combustion chamber geometry and cen-tral spark plug location allows an increase in compression ratio.

Intake valve control Shift from fixed-interval intake valve open-ing and closing to variable timing based on engine operating con-ditions, to yield improved air and fuel feed into cylinders and re-duced pumping loss at low engine loads.

Torque converter lockup. Lockup eliminates the losses due to

slippage in the fluid coupling between engine and transmission.

Accessory improvements. Adding a two-speed accessorydrive to more closely match engine output to accessory power re-quirements, plus design improvements for power steering pump,alternator, and water pump.

Four- and five-speed automatic transmisslons, and continuously variable transmissions. Adding extra gears to an automat-ic transmission increases fuel economy because engine efficien-cy drops off when its operating speed moves away from its opti-mum point, and the added gears allow the transmission to keepthe engine closer to optimal speed.

Electronic transmission control. Electronic controls to meas-ure vehicle and engine speed and other operating conditionsallow the transmission to optimize gear selection and timing,

keeping the engine closer to optimal conditions for either fuel

economy or power than is possible with hydraulic controls.Throttle body and multipoint fuel injection. Fuel injection al-lows improved control of the air/fuel mixture and thus allows theengine to continually adjust this mixture for changing engine con-ditions. Multipoint also reduces fuel distribution problems. Inwide use.

Roller cam followers. Most current valve lift mechanisms are de-signed to slide along the camshaft; shifting to a rolling mechanismreduces friction losses.

Low friction pistons/rings. Lowerfriction losses result from bet-ter manufacturing control of tolerances, reduced ring tension, im-proved piston skirt design.

Improved tires and lubricants. Continuation of longstandingtrends towards improved oil (in near-term, substitution of 5W-30oil for 1OW-4O oil), and tires with lower rolling resistance.

Advanced engine frictlon reduction. Includes use of light-weight reciprocating components (titanium or ceramic valves,

composite connecting rods, aluminum lifters, composite fiber re-inforced magnesium pistons), improved manufacturing toler-ances to allow better fit of moving parts, available post-1995.

Electrlc power steering. Used only for cars in the minicompact,subcompact, and compact classes.

Lean burn. Operating lean improves an engine’s thermodynam-ic efficiency and decreases pumping losses. Requires a newgeneration of catalysts that can reduce NO

Xin a “lean” environ-

ment.

Two-stroke engines. Unlike a conventional engine, there is apower stroke for every ascent and descent of the piston, thus of-fering a significantly higher output per unit of engine displace-ment, reduced pumping loss, smooth operation, and high torqueat low speeds, allowing engine downsizing and fewer cylinders

(reduced friction losses). Also, operates very lean, with substan-tial efficiency benefits (if NOXproblems are solved). Compliance

with stringent emissions standards is unproven.

Diesel engines. Compression-ignition engines, or diesels, area

proven technology and are significantly more efficient than gaso-Iine two-valve engines even at constant performance; new directinjection turbocharged diesels offer a large fuel savings. Althoughthe baseline gasoline engine will improve in the future, a portion ofthe improvements, especially engine friction reduction, may beused beneficially with diesels as well. Use may be strongly limitedby emissions regulations and consumer reluctance.

Electrlc hybrids. Involves combining a small electric motor forcity driving and a diesel for added power and battery charging.The small size of the diesel eases emission limitations, and thesubstantial use of the electric motors reduces oil use.

SOURCE: OffIce of Technology Assessment, 1991.

However, a significant reduction in average ve-hicle size and performance could offer a substan-tial benefit in increased fuel economy; and meas-ures to change consumer preferences (especially

economic incentives such as gasoline taxes andrebates on high fuel economy vehicles) might beattractive components of a fuel conservationstrategy.

To be successful, however, a fuel economystrategy featuring smaller, less powerful cars re-quires far more change in consumer attitudesthan one based on technological changes only; the

latter affects primarily a vehicle’s price and, in thecase of improved aerodynamics, its aesthetics,whereas the former can strongly affect a vehicle’sbasic utility, comfort, and driving enjoyment.




Fuel economy improvement strategies that relyheavily on changing consumer preferences for

more size and power or limiting consumers’choice of vehicles risk consumer disappointmentin new car offerings, reduced sales, and a reducedfleet turnover rate—with turnover being a criticalfactor in improving overall fleet fuel economyand, of course, in maintaining the financial healthof the auto industry. Consequently, legislatorswho believe fuel economy standards should be

raised substantially need to identify a fuel econo-my level and regulatory program design that bal-ances dual goals of pushing hard for improvedvehicle technology and design and maintaining anew car fleet that remains attractive to potentialpurchasers. They should also carefully considerthe advisability of economic incentives, such asgasoline taxes, vehicle rebates, and taxes tied tofuel economy, that would tend to align marketforces with regulatory requirements.

WHAT IS THE FUEL ECONOMYPOTENTIAL OF THE U.S.

NEW CAR FLEET?

Congress has been bombarded with a widerange of estimates of the “technological poten-tial” of the fleet. Many differences among theseestimates result not from actual differences intechnical judgment about the efficiency improve-ment of specific technologies, though such differ-

ences clearly exist, but instead from differences inassumptions about:

the timeframe of the higher fuel economylevels, thus the lead time available to theindustry to make technical and marketingchanges;

the nature of regulations accomplishing theefficiency change;

future shifts in the size mix of the fleet;

changes in acceleration capabilities or othermeasures of vehicle performance;

passage of new safety and emission regula-tions;

time required to develop, perfect, certify,and bring to market new technologies;

judgments about acceptable levels of eco-nomic disruption to the industry in re-sponding to new fuel economy regulations;and

judgments about consumer response to

changes in vehicle costs and capabilities(which are, in turn, a function of oil pricesand supply expectations).

These factors must be considered in calculating“technological potential,” since each will affectthe ultimate fuel economy achieved by the fleet.

OTA has examined estimates of technologicalfuel economy potential ranging from conservative

estimates prepared by domestic automakers tooptimistic estimates prepared by energy conser-vation advocates. The range of views about fueleconomy potential can be characterized as fol-lows: At the conservative extreme, further in-creases in fleet fuel economy are characterized aslikely to be quite small, even by 2001, because themajor gains have already been achieved, consum-

er tastes are heading towards vehicle characteris-tics that conflict with higher fuel economy, andgovernment safety and emissions standards willtend to degrade fuel economy.

6At the optimistic

extreme, large increases in fleet fuel economy, to45 mpg and higher, are portrayed as readily ob-tainable by existing or soon-to-be-available tech-nology, possibly as early as the year 2000.

As explained in the text, OTA concludes thatestimates prepared by Energy & EnvironmentalAnalysis, Inc. (EEA), under contract to OTA andthe Department of Energy, provide the best avail-able basis for decisionmaking about fuel econo-my policy. We note that the EEA analyses mustbe used in context: each individual estimate of fuel economy potential for a “scenario” of partic-

ular circumstances is associated with a set of critical assumptions that determines the magni-tude of reported fuel economy values. In some

f@antitative industy mp g estimates are not identified here because the automakers have been reluctant to provide estimates in this form.



6 q ImProving Automobile Fuel Economy: New Standards, New Approaches

regards, EEA estimates may be somewhat con-servative for the 2001 timeframe, because they do

not consider the possibility that new technolo-gies, not yet commercially available, may beginpenetrating the market by that date, nor do theyconsider the potential for diesel engines to over-come their current negative market perceptionsand their problems in meeting emission require-ments. On the other hand, the available EEAscenarios all assume that, at the worst, vehicleperformance, use of luxury equipment, and sizewill not increase indefinitely but instead level off after 1995; other scenarios assume a policy-driven rollback in these characteristics to 1990 or

1987 fleet levels. These assumptions could provetoo optimistic.

Table 1-2 provides OTA’s estimates for a vari-ety of fuel economy scenarios, ranging from a“product plan” projecting likely fleet fuel econo-my in a “business as usual” scenario (no new fueleconomy regulations, no major shifts in marketfactors), to a “maximum technology” scenarioestimating what could be achieved if regulationsforced maximum use of fuel economy technolo-gies and accelerated model retirement rates, to alonger term projection postulating the success of several new technologies such as two-stroke en-

Table 1-2-Scenarios of Automotive Fuel Economy

Fuel Economy

Levels Achievedl

1995

2001

2005

2010

q

q

q

q

q

q

q

Product Plancost-effective technology,continuation of current trends, no new policy initiatives

Regulatory Pressurefuel economy potential with added pressure of new efficiency regulations,but without size/class shifts

Product Plan at Rising Oil Priceno new policy initiatives and no radical

changes in market, but higher oil prices($1.50gal gasoline in 1991$); size/performance/luxury stable after 1995,tier 2 emissions standards not considered

Maximum Current Technologyfeasible technology added regardless ofcost, size/performance/luxufy rolled back

28.3 mpg domestic2

31.1 mpg imports29.2 mpg fleet

30.0 mpg fleet

32.0 mpg domestic34.6 mpg imports

32.9 mpg fleet

37.3 mpg domestic39.9 mpg imports38.2 mpg fleet. -

to 1987 levels, normal Iifecycle requirements not allowed to limit technology penetrationrates, no advanced technologies

Regulatory Pressuretechnology added that is cost-effective at $2.00/gal. gasoline (higher than expectedprice levels), lo-year payback, size/performance/luxury rolled back to 1990 levels,

technology penetration limited by normal Iifecycle requirements, no advanced technologies

Regulatory Pressureas above

Advanced Technologiessize/performance/luxury rolled back to 1987 levels, no new emissions standardspost-2ooo- addition of technologies that most automotive engineers

agree would be commercialized by 2000- addition of technologies not having general agreement

about benefits and commercial prospects.

34.5 mpg domestic37.4 mpg imports35.5 mpg fleet

36.5 mpg domestic38.4 mpg imports37.1 mpg fleet(38.1 mpg w/2-stroke)

45 mpg fleet

55 mpg fleet

‘EPA tests cycle, comblnad city/highway; potential credits for aitematlve fuel vehicles NOT considered.

2.~m=tlc,, refem t. ~hl~las made and sold In the Unltw ~at~ by the thr~ u,S a~omakers, Impofls refers to ~hlcl~ sold In the IJnltad stat% by the tOp fh Japanesa

automakers.

SOURCE: OffIce of Technology Assessment, 1991, based on analysis by Energy& Envkonmental Analyels, Inc., 1991.



Chapter I–Executive Summary q 7

gines. The “regulatory pressure” results illustrateone example of a set of scenarios that may beviewed by some as a “middle-of-the-road” strate-gy, although it does assume a rollback in vehiclesize and performance to 1990 levels in defiance of current upward trends, and technology additionsthat will not be cost-effective at expected gasolineprices.* OTA does not, however, believe thatthere is any “best” fuel economy strategy.

As illustrated by these scenarios, we find nei-

ther extreme of fuel economy potential de-ttle change”scribed—"li“ or 45 mpg plus by2000-credible for that timeframe. Our analysisshows that the application of multiple existingtechnologies can increase fleet fuel economy byseveral mpg, and up to about 10 mpg by 2001 if consumers accept some rollback in vehicle sizeand performance and are willing to pay more forimprovements in fuel economy than they will like-ly be repaid in fuel savings-but such acceptanceis not a foregone conclusion given existing markettrends, as discussed. Chapter 4 includes a de-tailed description of the current market trendsaffecting fuel economy. More detailed descrip-tion of the alternative fuel economy scenarios andtheir underlying assumptions are presented inchapters 7 and 9.

Larger gains, to 45 mpg or even higher, maybeavailable by 2010 if new technologies could makemajor gains in the marketplace, although the suc-cess of these technologies is by no means guaran-teed. For this, the automakers need time to rede-sign their model lines and to develop andadequately test new technologies.

As noted, changing consumer preferences forfuel economy, vehicle size, and vehicle perform-ance (or, in the extreme, imposing limits in choiceof these attributes) offers an alternative approachto improving new-car fleet fuel economy. Moder-ate changes in purchaser selection of vehicleswithin size or weight classes toward more effi-cient models, and shifts in size or weight class to

smaller vehicles can substantially increase fleetfuel economy. For example, in the 1990 U.S. newcar fleet, had consumers purchased only thedozen most fuel efficient models in each weightclass, and shifted their purchases toward lighterweight classes so that average weight was reducedby 6.2 percent, the fleet fuel economy would haveimproved from 27.8 to 33.2 mpg, a 20 percentimprovement. About two-thirds of fuel economyimprovement would have been due to consumersselecting the more efficient vehicles in eachweight class, with the remainder due to the actualshift in weight class market shares. The “cost” of the improvement (in terms of loss of consumerattributes) would have been a 7-percent decreasein the average interior volume of the fleet (from107 to 99 cu. ft.), an Ii-percent increase in O-to-60mph acceleration time (12.1 to 13.4 seconds), anda major shift from automatic to manual transmis-

sions (about 40 percent of the fuel economy bene-fit would be lost if drivers refused to switch trans-mission types). The “average car’’—the car thatattains the average fuel economy of the fleet andis representative of its average characteris-tics—would have shifted from a Dodge Dynastyto a Toyota Camry.

What, then, should be the targets for a new

generation of fuel economy standards? If Con-gress wishes to set a fleet target for model year1996 that pushes the industry further than itwould otherwise be likely to go, we believe a real-istic target would be 30 mpg assuming no signifi-cant changes in current trends in vehicle size andperformance. With full use of available alterna-tive fuel credits, a reported fleet average7 of 31

mpg should be feasible. The fleet average couldbe considerably higher than this if consumerschanged their buying preferences for efficiency,performance, and size; legislators will have toweigh the benefits of attaining this higher levelwith the risks, in particular the potential forcustomer dissatisfaction with smaller, lower-powered cars, resulting lower vehicle sales, and

*The gasoline price that would yield cost-effectiveness ($2.00/gal) was chosen to represent one possible value of the total societal cost of gasoline, that is, actual market price plus costs of air pollution damage, lobal warming contribution, national security impacts, and so forth.Different polieymakem should have different opinions of what an appropriate societal cost might be.T~at is, the tested Va]ue plus any available credits.



8 . Improving Automobile Fuel Economy: New Standards, New Approaches

the consequent impacts on the U.S. automobileindustry.* Congress could reduce these risks bycoupling higher fuel economy standards with eco-

nomic incentives—gasoline taxes and rebatesand penalties tied to fuel economy—designed topush the market towards higher efficiency.

For the longer term, the choice becomes moredifficult because there are more options andmore uncertainties. The “maximum technology”value of 38 mpg in 2001 assumes a rollback in size

and performance to 1987 levels, an increase invehicle costs that will not be offset by fuel savings(unless gasoline prices rise substantially), and theearly retirement of several model lines, whichcould be costly to the industry. The compressionof vehicle lifecycles embodied in the maximumtechnology scenario is not unprecedented, how-ever, and legislators may feel that growing oilimports and the need to reduce greenhouse emis-sions warrant such measures. Further, a high fueleconomy standard may accelerate the entry of new technologies, such as the two-stroke engine,into the fleet-though not without market andtechnical risks.

For legislators who believe that the marketshould better reflect societal costs of oil but who

wish neither to demand that the industry aban-don product lines before their initial costs can berecovered nor to risk requiring major changes invehicle size and performance, a fleet target of around 35 mpg should be feasible by 2001. Alter-natively, a “maximum technology” scenario thatassumed a rollback in size and performance onlyto 1990 levels would yield a fleet average fueleconomy of about 37 mpg by 2001. The change insize and performance between 1987 and 1990 costover one mpg in new-car fleet fuel economy. Be- cause of the importance of lead time, these potential fuel economy targets presume passage of new fuel economy legislation by the end of calendar year1991. Substantial delays in promulgating new ruleswould Iower fuel economy values attainable in the

target year

For the still longer term (2010 and beyond),there is real potential for fleet fuel economyvalues of 45 mpg or even 55 mpg,

8

but consider-able uncertainty as well because of untested tech-nologies. For this time period, Congress mightconsider mechanisms to insure continued tech-nological pressure while maintaining enough ad-ministrative discretion to reduce fuel economygoals if optimistic forecasts of technology poten-tial turn out to be incorrect.

WHICH TYPE OF STANDARDIS BEST?

Recent proposals for new fuel economy legisla-tion have moved away from the format of currentlaw, which imposes a 27.5 mpg standard on allautomakers. With the current format, automak-ers producing a variety of vehicle sizes or primari-

ly large vehicles are subject to a more demandingtechnological challenge than automakers whoconcentrate on small vehicles. This gives thelatter automakers more flexibility to capture mar-kets for larger cars and to introduce features(high-performance engines, four-wheel drive,etc.) that are both attractive to consumers andfuel inefficient–putting full line and “high end”

manufacturers at substantial market dis-advantage.

Many legislators would not approve a new fueleconomy standard unless domestic automakerscould comply without a drastic shift in their fleetstoward small cars—but a “uniform mpg” stand-ard set under a restriction of this sort would beunlikely to force automakers making primarily

small cars to improve very much. As a result, themaximum fuel economy the fleet could be ex-pected to attain with a uniform mpg format wouldbe lower than with a format that challenges all automakers to substantially improve theirCAFES.

New legislative proposals ask that automakersraise their CAFES by a uniform percentage over

*New car sales represent about 2 percent of U.S. GN ~ and total expenditures for automobile use represent about 10 percent of GNP–illustrating the importance of the automobile indust~ to the U.S. economy.8Even higher va]ues could be achieved, but Only withmajor changes in the basic character of the cars, e.g. With large numbe~ Ofdiesel/electric

hybrid vehicles.




what they had attained in a baseline year—1988in Senator Bryan’s proposal (S. 279); 1990 in S.1220, reported by the Senate Energy Committee.Because the 1988 or 1990 CAFES reflect in somemeasure the size makeup of each company’s fleet,their use as a baseline for assigning fuel economyrequirements will account for the differences insize among the various companies—but only tothe extent that these differences do not changefrom the baseline year to the compliance year. If companies seek to gain share in market segments

different from their traditional market (e.g., bymarketing large luxury cars), the uniform per-centage increase approach could prevent themfrom doing so—and may be viewed as anticom-petitive. Furthermore, to the extent that somedifferences for the baseline year were due to dif-ferences in fuel economy technology and design, auniform percentage increase standard places the

most severe new demands on those companieswho in the past had tried hardest to improve theirfuel economy. There have been differences in fueleconomy technology and design among the differ-ent automakers, and several companies have,through deliberate marketing strategy or throughloss of market shares, changed their size mix overtime—both factors compromising the internal

logic of the uniform percentage increase ap-proach to CAFE regulation.

An alternative approach to fuel economystandards is to base company standards on theattributes of each company’s fleet at the time thestandards are to be met. If based on interiorvolume, for example, a new standard would placethe highest numerical fuel economy target on the

company making vehicles with the lowest interiorvolumes. Such a Volume Average Fuel Economy(VAFE) standard could be designed to place asequal as possible a technological (or financial)burden on each automaker. This type of standardwould put no pressure on automakers to buildsmall (low interior volume) cars

9

—a minus with

those conservationists who believe most cars aretoo large, a plus with others who believe consum-ers should have an unrestricted choice of car sizeand who may also believe large cars are safer.Instead, a VAFE standard demands that auto-makers focus on technology, design, and per-formance to improve fuel economy, removing thecontentious issue of car size from the policy de-bate. A perceived disadvantage of a VAFE stand-ard is that any increase in market share of cars inthe larger size classes could reduce the overallfleet fuel economy target, a potential outcomethat disturbs some policymakers; however, a uni-form percentage increase standard could alsohave its total fleet target reduced with marketchanges. l0

Another potential problem with VAFE stand-ards—and with the original uniform 27.5 mpgstandard—is that they are difficult to apply tomanufacturers falling outside the competitivemass market. Companies such as Mercedes-Benzand BMW sell products that stress high perform-ance, luxury, and safety at a high price. Tradition-ally, their vehicles are substantially heavier thanother vehicles in their size class, more powerful,and have rear-wheel drive (to achieve the han-dling characteristics they seek), all of which com-

promise fuel economy. These companies cannotmatch the fuel economies of mass market auto-makers in their size classes at similar levels of technology.

Basing fuel economy standards on a widergroup of vehicle attributes could provide more of a move to a “pure technology” standard, that is, astandard that can be met only by improving tech-

nology rather than by reducing size or power.Mercedes-Benz, BMW, and Porsche have pro-posed a standard based on a group of vari-ables—curb weight, the ratio of curb weight tointerior volume, and the ratio of curb weight totorque—that would allow companies in a widerange of market niches to comply with a reason-

‘J~cauW ~mal]er cam till have higher fuel economy targets, and selling more of them will not make it easier for an automaker to achieve itscompany standard— unless the size-based targets are deliberately set to give smaller cars a less difficult target fuel economy than large cars wouldhave.

IOFor enmple, if an automaker with a relatively low mpg target gained market share, the overall fleet fuel economY target would be reduced’




able standard by improving technology, withoutbeing forced to move into other markets to “bal-

ance” their production of niche vehicles. Thestandard is formulated by performing a regres-sion analysis,ll

using EPA data for the 1990 fleet,that defines current vehicle fuel consumption as afunction of the above three variables. A standardrequiring 1995 fleet fuel economy to be at least 20

percent higher than the 1990 level would simplyreduce the 1990-based fuel consumption functionby 20 percent and apply this new function to eachautomaker’s fleet. As with the uniform percent-age increase and VAFE standards, this systemwill not guarantee attainment of an exact fueleconomy level (because the market can change),but it will force technology improvement and itprovides positive incentives for weight and per-formance reduction.

WHAT IS THEFOR NEW

BEST SCHEDULE

STANDARDS?

Legislation proposed during last year’s (1990)debate focused on setting new fuel economystandards for the (model) years 1995 and 2000.This year, these dates have been changed to 1996and 2001 to reflect the loss of a year of lead timefor the automakers. Are these the best years for aset of new standards?

Generally, the design and product develop-ment lead time for new models and major compo-nents is about 4 to 5 years, indicating that prod-

ucts for the 1996 model year are now beingfinalized, while products for 1995 have moved to astage where tooling orders are being placed.Models of domestic automakers will have a life-cycle of at least 7 to 8 years prior to redesign,during which their large development costs mustbe recovered. Japanese models tend to haveshorter lifecycles, as short as 4 years.12

These time horizons imply, first, that 1996 isvery early to demand significant improvements in

fuel economy beyond that already built into prod-uct plans, and second, that 2001, while allowingenough time for major adjustments to be made, isearly for a standard that might seek fleetwideredesign unless Congress believes energy concernswarrant a redesign schedule that would induce ac-

celerated retirement on several model lines. Al-though OTA has reached no conclusion about

what an optimal schedule might be, a set of datesthat would allow an interim fuel economy adjust-ment followed by a full redesign of all model lineswithout forced early retirements would be 1998 and2004 or 2005. A 2001 standard could also be in-cluded, predicated on redesign of only a portionof company model lines.

NEW FUELSTANDARDS

ECONOMYAND SAFETY

Industry and Administration opposition tonew fuel economy standards has included argu-ments that higher standards, such as those pro-posed by S.279, would force consumers into a newfleet of smaller cars significantly less safe than a

new fleet with an unchanged size mix-and per-haps even less safe than the current fleet.13 InOTA’s view, unless sharp fuel economy improve-ments are demanded over a period too short toallow vehicle redesign, or the fuel economy re-quirements are so stringent they can only be metwith drastic levels of downsizing, it is unlikely that absolute levels of safety would decrease. The con-

tinued introduction of new safety improvements,and wider use of already introduced improve-ments should compensate for adverse effects of moderate amounts of downsizing. Further, if giv-en enough time, automakers can significantly im-prove fleet fuel economy without downsizing(though with some weight reduction), and prob-ably without an adverse safety impact. Nonethe-

1lA regression analpis involves a statistiml enmination of data that seeks to determine functional relationships among variables that th eanalyst believes to be related, for example, between fuel economy and weight and horsepower (variables that should affect fuel economy).

lz~ght t r u c k s m ay have somewhat longer lifeCyCleS.

13FOr enmple, we statement of Je q Ralph Curry, Administrator, National Highway ’Ikaffic Safety Administration, before the Subcommitteeon Energy and Power, House Committee on Energy and Commerce, Oct. 1, 1990.



Chapter l–Executive Summary .11

less, there is cause for concern about the relation-ship between fuel economy and safety, and there

is reasonable probability that further downsiz-ing—especially a reduction in exterior dimen-sions—would cause the fleet to be less safe than itwould otherwise be. However, we also find thatthe debate about the relationship between fueleconomy and safety has at times become over-heated,14 and assertions on both sides of the de-bate seeking to demonstrate the magnitude of risk are frequently flawed or misleading.

Car size can be characterized by weight, interi-or volume, or exterior dimensions. Each has adifferent relationship to safety. Added weightmay help the heavier car in a vehicle-to-vehiclecollision, because the laws of momentum dictatethat a heavier car will experience less decelerationforce in a crash–but the weight and safety ad-

vantage afforded the first car represents a disad-vantage to the second car, increasing the force onit. Although accident records have demonstrateda statistical relationship between overall fleetsafety and average weight of the vehicles in thefleet, the strong association between weight andvarious measures of vehicle size, especially exteri-or dimensions, makes it difficult to separate ef-

fects of weight and size. Many safety experts think size is more important than weight to overall fleetsafety, even though weight may be important toconsumers making individual purchase deci-sions. If carmakers can make vehicles lighterwhile retaining structural integrity-and withproper materials, they can—there should be noadverse safety impact.

Interior volume may affect safety somewhatbecause a larger interior makes it easier forvehicle designers to manage the “secondcrash” —when bodies are flung about the passen-ger compartment. The average interior volume of the U.S. automobile fleet has been remarkablystable over the past decade, but there is concernthis may change if fuel economy standards are set

at levels that cannot be attained with technologyalone. However, increased airbag use may make

differences in interior space less important tooverall vehicle crashworthiness, because airbags

should reduce movement —and likelihood of sec-ondary collisions—of front-seat passengers in acrash.

Exterior dimensions may be particularly im-portant to a car’s crashworthiness, since theseaffect available crush space, and narrower vehicletracks and shorter wheelbases appear to affectrollover frequency (rollover accidents are often

associated with fatalities). Accident studies haveshown that some of the largest vehicles in the fleetconsistently have the lowest fatality rates, evenwhen the data are corrected for driver character-istics (especially age). Further, studies by the Na-tional Highway Traffic Safety Administration in-dicate that small vehicles experience morerollover accidents, and more traffic fatalities in

such accidents than large vehicles, and the Insur-ance Institute for Highway Safety claims down-sizing has driven up death rates in several re-designed General Motors models.

Will new fuel economy standards decrease au-tomobile safety? It depends, and we believe therisks are less than those characterized by some.First, substantial increases in fuel economy can

be achieved with little or no downsizing, althoughautomakers might conceivably choose downsiz-ing over other measures to satisfy new fuel econo-my standards. Although vehicle weight wouldlikely be reduced, this need not have negativesafety consequences if careful attention is paid tovehicle structural integrity.

Second, even if further downsizing were to de-

crease safety relative to not changing standards,this need not mean, and probably would notmean, an absolute safety decrease. During theperiod when CAFE standards have been in ef-fect, when the median weight of new automobiles

dropped by about 1,000 pounds, wheelbase by 10inches, and track width by 2 to 3 inches, the safetyrecord of the U.S. fleet improved substantially

–between 1975 and 1989, death rates for passen-ger cars declined from 2.43 per 10,000 registered

l~e rhetoric has ranged from a~rting that safe~ and vehicle size are essentially unrelated to suggesting that S.279 be referred to as “meHighway Fatality Bill.”




fatality rates would be lower without new fueleconomy standards than with them—even if over-

all rates decline—then a real tradeoff betweennew standards and safety does exist and must beaddressed explicitly during the fuel economydebate.

FUEL SAVINGS FROM S. 279

The magnitude of fuel savings likely from a new

fuel economy standard is both a critical compo-nent of the decision calculus for the policy debateabout standards and a source of great controver-sy because of large differences in estimates pre-pared by opposing interests. The source of thesedifferences is the set of assumptions associatedwith each estimate. Critical assumptions affect-ing the magnitude of estimated savings include:

1.

2.

3.

Fuel economy values without new standards.Alternative assumptions about the fueleconomy of the new car fleet in the absence

of new standards will play a critical role inestimating fuel savings associated with newstandards. Factors affecting future fleet fueleconomy include future oil prices and priceexpectations, fuel availability, consumer

preferences for vehicle size and power, newsafety and emissions standards, and prog-ress in technology development. The span of credible assumptions about future fueleconomy is likely to be quite wide, especiallyfor the late 1990s and beyond.

Use of alternative fuel credits. Manufacturerscan claim up to 1.2 mpg in CAFE credits by

producing vehicles capable of using alterna-tive fuels. Depending on whether automak-ers would produce large numbers of alter-native fuel vehicles if there are no new fueleconomy standards—both the Clean AirAct and new California emission standardsprovide incentives to do so–the actual fuelsavings associated with new standards

could be reduced. Magnitude of a “rebound” in driving. Anincrease in fuel economy, by reducing “permile” costs, may stimulate more driving and

4.

5.

thus reduce the associated fuel savings. Themagnitude of a “rebound” effect is contro-

versial, with estimates ranging up to 30 per-cent of potential fuel savings lost to in-creased driving.

Magnitude of vmt growth. Small differencesin the growth rate of vehicle miles traveled(vmt) can make a significant difference inthe fuel savings estimated to occur from anew standard. In OTA’s view, the credible

range of future rates is fairly broad, perhapsfrom 1 percent per year to 3 percent peryear, which translates into a variance of 1.3mmbd in estimated fuel savings for S. 279 inthe year 2010.

Effects of new standards on vehicle sales.Some opponents of new fuel economystandards have argued that stringent stan-dards will have the effect of slowing vehiclesales (because of higher vehicle prices andreduced customer satisfaction with smaller,slower, less luxurious cars), reducing vehicleturnover and the positive effect this has onfleet fuel economy. Others consider the like-lihood of a sales slowdown large enough toaffect fleet fuel economy in a significantmanner to be very small. Clearly, an effect

on turnover is theoretically possible, andwould be likely if policymakers were to mis-calculate and set a standard beyond auto-makers’ technical capabilities.

Different estimates of the likely fuel savingsfrom S.279, which requires 20 percent (by 1996)and 40 percent (by 2001) improvements in eachautomakers fleet fuel economy levels, include:

American Council for an Energy-EfficientEconomy (ACEEE), for the Senate Com-merce Committee: 2.5 mmbd by 2005.

Department of Energy: 0.5 mmbd in 2001,1mmbd by 2010.

Congressional Budget Office:O.88 mmbdby2006 and 1.21 mmbd by 2010 (base case);

range of 0.45 to 1.42 mmbd by 2006 and 0.59to 1.82 mmbd by 2010.

The differences among the above estimates canbe readily understood by examining their as-




sumptions. For example, ACEEE assumes thatfuel economy levels will remain unchanged from

today’s in the absence of new standards, i.e.,about 28.5 mpg for cars and about 21 mpg forlight trucks. The Department of Energy has as-sumed that, without new standards, new vehiclefleet fuel economy will rise to about 33 mpg forcars and 24 mpg for light trucks by 2001, andremain at that level thereafter. CBO has chosenbaseline mpg values of 30 mpg (range 28.5 to 33.0

mpg) for 2001. This difference in baseline mpgassumptions is the most important factor in ac-counting for differences among the estimates.

Similarly, DOE has chosen assumptions aboutalternative fuel credits, rebound effect, and vmtgrowth rate that will tend to yield lower estimatedfuel savings than ACEEE, with CBO choosingassumptions somewhat in between. Much of the

difference stems from DOE’s assumptions of ris-ing oil prices –$29/barrel (1990$) in 2000 and$39/barrel (1990$) in 2010.

OTA concludes that the DOE baseline esti-mate of 1 mmbd fuel savings from S.279 by 2010 isanalytically correct but very conservative. Al-though none of its assumptions are extreme, vir-tually all push the final result towards a low value.In our view, the likelihood of such uniformity issmall, although much less improbable if oil pricesfollow their assumed (upwards) path.

In contrast to the DOE estimate, the Bryan/ ACEEE estimate of 2.5 mmbd by 2005 appearsvery optimistic because it discounts the potentialfor a driving “rebound” and, more importantly,

accepts unusually pessimistic assumptions aboutlikely fuel economy improvements in the absenceof new standards.

Although the range of potential fuel savingsfrom S. 279 is wide, OTA believes that the “mostlikely” value for year 2010 savings lies between 1.5and 2 mmbd. For a 10 percent rebound effect, 2percent/year vmt growth rate, baseline fuel econ-

omy of 32.9 mpg in 2001 (frozen for the nextdecade), and no accounting for alternative fuelvehicles, we calculate the fuel savings to be 1.64mmbd in 2010. Although the 32.9 mpg baseline(no new standards) value is optimistic unless oil

prices rise substantially, it is also likely that theautomakers will gain some alternative fuel credits

in the baseline; these two factors will tend tocancel one another.

Figure 1-1 displays the projected U.S. oil con-sumption over time with and without enactmentof S.279. The figure also displays the consump-tion projected under OTA’s “regulatory pressure”scenario.

REGULATION OF LIGHT-TRUCK

FUEL ECONOMY

Because light trucks make up a rapidly growingproportion of the passenger vehicle fleet, andconsumers can readily find transportation alter-natives to new cars in the light-duty truck fleet,fuel economy regulations must consider lighttrucks to assure an effective reduction in total fueluse. Proposed legislation generally recognizesthis necessity and sets fuel economy standardsfor trucks similar to those for automobiles. Forexample, S.279 proposes that light trucks attainthe same 20- and 40-percent fuel economyincreases (by 1996 and 2001, respectively) asautomobiles.

OTA concludes that currently available tech-nology will not allow automakers to improvelight-truck fuel economy to the same extent asthey can improve passenger automobiles unlessdiesels become more popular in the 6,000- to8,500-pound category of light trucks. Sources of fuel economy limitations include:

q

q

q

load carrying requirements that imposestructural and power needs that are more afunction of payload weight than bodyweight of the truck—yielding fewer flow-through benefits from initial weightreduction;

open cargo beds for pickups and largeground clearance that limit potential foraerodynamic improvements;

need for low end torque, limiting benefitsfrom four-valve engines; and



Chapter 2

Introduction

The purpose of this report is to assist Congressin evaluating and, if desired, revising a series of legislative initiatives establishing new fuel econo-my standards for new automobiles sold in theU.S. market. As indicated by the congressionalcommittee requesting this report, the time frameof these initiatives is the coming decade, and

OTA’s evaluation focuses on this time period–al-though we do examine, in lesser detail and cer-tainly with less precision, some longer range po-tential. As a result, we examine the technologicalpotential for improved automotive fuel economyprimarily in terms of vehicles similar in type andperformance to vehicles in today’s fleet. Althoughwe do examine the impact of a shift in consumer

tastes towards the smaller and more efficientmodels in this fleet, we have not examined the po-tential to design vehicles that are radical depar-tures from today’s with different performance,size, and function from vehicles we are familiarwith, nor have we tried to rethink the basic natureof our personal transportation system. Both of these are important dimensions of the future of the Nation’s transportation that should not beoverlooked. OTA will examine these dimensionsin an ongoing assessment, U.S. Energy Efficiency:

Past Trends and Future Opportunities.

Strategies to reduce fuel use by the U.S. fleet of light-duty highway passenger vehicles —automo-biles and light trucks–are at the focal point of debate concerning several important issues af-fecting the United States. In particular, problemsassociated with an unstable oil supply and na-tional security, a large trade imbalance aggra-vated by rising oil imports, and the potential for

global warming primarily due to burning of fossilfuels all contribute to congressional interest in re-

ducing light-duty vehicular fuel use. Although avariety of policy measures can address this goal,new automobile fuel economy standards havebeen at the center of congressional debate. Abrief discussion of the national energy security

and global warming issues appears in box 2-A.Trends in U.S. oil consumption, production,

and imports have worsened over the past fewyears, adding to long-standing concerns aboutU.S. energy security, balance of trade, and envi-ronmental quality (see figure 2-l). In 1985, theUnited States was enjoying substantial success inreining in oil consumption, maintaining domestic

production, and thus reducing imports. In thatyear, we produced nearly 9 million barrels per day(mmbd) of crude oil and 11.4 mmbd of total liq-uid fuels;

lconsumed 15.7 mmbd, down from 18.4

mmbd in 1977; and imported 4.3 mmbd, only 27percent of total supply, down from a 1977 high of 8.6 mmbd or 46 percent. At the end of 1985, how-ever, world crude oil prices plunged, drastically

reducing incentives for production investmentsand easing economic restrictions on consump-tion. Since 1985, domestic crude oil productionhas fallen well below 8 mmbd; total petroleumconsumption has risen back over 17 mmbd; andnet oil and product imports have grown to over 7mmbd in 1990, close to 45 percent of total con-sumption, and are still rising.

2In fact, most major

forecasts of U.S. energy supply and demand proj-ect that, without major changes in energy policy, oilimports will exceed 50 percent of total oi1

3con-

sumption within a few years. OTA’s previous

l~at is, crude oil, lea= condensate, natural gas plant liquids, processing gains, alcohols, and other liquids.

ZU.S. Department of Energy, Energy Information Administration, Short-term Ene~ Outlook, lnd Quamr Iwo, DOEEIA-0202(90@.

NOTE: Figures for oil import percentage vary with the source, and some public figures are quoting values well above 50 percent for the U.S. oilimport level. These values almost certainly are based on inappropriate comparisons of total product and crude oil imports to domestic crude oilproduction without accounting for domestic production of natural gas liquids, which area valuable part of our total petroleum supply.

s~at is all l i qu id fuels , i n c l u d i ng c r u d e Oi], ]ease condensates, natural gas plant liquids, processing gain, alcohols, etc. MOSt statements of import de>ndence refer to imported crude oil and petroleum products as a fraction or percentage of total liquid fuels consumption.

-17-




Box 2-A—The US. Light-Duty Fleet, Energy Security, and Global Warning

Efforts to update past fuel economy regulations and boost substantially the efficiency of the U.S.light-duty fleet of automobiles and light trucks are based primarily on two key policy issues facing theUnited States: the perceived insecurity of U.S. oil supplies and the growing threat of global warmingfrom rising atmospheric concentrations of carbon dioxide and other so-called “greenhouse” gases.

Energy Security. After a decade of quiescence, energy security has once again become a major U.S.concern. The key statistic driving that concern is the level of U.S. oil imports, which had dropped to 27percent of supply by 1985 but rose to 42 percent in 1989,

1and continues to rise steadily as U.S. oiI produc-

tion drops. As in the 1970’s, four basic elements underlie the concern: the near-total dependence of the

U.S. transportation sector on petroleum; the United States’ limited potential to increase oil production;the preponderance of oil reserves in the Middle East/Persian Gulf area; and the basic political instabilityand considerable hostility to the United States existing there.

In fact, in some ways these elements have grown more severe since the energy crises of the seven-ties. During the past 10 years (1979-89), the transportation sector’s share of total U.S. petroleum use hasgrown from 53 to 63 percent as transportation has remained almost totally oil-dependent while othersectors have switched to alternate fuels.

2This is particularly important because the sector’s prospect for

switching fuel in an emergency is virtually zero. In addition, the boom-and-bust oil price cycle of thepost-boycott period, and especially the price drop of 1985-86, may have created a wariness in the oil in-

dustry that would substantially delay any major boost in drilling activity in response to another pricesurge. And, with the passage of time, the industry’s infrastructure, including skilled labor, needed for adrilling rebound is being eroded

Despite these problems, OTA believes that, on balance, the United States’ energy security is some-what less at risk today than in the 1970’s. Shifts in the oil market that we considers supporting increasedenergy security include:

. the Strategic Petroleum Reserve and increased levels of strategic storage in Europe and Japan;

q increased diversification of world oil production since the seventies;

q the end of U.S. price controls, allowing quicker market adjustment to price and supply swings;q advent of the spot market and futures market, making oil trade more flexible;

q increasing interdependence of the world economy, particularly the major investments of OPECproducers in the economies of the Western oil-importing nations and, especially, in their oil-refin-ing and marketing sectors;

q lessening of the strategic importance of the Gulf of Hormuz due to diversification of transportroutes out of the Gulf;

• growing importance of natural gas, and its substitutability for oil in key markets; and

q recent political changes in Eastern Bloc nations and the resulting lowering of tensions betweenEast and West.

Iraq’s rising military power and recent invasion of Kuwait threatened this trend toward improvedsecurity by concentrating control of much of the world’s oil resources in one country. The successful wareffort liberated Kuwait and seriously weakened Iraq’s military capability; but it may also have far-reach-ing repercussions on power balances, alliances, and attitudes toward the United States and the West.Whatever the outcome, the likelihood of continuing tensions in the Gulf and the considerable enmity

IU.S. Department of Energy, Energy Information Administration, ELA Monfh/Y Ene~RevieW, DOEmlA-003S(Ql/Ol)JanMw1991, p. 13; cited hereafter as “iUER 1/91. ” NOTE: “Oil” refers to all crude oil, natural gas liquids, and oil products.

ZjUER 1/91, pp. 7,27.

Continued on next page



Chapter 2–Introduction q 19

toward the United States there will create a strong incentive to reduce U.S. dependence on imported oil.

In fact, even with the positive outcome in the war, the U.S. effort and the refugee problems created stillhave the potential to yield new animosities towards the United States that would have negative implica-tions for long-term energy security.

Global Warming. The need to slow and reverse the growth of worldwide emissions of carbon dioxide(C02) and other greenhouse gases has provided new impetus to energy conservation measures.

The greenhouse effect is a warming of the Earth and atmosphere resulting from trapping of theEarth’s outgoing infrared radiation by C02, water vapor, methane, nitrous oxide, chlorofluorocarbons,and other gases, both natural and manmade. Although there are respected scientists who remain skepti-

cal that significant greenhouse warming will occur, most scientists believe that growing atmospheric con-centrations of the greenhouse gases caused by past and ongoing increases in emissions rates will lead tosignificant global temperature increases: a widely accepted value is a global average temperature in-crease of 3 to 8°F. (1.5 to 4.5°C.) from a doubling of CO

2concentrations or the equivalent.

3Other ef-

fects of the warming include an expected rise in sea level, drastic changes in rainfall patterns andincreased incidence and severity of storms, and resulting disruptive impacts on agriculture and naturalbiological systems.

Despite substantial scientific consensus about the likely change in average global temperatures,there is also substantial disagreement and uncertainty associated with regional impacts, effects of varioustemperature feedback mechanisms such as clouds, the role of the ocean, the relative greenhouse effectof the various gases, and other factors. These uncertainties affect arguments about both the urgency andvalue of conservation measures such as improving automobile fuel economy.

The U.S. light-duty fleet accounts for about 63 percent of U.S. transport emissions of C02, 3 per-

cent of world C02emissions, and about 1.5 percent of the total greenhouse problem. This last value has

been variously interpreted as being a significant percentage of the greenhouse problem, and as provingthat focusing on the U.S. fleet to gain consequential greenhouse benefits is a mistake. In OTA’s view, fewif any sectors of the U.S. economy are large enough, by themselves, to significantly alter the course of greenhouse warming. In other words, ignoring the light-duty fleet as “too small a factor” is identical todeciding to do nothing. An effective strategy to mitigate greenhouse warming must address all sectors of the economy. Furthermore, the global nature of the automobile and light-truck market and the eco-nomic importance of the U.S. market imply that acceleration of improvements to the fuel economy of theU.S. fleet can have a strong ripple effect on the fuel economy of the worldwide fleet.

Sother gaws have a warning effect that is some multiple of [the effectofl Coz; so a combination of hCKXRs of various gases can

be translated into an effective C02 increase by appropriately weighting the increased concentration of each gas.

review of domestic oil production prospects4and the U.S. economy, attributable at least in part to

its preliminary review of oil demand generallysupport these projections.

If trends in imports are to be changed, im-proved efficiency of use is widely expected to be atthe head of the list of policy options. During thedecade and a half since the first oil price shock,the major factor in reducing U.S. oil imports wasthe marked reduction in the energy intensity of

dramatic increases in the efficiency of energy use.Many opportunities remain to continue thisdownward trend in energy intensity.

Because of its importance to U.S. petroleumuse, the transportation sector is a main target forfurther efficiency efforts. In 1988, this sector ac-counted for approximately 27 percent of total en-ergy consumed by the United States5 and, more

4u.s. congress, office of ~chnolo~ Assessment, U.S. OiIFroduction: The Effect of Low Oil ti”ces-Special Repoti, OTA-E-348 (Washington,

DC: U.S. Government Printing Office, September 1987). 5 MER 1/91, p. 21.




1974

19761978

1980

1982

1984

1986

1988

1990

1995

2000

Figure 2-1 –U.S. Oil Balance

1

-1

1

0 5 10 15 20 25Millions of barrels per day

U.S. oil production ~ U.S. oil imports

SOURCE: Energy Information Admlnlstratlon, Annual Energy Ouflook 1991

important ,63 percent of all U.S. petroleum con-

sumption.

6

Furthermore, a substantial portion of the remaining oil use involves consumption of by-products of refinery production of transportationfuels. 7 Reducing the use of these byproductswould not have a major impact on overall oil sup-plies unless transportation fuel use were reducedas well.

The light-duty highway fleet-automobiles and

light trucks (vans and pickups) used largely forpassenger travel–accounts for a very large por-tion of U.S. transportation energy use and overalloil use. In 1988, this fleet accounted for 38.2 per-cent of U.S. oil consumption and 15.7 percent of total energy consumption. The automobile fleetalone was responsible for about 26.2 percent of U.S. oil consumption and 10.8 percent of total en-

ergy consumption.8

Consequently, the automo-bile and light truck fleets represent the largestavailable targets for reducing U.S. petroleumuse, and they have in fact become the focal points

of recent efforts to involve the Federal Govern-ment more actively in energy efficiency efforts.

This report addresses apart of what the Feder-al Government can do to reduce fuel usage by thelight-duty highway fleet; it focuses solely on en-acting fuel economy regulations governing the ef-ficiency of the fleet. The full range of options open

to the Government is much broader, and includesstrategies to:

q

q

q

q

q

T h e

reduce light-duty vehicle travel demand by

improving other travel modes, reducing theneed for travel (e.g., by better urban plan-ning or promotion of video conferencing),or increasing the costs of using light-dutyvehicles;

reduce congestion;

reduce maximum highway speeds;

increase vehicle occupancy; and

improve vehicle efficiency through technolo-gy and design and through changes in thetradeoffs automakers and consumers makebetween fuel economy and other vehicle at-tributes such as performance and interiorspace.

government can influence the efficiency of the fleet by accelerating fleet turnover; increasinggasoline costs (e.g., by a gasoline tax increase);taxing inefficient vehicles or giving rebates on ef-ficient ones; and regulating new-car fuel econo-my.

Congress enacted the initial Corporate Aver-age Fuel Economy (CAFE) regulations 15 years

ago (see box 2-B). Although there appears a wide-spread public consensus that the CAFE programwas a substantial success—in the interim period,average fuel economy of new cars improved by

6MER 1191, pp . 7,27.TData from U.S. Department of Energy, Energy Information Administration, 1989 Annual Enqy @tl~k, DOE~IA-0383(89), January

1989.

aData from Oak R i d g e Na t i o n a ] Labora tory , Transportation Ene~ Data Book, Edition 11, ORNL-6649, JanUaw 1991 ; and Energy Informa-tion Administration, Annual Energy Review 1988, DOE/EIA-0384(88), May 1989. Different sources of data and different definitions will givesomewhat different values. For example, light trucks may include all light trucks, as in table 2.8 in the Oak Ridge document, or light trucks usedfor personal passenger travel, as in table 2.13 of the same document. For the value shown here, we use total light trucks, primarily because wedon’t have good data over time for the breakdown of personal light truck travel and freight light truck travel. Othenvise, using the lower figure forpersonal travel, as in table 2.13, would be preferable. Furthermore, the value for total energy consumption vanes with data source. We use83.4 quads for 1988, from the Energy Information Administration.




Greene, ll constrained automakers moved theirfleet fuel economies upwards almost in lockstepwith rising CAFE standards, whereas uncon-strained automakers did not improve their fleetfuel economies as fast and tended to level off much earlier. Greene’s statistical analysis indi-cates that the standards were at least twice as im-portant as changes in oil prices as a “driver” of fuel economy.

This report does not attempt to resolve thesetwo points of view; we are not certain any quanti-tative analysis would prove sufficiently convinc-ing to end the argument. We note, however, thatthe process of enacting new fuel economy regula-tions balances important societal and privatebenefits (lower emissions of carbon dioxide, re-ductions in oil imports, lower fuel bills) againstsocietal and personal costs (market distortions,

potential losses in vehicle safety, increased capi-tal expenditures for car design and manufacture,higher new car prices). At the “right” level, newfuel economy standards should save substantial

quantities of oil, though at a cost. On the otherhand, there may be some level beyond which fur-ther increases in the standards would be damag-

ing to the industry: the standards would raisevehicle prices or degrade vehicle size andperformance enough to significantly reduce newcar sales. Because retirement of old, inefficientcars and their replacement with new efficient carsare the primary forces driving steady growth infuel economy of the total on-road automobilefleet, slower turnover caused by overly stringent

standards theoretically could produce a net increase in fuel use compared to more lenient stand-ards. At a lesser extreme, even standards thatwould save large quantities of oil may have coststhat outweigh their benefits; few if any policy-makers believe oil savings should be pursued re-gardless of cost. Members of Congress who favornew fuel economy standards must take care to set

standards that are a reasonable compromise be-tween the need to encourage more fuel efficientdesign and technology, and a range of competingvalues.

llD.~ Greene, Oak Ridge National ~boratory, “CAFE OR PRICE? An Analysis of the Effects of Federal Fuel Economy Regulations andGasoline Price on New Car MPG, 1978-89,” contract paper for office of Policy Integration, U.S. Department of Energy, revised Nov. 30,1989.



*




crease from today’s 9.0 to 10.0 and beyond. Com-bustion chamber redesign can provide small in-creases in thermal efficiency. Higher thermo-dynamic efficiencies can also be achieved withcompression ignition (diesel) engines.

Mechanical friction can be reduced by improv-ing design of rubbing and sliding surfaces orusing new materials and lubricants. Decreasingthe weight of the piston, connecting rod, valves,and valve springs also reduces frictional losses.

Replacing sliding contact surfaces with rollingcontacts can provide significant benefits in fric-tion reduction. No theoretical limit currently ex-ists for reducing mechanical friction, and histori-cally, engine friction has declined 8 percent perdecade.

Pumping losses include losses due to throttling(i.e., restricting air flow to maintain proper air/ fuel ratios when the engine must be operated at afraction of its peak power capability) and lossesdue to aerodynamic friction. Throttling loss isproportional to the degree of restriction of theairflow (throttle setting); it is zero at wide openthrottle. Throttling loss can be reduced by operat-ing the engine at a lower rpm but higher load for agiven vehicle speed, or by using “lean burn” com-

bustion (where excess air is not a problem). Forexample, the diesel engine uses lean burn and iscompletely unthrottled. Throttling loss can alsobe reduced by controlling valve lift and timing orby deactivating cylinders at low loads (so theengine essentially becomes smaller and can oper-ate closer to peak capacity).

Aerodynamic (pumping) losses are associated

with the air/fuel mixture as it flows through the aircleaner, intake manifold, and valve orifices, aswell as the exhaust as it flows through the valves,manifold, muffler, and catalyst. This loss is pro-portional to the airmass flow and increases athigher loads and speeds. Aerodynamic losses canbe reduced by tuned intake manifolds, increasedvalve area (or increased numbers of valves),

tuned exhaust manifolds, and reduced pressuredrop in the catalyst and muffler.

Efficiency improvements in the remainder of the drivetrain can be obtained by reducing fric-

tional loss in the gearbox, axle (or transaxle forfront-wheel-drive cars), wheel joints, wheel bear-ings, brakes, and oil seals. Those improvementscan be small individually but provide a measur-able cumulative benefit. The use of more gears inthe transmission, however, improves efficiency byallowing the engine to operate closer to peak effi-ciency, rather than by reducing drivetrain loss.

Finally, accessory drives can be made moreefficient. Most front-wheel-drive cars already use

an electric radiator fan which is engaged onlywhen needed. “Smart” alternators that reduce theload when the battery is fully charged, more effi-cient water pumps, electric power steering, etc.can reduce the accessory loads that currently ac-count for 8 to 12 percent of all fuel consumed overthe test cycle..

Some specific technologies available to reduce

vehicle loads and reduce losses include the fol-lowing (fuel economy benefits were estimated byEnergy and Environmental Analysis, Inc., EEA,which has been an OTA technical consultant forthis study; for some of the technologies, magni-tude of the benefits is controversial):

Weight reduction. Reducing vehicle weight with-

out reducing practical space for passengers and

cargo involves three strategies—substitution of lighter-weight materials without compromisingstructural strength (e.g., aluminum or plastic forsteel); improvement of packaging efficiency, thatis, redesign of drivetrain or interior space to elim-inate wasted space; and technological change thateliminates equipment or reduces the size of equipment. The EEA analysis does not isolate

weight reduction directly associated with otherefficiency changes, for example, reduced engineweight due to the downsizing (decrease in enginedisplacement) made possible by engine efficiencyimprovement, but instead counts the weight re-duction as part of the overall fuel economy in-crease associated with the efficiency change.Most weight reduction gains are expected after1995. The fuel economy gain available from a10-percent weight reduction is estimated to be6.6 percent, including the effect of engine down-sizing to maintain constant performance. With-out downsizing, the fuel economy benefit would



Chapter 3–W%ere Does Improved Fuel Eficiency Come From? q 25

be 4.2 percent. Materials substitution could re-duce average vehicle weight 9 percent under 1987levels by 2001, and 18 to 25 percent under 1987levels by2010, with additional weight reduction (3to 8 percent, depending on market class) possiblefrom improved packaging.

Aerodynamic drag reduction. Aerodynamic dragon a car is the product of its frontal area, its dragcoefficient, and the square of its speed. Thesquared velocity factor means that drag increases

ve~ rapidly with speed, and aerodynamic drag isthe most important power drain at highwayspeeds. Reducing frontal area is difficult because,with limited exception, this will compromise inte-rior space. Reducing the drag coefficient involves

smoothing out the basic shape of the vehicle,raking the windshield, eliminating unnecessaryprotrusions, controlling airflow under the vehicle(and smoothing out the underside), and designing

the rear end to avoid turbulence and to controlbehavior of the “boundary layer (the thin layer of slow-moving air next to the vehicle’s outer surfacewhich exerts an important influence on drag). A10-percent reduction in the drag coefficient willyield about a 2.3-percent fuel economy gain if theaxle ratio or top gear ratio is adjusted to matchthe engine’s operating point to the reduced power

requirement. For cars redesigned between nowand 1995-%, an average drag coefficient might be0.335, down from 0.375; for cars redesigned be-tween 1996 and 2001, average drag coefficientmight be further reduced to 0.30, which is the levelof the most streamlined cars in the U.S. fleettoday. Further reductions should be feasible by2010—drag coefficients of 0.23 to 0.24 seem

attainable, and coefficients as low as 0.20 arepossible.

Front-wheeZ drive. Shifting from rear- to front-wheel drive provides a number of fuel-savingbenefits, including the ability to mount enginestransversely, reducing engine compartmentlength; elimination of the transmission tunnel,which provides important packaging efficiency

gains in the passenger compartment; and elimi-nation of the weight of the propeller shaft andrear differential and drive axle. Counterbalancingthese benefits, front-wheel drive changes vehicle

297-903 0 - 91 - 2 QL:3

handling characteristics in ways objectionable tosome drivers (though it offers clear advantages inslippery conditions) and compromises trailer-

towing capability. There has been controversyabout overall fuel economy gain, because someshifts to front-wheel drive have been made at thesame time other downsizing measures were tak-en, and also because some shifts have been ac-companied by increases in vehicle size and inpower-to-weight ratio. Total fuel savings availablefrom a shift to front-wheel drive are about 10

percent for vehicles replacing 1970’s vintage de-signs (body on frame), and about 5 percent forthose where some potential benefits had alreadybeen gained through 1980’s redesign (unit body).Because current levels of penetration of front-wheel drive are high and because many remainingrear-wheel-drive vehicles occupy market nichesthat may favor rear-wheel drive, additional gains

available are moderate.Overhead cam engines. Overhead cam (OHC) en-gines are used in all imported vehicles; only U.S.manufacturer’s still sell overhead valve (OHV)engines. Older OHV engines produced less than40 bhp/liter, but more modern OHV engines pro-vide 45 bhp/liter. In contrast, modern OHC en-gines provide 50 to 55 bhp/liter in non-sports car

applications. The higher specific output is due tothe low mass of the valve train that makes it easierto open and close the valves, thereby improvingbreathing efficiency. A modern OHC engine pro-viding equal performance (i.e., smaller displace-ment) will yield a 3-percent benefit in fuel econo-my over a modern OHV engine and up to 6percent over an older OHV engine.

Four-valve-per-cylinder en~”nes. Adding two extravalves to each cylinder improves an engine’s abil-ity to feed air and fuel to the cylinder and dis-charge exhaust. Four-valve engines typically havesharply higher horsepower than two-valve en-gines of the same displacement, though peakhorsepower is reached at much higher enginespeeds, and torque (pulling power) at low engine

speeds generally is not improved nearly as much.The major fuel economy gain of a four-valve en-gine is achieved by downsizing the engine, sincethis can be done without performance loss; the




greater valve area also reduces pumping losses,and the more compact combustion chamber ge-

ometry and central spark plug location allows anincrease in compression ratio. However, enginedownsizing cannot be proportional to horsepow-er gain because of the resulting lack of low endtorque. An important area of uncertainty is theextent to which automakers will be willing to useaggressive transmission management to compen-sate for a four-valve engine’s lack of low endtorque by rapidly increasing engine speed whenpower is needed. This would allow more enginedownsizing than if the automaker wanted tomaintain the driving “feel” of a high torque, “lowrevving” engine. Available fuel economy gainover a two-valve overhead cam engine with thesame number of cylinders is 5 percent; the gain is8 percent if a four-cylinder engine replaces a two-valve six cylinder engine, or a six replaces aneight. The gain includes the effect of using a com-pact combustion chamber and increasing com-pression ratio from 9.0 to 10.0, which by itself isresponsible for a 2-percent gain. By 2010, anincrease in compression ratio to 11.0 should bepossible, yielding an additional l-percent gain infuel economy. These benefits do not include theeffect of downsizing to the extent where aggres-

sive transmission management would benecessary.

Intake valve control. All engines have traditionallyutilized fixed valve timing since a simple, reliablemechanism to vary timing had not been designeduntil recently. Thus, valve timing has always beena compromise between high rpm power output

and low rpm torque. At part load, it is moreefficient to close the intake valves early ratherthan pump air across the throttle. New devices tovary both valve timing and lift have been commer-cialized, and such systems have provided 5- to8-percent gain in lowspeed torque and 20-percentgain in specific power. A valve lift and timingcontrol system can provide 6-percent benefit in

fuel economy if the engine is downsized to pro-vide equal low-speed performance, althoughthere may be unfavorable synergies with moreadvanced transmissions that also reduce pump-ing loss (these transmissions reduce the amount

of time that engines operate at inefficient low-load conditions, when intake valve control is most

effective). Valve control systems are most easilyincorporated into a double overhead cam, four-valve engine.

Torque converter lockup. Current automatictransmissions utilize a hydraulic torque conver-ter, where an impeller pushes fluid pasta turbineto transmit engine torque to the wheels. Thishydraulic connection is useful at idle and during

acceleration, where it can provide torque multi-plication. At higher speeds and low accelerationrates, the system is wasteful as there is some“slippage” between the impeller and turbine. Arigid mechanical link, called a lockup, preventsthis slippage and provides a 3-percent benefit infuel economy if employed in all gears except first.The lockup mechanism also transfers more vibra-

tion to the driveline, creating some negative re-sponse toward its use. Lockup is now widely used,so available gains are limited.

Accessory improvements. Accessories driven bythe engine include the airconditioner, waterpump, oil pumps, hydraulic power steeringpump, alternator, and, in some cases, the radiatorfan. Modest benefits are available in the redesign

of all those systems to reduce total energy use. Forexample, a “smart” alternator can be electroni-cally controlled to provide battery charging onlywhen desirable. Power steering pumps are verywasteful at speed, as they are sized for idle, whensteering loads are greatest. Most cars alreadyemploy electric fans for the radiator which areswitched on when necessary, but further improve-ment is possible if their speed can be varied.Individually, these accessory benefits are verysmall but together they can provide a 0.5- tol.O-percent benefit in fuel economy. One possibil-ity is completely eliminating the hydraulic powersteering pump and replacing it with electricpower steering. This action alone can increasefuel economy by 1 percent. However, the electri-cal power demand is so large that electric power

steering is thought to be impractical for interme-diate and large cars.

Four- and five-speed automatic transmission and

continuously van-able transmissions. A particular



Chapter 3–Where Does Improved Fuel Efficiency Come From? q 27

power demand can be met by an engine at differ-ent operating points since:

power = torque x speed.At any level of power demand, the highest torqueand lowest engine speed combination—up to acertain point —offers the best fuel economy. Add-ing gears to an automatic transmission allowsoperation closer to the optimal combination of torque and speed for any given power demand.Theoretically, a continuously variable transmis-

sion (CVT) can keep engine speed at optimalrates for all vehicle speeds. Current CVT designsappear practical only for smaller cars, with two-liter engines or smaller, because of limitations onthe amount of power that can be transmitted bythe flexible belts in the transmission. Average fueleconomy improvement in moving from three-speed transmission with lockup to four-speed

with lockup is 4.5 percent, with an additional 2.5percent available from adding a fifth gear, or anadditional 3.5 percent available from moving to aCVT.

Electronic transmission control. Most automatictransmissions currently use mechanical controlsto shift gears or engage the torque converter lock-up. The controls have been highly developed over

the years to match the requirements of the testcycle. Electronic controls can offer a minor bene-fit by shifting gears and engaging the lockup moreefficiently, but the fuel economy gain on the cycleis only 0.5 percent. Under real-world conditions,it is expected to provide greater benefits, espe-cially at operating points outside the test cycleenvelope.

Throttle body and multipoint fuel injection. Mostvehicles already utilize fuel injection systems thathave replaced carburetors. Fuel injection systemsare of two types: throttle body, that essentiallyreplaces a carburetor with one or two injectorsthat supply fuel to all cylinders; and multipoint,that utilizes one injector per cylinder meteringfuel directly into the intake port. Fuel injection

allows more precise control of fuel quantity me-tered during transient operation (e.g., accelera-tion or deceleration) and also atomizes fuel morecompletely. These factors allow less fuel to be

used during cold starts and transients and alsoimprove emissions. The throttle body system pro-vides a 3-percent benefit over a carburetor, if

adopting the system eliminates the air pump re-quired to meet emission standards. Widespreaduse limits available fleet gains, however. A multi-point fuel injection system allows the inlet man-ifold to be tuned to maximize airflow, as no fuelflows through the manifold. The tuned inlet man-ifold can increase torque by 3 percent. A multi-point fuel injection system allows fuel shutoff

during deceleration. The multipoint system alsomitigates fuel distribution problems, allowingleaner mixtures during warmup and slightly moreaggressive spark timing after warmup. The com-bination of a multipoint system with a tuned in-take manifold and deceleration fuel shutoff pro-vides a 3-percent benefit in fuel economy relativeto the throttle body system.

Improved tires and lubricants. Longstandingtrends toward slipperier oil and tires with lowerrolling resistance will continue. The recently dis-played GM prototype electric car, the Impact,has tires with half the rolling resistance of modernradials. The fuel economy benefit of using thebest available oils (5W-30 replacing 1OW-4O) andtires, now in use on about 20 percent of the 1988

fleet, is about 1 percent. Incremental improve-ments in tires beyond 1995, available to the fleetin 2001, should yield another 0.5-percent gain.Tires like those of the Impact, if they prove practi-cal, would yield additional gains.

Engine friction reduction. Engine friction is pre-dominantly in the pistons/rings, valve train, andcrankshaft. On average about 20 percent of po-tential engine power is lost to friction; this repre-sents one third of total output power. Enginefriction reduction in the 1987 to 1995 timeframewill involve reducing piston ring tension, rede-signing the piston skirts (or load bearing area),and improving manufacturing methods to reducecylinder bore distortions. These efforts will pro-vide a 2-percent fuel economy benefit. Roller cam

followers reduce valve train friction by replacingthe sliding contact between the roller cam andcamshaft with a rolling contact, also providing a2-percent fuel economy benefit. After 1995, fric-



28 Irnproving Automobile Fuel Economy: New Standards, New Approaches

tion reduction will involve the use of lightweightvalves and springs, reduction in piston and con-necting rod mass through the use of fiber-rein-forced composite materials, and possibly, use of only two rings rather than three, with a potential2-percent fuel economy gain by 2001.

“Reduced performance. ” Reducing a car’s per-formance is not a “technology,” but it is a viableoption for improving fuel economy. If a smaller,less powerful engine is used in a vehicle, fueleconomy gains are obtained from both reducedengine weight and lower throttling losses, becausethe engine must be operated at full throttle for agreater portion of the driving cycle. For example,if a high-performance vehicle has a O-to-60 mphacceleration time of 8 seconds, increasing thistime by 10 percent—O.8 seconds—will increasefuel economy by about 3.5 percent, about 1 mpg

for a 28-mpg car. For a family car with a 14-sec-ond O-to-60 time, a similar increase of 10 percent(1.4 seconds) would add 5.5 percent to fuel econo-my, or over 1.5 mpg.

Lean bum. Current engines with catalytic con-trols operate under stoichiometric conditions,that is, using air/fuel mixtures with just enoughoxygen to burn all the fuel. This operating envi-ronment is necessary to allow the current genera-tion of catalytic controls for nitrogen oxides towork properly; they cannot operate in a “lean”environment, one with excess air. Operating lean,however, improves an engine’s thermodynamicefficiency and decreases pumping losses, withpotential gains in fuel economy of 10 to 12 percent

over current two-valve engines, or about 7 to 10percent over current four-valve engines. Toyotaand other companies are working on new catalysttechnology to allow high levels of nitrogen oxidescontrol with a lean burn engine. If development of this control technology is successful, advancedlean burn engines might begin to enter the U.S.fleet in the late 1990s. Although lean burn engines

are not new and are in use in Europe, develop-ment of the necessary nitrogen oxide catalysts isby no means guaranteed, and this technologyshould be considered speculative.

Two-stroke engines. In conventional four-strokeengines, the piston descends and ascends in thecylinder twice for every spark ignition and com-bustion: the first descent and ascent for combus-tion and power, and then forcing out the exhaustgases; and the second for drawing in air and fuel,then compressing the air/fuel mixture. In a two-stroke engine, the piston need descend and as-cend only once for each spark ignition, thus offer-ing significantly higher output per unit of enginedisplacement: 80 to 100 hp/liter compared to

about 60 to 65 hp/liter for an advanced overheadcam, four-valve four-stroke engine. The two-stroke also produces high torque at low speeds, incontrast to multi-valve four-stroke engines; thisallows engine downsizing corresponding to thedifference in horsepower. The higher frequencyof power strokes yields smoother operation, sothat a three-cylinder two-stroke engine can re-

place a six-cylinder four-stroke with minimalchange in operating quality and substantially re-duced friction losses. Finally, an advanced two-stroke engine will use a direct injection systemthat will run very lean, adding substantial effi-ciency benefits (though with potential nitrogenoxide problems because of the inability to useconventional reduction catalysts). Somewhat off-setting these sources of increased fuel efficiencyare:

q

q

q

q

reduced thermal efficiency of the two-strokecycle;

power loss due to the supercharger/blowerrequired for forced scavenging of exhaustgases;

power losses from the high-pressure fuelinjection pump; and

potential increase in piston friction asso-ciated with need for a large piston skirt.

The net fuel economy benefit is likely in the rangeof 12 to 14 percent over a two-valve four-strokeengine, or perhaps only 3 to 4 percent over anadvanced version of a four-valve engine with in-

take valve control, that will be available for the2001 fleet. However, the two-stroke may be con-siderably less expensive than these engines. Thekey to realizing these benefits is to solve the two-



Chapter 3–Where Does Improved Fuel Efficiency Come From? • 29

stroke’s remaining emissions control problems,especially for application to larger cars where theNOX emission standards can be limiting. A fur-ther tightening of NOX standards if Tier II stand-ards go into effect will further complicate pros-pects for this engine.

Diesel engines. Diesel engines represent a proventechnology available now to improve fuel econo-my substantially. However, diesels have not beenvery successful in the U.S. market for reasons that

include performance limitations (most dieselshave been significantly less powerful than com-peting gasoline engines), costs, noise, smell,delayed starting, emissions, and reliability prob-lems associated with some domestic models. Al-though the 1990 Clean Air Act amendments allowdiesels to meet a l.O-g/mi NOX standard com-pared to a 0.4-g/mi standard for gasoline (spark

ignition) engines,

3

it is questionable whether thisdegree of leniency would persist if diesels beganto take a major share of the new-car market; andin 2004, diesels must meet the 0.4-g/mi standard(or O.2g/mi if Tier II standards are applied). WereNOX catalysts capable of operating in a “lean,”oxygen-rich environment developed, dieselscould likely meet stringent NOX standards. Ac-cording to European manufacturers, diesels are

significantly more efficient than gasoline four-valve engines even at constant performance: 15 to18 percent more for naturally aspirated diesels,24 to 28 percent more for turbocharged diesels,and 35 to 40 percent more for direct injectionturbocharged diesels.

4And although the baseline

gasoline engine will improve, a portion of theimprovements, especially engine friction reduc-

tion, may be applied beneficially to diesels aswell.

Electric hybrid vehicles. Vehicles that combine anelectric motor for city driving with an internalcombustion engine for added power, when need-ed, and battery charging may represent a viablefuel economy alternative. In aversion designed by

Volkswagen, an 8-hp electric motor powers thecar at speeds up to 30 mph and a 1.6-liter dieselengine provides more power for highway driving

and other purposes. The weight of the extra en-gine and batteries (nearly 300 pounds) cuts downon acceleration and fuel economy, but the Volk-swagen prototype can still deliver nearly 100 mpgof hydrocarbon energy fuel economy, and 60-mpg(total) fuel efficiency.

5

This type of vehicle repre-sents an interesting opportunity because its useof the electric motor during much of the urban

cycle may allow the onboard diesel—or a two-stroke engine—to comply with stringent NOX

standards, such as those in California.

A SPECIFIC EXAMPLE OF THE

APPLICATION OF FUEL

ECONOMY TECHNOLOGY:

HONDA’S NEW CIVICVTEC-E MODEL

Honda Motors recently announced a new en-gine that combines Honda’s variable valve timingand lift control (VTEC) with lean burn. The com-bination of technology will be available in modelyear 1992 in a hatchback model called the Civic

VTEC-E, as a 49-state model. The Civic VTEC-Ewill also be available in California; but this modeldoes not use lean burn. Rather, it uses a highEGR (exhaust gas recirculation) rate but main-tains the mixture at a stoichiometric air/fuel ra-tio. California’s stringent NOX emissions stand-ards are met with use of a three-way catalyst. TheCivic VTEC-E in both Federal and Californiaversions has performance very similar to thestandard Civic, and the VTEC-E engine andstandard DX engine are both rated at 92 hp.However, the Civic VTEC-E provides a substan-tial increase in fuel economy over the DX model.

Detailed EPA test data were not available atthe time of this analysis and preliminary dataprovided by Honda are used instead. The 1992

J~mPra~ly for cam and light trucks below 3t750 pounds.

4Eneru and En~ronmental Analysis, Inc., February 1991, oP . cit.

51bid.




Civic model is somewhat larger and more aerody-namic than the 1991 Civic (for which detaileddata are available), but differences are not large,so that a comparison between a 1992 CivicVTEC-E and a 1991 Civic DX is valid. Table 3-1shows the relevant data. The 49-State CivicVTEC-E has approximately 44-percent betterfuel economy than the 1991 DX, with near-equalacceleration performance, while the Californiamodel has 34-percent better fuel economy. Thelean burn feature accounts for the 10-percentdifference in benefit between the California and49-State model.

This large increase in fuel economy comes notonly from the engine but also a range of othertechnologies, some made possible by the VTECengine characteristics. Items unrelated to the en-gine

q

q

q

q

include:

5-percent weight reduction due to reducedoptions;

improved aerodynamics due to the additionof an air-dam and removal of one externalmirror;

reduced rolling resistance through use of special tires;

reduced accessory loads from use of a“smart” alternator; and

Table 3-1 –Comparison of the Civic VTEC-E and

DX Models

1991 Civic 1992 Civic

Test weight (lb) . . . . . . . . . . . . . . . . . 2,500

CD . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.33Frontal area (m2) . . . . . . . . . . . . . . . . 1.80Engine displacement (cm

3) . . . .......91

Horsepower . . . . . . . . . . . . . . 92 @ 6,000Axle ratio. . . . . . . . . . . . . . . . . . . . . . . 3.89Transmission . . . . . . . . . . . . . . . . . . . M-5

Acceleration time,0-100 kph (secs) . . . . . . . . . . . . . . 10.6

City fuel economy (mpg) . . . . . . . . . 36.5Highway fuel economy (mpg) . . . . . . 47.7

Combined fuel economy (mpg) . . . . 40.8

2,375N 0.32˜

-1.85

9192@ 5,500

3.25M-5 wideratio/SIL

10.553 (48.5)’

67 (62)a

59 (54)’‘CallfornlaWEC-E lnparentheses AllVtEC-Efueleconomy data areapproxlmate

SOURCE. Energy & Environmental Analysis, Inc., 1991

. use of fuel-efficient lubricants.

These features, however, are responsible for lessthan 10 percent of fuel economy gain, and theEEA sensitivity coefficients reveal that 8 to 9percent is appropriate for the non-engine/trans-mission-related benefits.

This suggests a 35-percent gain is possiblefrom the engine/transmission/driveline combina-tion (25 percent for the California car). Hondahas reduced the axle ratio by about 16.5 percentbetween the VTEC-E and the DX. Normally thiswould reduce performance significantly, but theVTEC engine’s variable valve timing enhanceslow-speed torque. At 2,500 rpm, the torque of theVTEC engine is about 10 percent higher than thatfor the DX engine. The maximum 92 hp rating isattained at 5,500 rpm in the VTEC engine, while it

is attained only at 6,000 rpm in the DX engine.Hence, it appears the VTEC engine providesabout 10 percent more power across the entireusable speed range to 5,500 rpm. A wide-ratiotransmission with shift indicator light providesfurther fuel economy benefits, at some expense toshift quality and performance.

The engine also has other enhancements be-yond VTEC, such as roller cams, low-frictionpistons/rings, and other unspecified friction-re-duction technologies. Honda claims that only 10to 15 percent of the total fuel economy increase isdue to the VTEC/lean burn combination. Thisclaim, however, doesn’t include the drivetrain op-timization made possible by the engine’s in-

creased torque output. EEA estimates that atconstant performance, the VTEC/lean bum com-bination may be capable of a 20- to 25-percentincrease in fuel economy. This combination can-not meet current California or future Federalemissions standards. Without the lean burn fea-ture, it appears that a 10- to 15-percent benefitmay still be possible with VTEC technology,

while maintaining all other vehicle attributes con-stant. This engine can meet both California andfuture Federal NOX standards.



Chapter 4

Market-Driven Fuel Efficiency

There is widespread agreement among energyanalysts that, without significant changes in mar-ket conditions or government policy, improve-ments in the efficiency of the U.S. automobilefleet will slow from the pace of the past decadeand a half, with most improvements during thenext decade coming from diffusion into the fleetof technologies already introduced into the new

car fleet. In fact, as shown in figure 4-1, rapid im-provements in new-car fuel economy that beganin the 1970s essentially ended in 1982—the slow-down has already begun.

The primary factor reducing potential forrapid increases in fleet fuel efficiency is lack of strong market pressures for such increases. Withlower gasoline prices (and lower expectations forprice increases), relatively high non-fuel vehicleoperating costs, and average fuel economy of most new vehicles already in the 20- to 35-mpgrange, fuel costs have become a smaller fractionof total costs (figure 4-2) and fuel efficiency has

Figure 4-1 -Trends in U.S. Auto Fuel Economy(miies per gaiion)

20

16

10

5

0 !1974 1976 1978 1980 1982 1984 1986 1988 1990

, New au to f leet = To ta l auto f leet

SOURCE. MotorVehlcle Manufacturer’ sAssoelatlon, Oak Ridge National l-aborato~.

Figure 4-2-Auto Fuel Costs vs. Total Costs(cents per mile-1986 doiiars)

5 0

197577 79 80 81 82 83 84 85 86 87 88 89

Ali other costs Fuel costs

SOURCE: Oak Ridge National Laboratory.

declined dramatically in importance as a factor inchoosing a new vehicle. Presuming cost-effectiveefficiency improvements are available, the overallcost savings over vehicle lifetimes of any efficien-cy gain will be a small fraction of the total costs of ownership and operation.l Also, many technolo-gies that improve fuel economy while maintainingperformance and other vehicle attributes will cost

more than the technologies they replace and thuswill likely raise vehicle price. To the extent that au-tomobile purchasers focus on purchase pricerather than on “lifecycle” savings, high-efficiencyvehicles may be less marketable than less efficientbut lower priced vehicles.

2

Available consumer surveys seem to confirmthis. The firm of J.D. Power & Associates con-

ducted an annual survey investigating factorsconsumers consider important in choosing theirnext car. In 1980, when most analysts and con-sumers anticipated rapidly escalating gasolineprices, about a third of the consumers surveyedlisted fuel economy as the most important factor

ISee, for ~nmple, J. Go]demberg, T.B. JOhan~On, A.K.N. Reddy, and R.H. Wi]]iams, Ene~fora SuSfaintile ~o~l~(washington, ‘ c:‘or]d

Resources Institute, September 1987).z~uming th e vehicles are otherwise Comparable , which they often are not. NOTE: In today’s market, high+ fficieney vehicles often are

“bottom-of-the-line” models generally ess expensive than alternative models.

-31-



Chapter 4–Market-Driven Fuel Efficiency q 33

Figure 44-New-Car Performance O-to-60-mphAcceleration Time

.- Seconds

7

197879 80 81 82 83 84 85 86 87 88 89 90

SOURCE Environmental ProtectIon Agency

trol and satisfaction of CAFE standards;

automakers claim new-car owners raisedstrong objections to reduced power levels inthe early 1980s. Although the preference forincreased performance may disappear inthe future, it is worrisome to those con-cerned with fuel conservation. An impor-tant consequence of this consumer prefer-ence has been that drivetrain improvements

(such as engines with four valves per cyl-inder and turbochargers) with the potentialto either increase fuel efficiency (at least inpart by reducing engine displacement) orboost horsepower have been introducedin configurations emphasizing power in-creases rather than fuel savings.

The actual reduction in O-to-60 accelera-

tion time from 1982 to 1990 is 2.3 seconds(from 14.4 to 12.1 seconds), a 16-percentdecrease. Based on an EPA analysis of the

q

q

sensitivity of fuel economy to changes inperformance, 9 this decrease has caused

more than an 8-percent decline in fuel econ-omy—more than 2 mpg—from what itwould have been at 1982-level performance.

.

Additional luxury and safety equipment on

new cars. Although airconditioning andpower steering have penetrated more than80 percent of the fleet, and further increaseswill be small, other equipment such aspower seats, sunroofs, and power locks andwindows may gain additional market shareand can add significant weight to the ve-hicle. In addition, four-wheel drive, whichcan add 150 to 200 pounds to a vehicle andcut its fuel economy by 12 to 15 percent, isgaining popularity. Safety equipment suchas airbags (30 to 45 lb) and anti-skid brakes

(30 to 45 lb) will add further weight. The neteffect of greater penetration of these tech-nologies could be as large as a 3- to 5-per-cent decrease in fuel economy .10

More stringent emission standards, espe-

cially for nitrogen oxides. To meet the newTier I Federal standards on exhaust andevaporative hydrocarbons and nitrogen ox-ides, manufacturers will choose from alter-native strategies that will have tradeoffs incost, fuel efficiency, and emissions. Thereare approaches available to manufactur-ers —e.g., increasing the rhodium content of vehicle catalyst systems—that would meet amore stringent nitrogen oxide standard witha relatively small fuel economy penalty, but

at an added cost over alternative ap-Proaches. ll On the other hand, if manufac-turers perceive that consumers do not value

9K Hellrnan, chief, Control ~ChnOIOgy an d Application Branch, U.S. Environmental ~OteCtiOn Agency, ~n Arbor, MI) ~mOnal commu-

nication.

IOEner~ & Environmental Analysis, Inc.,“Developmentsin the Fuel Economy of Light-Duty Highway Vehicles,” contractor report preparedfor the Office of lkchnology Assessment, August 1988.

IISieKa Research, Inc., ‘me Feasibili~ and Costs of More Stringent Mobile source Emission Controk,” contractor report prepared for theOffice of ‘lkchnology ksessment, Jan. 20, 1988. The report estimates a cost per vehicle of $139 to achieve a 0.25 grams/mile standard fornon-methane hydrocarbons and a 0.4 g/mi standard forN@ with no fuel eeonomy penalty, and no forgone fuel economy improvements. Thetechnology involved is an increase in rhodium loadings by 0.5 gramdvehicle in the exhaust catalyst and the addition of a bypassable start catalyst.Another CYllA contractor-Energy& Environmental halysis, Inc. –believes that satisfaction of the above standards wouldaf feat cause somefuture fuel economy improvement to be forgone, KG.Duleep, Director of Engineering, Energy&Environmental Analysis, Inc., personal om-munication.



34. Improving Automobile Fuel Economy: New Standards, New Approaches

fuel economy highly, they may choose con-trol strategies that add little or no cost butsacrifice more fuel economy. In addition,manufacturers could add technologies thathave potential for both efficiency improve-ment and emission control—e.g., multi-point fuel injection —in ways that maximizeemission reduction effects but sacrificesome efficiency potential. In these cases, theemission standards would have causedsome potential improvement in fuel econo-

my to be forgone. Historically, manufactur-ers have pursued a variety of strategies toachieve standards: to meet 1981 emissionstandards, many Japanese manufacturersused oxidation catalyst technology and ac-cepted an efficiency loss of 4 to 6 percent;General Motors met the same standard with“closed loop” electronic fuel control sys-tems with three-way catalysts that incurred

12 Energy and Environ-no efficiency loss.mental Analysis, Inc. has estimated the po-tential fuel economy penalty (or gain for-gone) of the Tier I standard of 0.4grams/mile for nitrogen oxides to be about 1percent, with significant variation possible

depending on how manufacture balance efficiency against costs.

13

Slower replacement of the automobilefleet, so that technological improvementsintroduced into the new car fleet will takelonger to diffuse into the total fleet. In 1%9,cars more than 10 years old accounted foronly about 7 percent of vehicle miles trav-eled and fuel consumed; by 1977, such ve-hicles accounted for about 13 percent of vmt

and fuel; and by 1983, they accounted for

q

almost 20 percent of vmt and 23 percent of fuel.14 In 1989, all light-duty vehicles (not

just cars) more than 10 years old accounted

for over 30 percent of vmt and roughly 31percent of light-duty fuel consumption.15

Note that the importance of turnover ratesto total fleet fuel economy and, more signifi-cantly, to improved emissions performanceindicates that policymakers must avoidstrategies that would make new cars lessattractive to potential purchasers, and thus

slow new-car sales and vehicle turnover.No signs that U.S. drivers will shift to cars

with less interior volume. Although averageexterior size and vehicle weight have beenreduced substantially, with great positiveeffect on fuel efficiency, and though therehave been substantial sales shifts among thedifferent size classes, the average interior

volume of new automobiles in the U.S. fleethas remained virtually constant for 13 years:109 cubic feet in 1978 and 107 in 1990 16

(figure 4-5). On the other hand, the vehiclesoften cited as demonstrating potential formajor fleet efficiency improvements—thevery-high-efficiency vehicles in the currentfleet and most ultrahigh-efficiency proto-

types-are smaller than the average auto-mobile. Although substantial efficiencygains can be made without a shift to smaller(lower interior volume) cars–less than one-tenth (0.5 mpg out of 6.6 mpg total increase)of 1978-1984-progress in new-car efficien-cy was due to shifts in size class 17—the ap-parent difficulty in effecting such a shiftlimits prospects for future fuel economygains from fleet downsizing.

lzEnergy & Environmental Analysis, Inc., 1988, op. cit.

13Duleep, op. cit.

14u.s. D e p a r t m e n t of Enerw,~sess~nt of Costs and Benejifi of Flexible andA[temative Fuel Use in the U.S. fiawpotiation secfo~ ~~essRepoti One: Context and Analytical Framework, DOE-PE-0080, January 1988.

15u.s. De p a r t m e n t of Energy, Energy Information Administration, Househo[d Vehic/es Ene~ Consumption 1988, DOEmIA-0464(88), Feb-

ruary 1990, p. 29.IGHeavenrich 1990, op. CiL, P. 17.

17~D. pattenOn, t~~end~ in Automobile Fuel fiOnOmy and Ener~ use,” pa~r presented at oRsA-~Ms Conference, &XtOn, MA, Apr.30, 1985.



Chapter 4–Market-Driven Fuel Efficiency q 35

Figure 4-5–interior Volume of New Cars (cubic feet)

1 2 0

197879 80 81 82 83 84 86 86 87 88 89

SOURCE: Oak Ridge National Laboratory.

q

q

If

Continued consumer demand for “old--fashioned” car models. U.S. manufacturershave found that a portion of new-car pur-chasers prefer large, heavy, rear-wheel-drive models even though newer, more fuelefficient designs appear functionally superi-or 18 Because manufacturers can obtain.

high profit margins on these models, theyhave kept them in the fleet despite prior

plans to phase them out.

Growing road congestion and other factors

affecting on-road fuel economy. Currenton-road efficiency of the fleet is estimated tobe about 15 percent lower than estimatesmade with the EPA test procedure. As dis-cussed in box 4-A, changing driving condi-

tions may change the 15-percent adjust-ment, most likely increasing the gapbetween EPA and on-road values. In partic-ular, growing congestion may play a majorrole in reducing fuel economy.

low oil prices continue, relatively modestbenefits to the individual automobile ‘owner of improving fuel efficiency beyond about 30 mpg

are unlikely to provide much incentive to man-ufacturers who must factor in both market risk

and the risk of reliability problems into their de-sign and marketing decisions. Manufacturers are

likely to be reluctant to introduce major fuel-effi-cient technology unless it offers other importantbenefits as well, and they are likely to forgo somepotential efficiency benefits to maximize otherbenefits. Possible side benefits include betteremission control characteristics (e.g., from bettercombustion controls) and improved performance(e.g., from continuously variable transmissions).And despite the existence of some side benefits,

improvement in new-car fuel economy is ex-pected to be incremental and quite slow over thenext decade or so, assuming the current marketenvironment persists.

Thus, absent sharp increases in world oilprices, oil supply disruptions, or other events thatmight increase consumer demand for fuel econo-my, or policy intervention such as gasoline excisetaxes (over $2/gallon in many industrial countries,see figure 4-6) and other market incentives (e.g.,gas guzzler/sipper fees and rebates), or tighteningof CAFE standards, fuel efficiency for the U.S.new vehicle fleet will likely have only modest in-creases over the next decade as engineering im-provements well along in development are gradu-ally introduced. Such technological and design

Figure 4-6-Gasoline Price With Tax(dollars par gallon)

2

1

0United Canada West Br it ain F rance JapanStates Germany

_ Price per gallon = Tax per gallon

SOURCE: Business Week

lgHowever, rear-wheel drive generally is more suitable than front-wheel drive for trailer towing.




Box 4-A-Potential for Reductions in On-Road Fuel Economy From Changing Driving Patterns

Recent analyses conducted for the Department of Energy l conclude that the 15 percent adjustmentfactor used to translate EPA fuel economy test results to estimated on-road fuel economy is too low forprojectiorts of fuel use. First, the share of driving done on urban roads is now substantially higher than theassumed 55 percent; the 1987 share was 63 percent, and the projected sham for 2010 is 72 percent.

2Tak-

ing these shifts in the urban/rural share into account would lead to a 1.3-percent decrease in estimatedon-road fuel economy for 1987, and a 3.1-percent decrease by 2010. Second, rising urban congestion,caused by a rate of increase in vmt much greater than increases in road capacity in urban areas, will exert adownward pull on on-road efficiency; the estimated effect for 2010 is a 15-percent reduction in EPA cityfuel economy, or a 9.1-percent reduction in estimated on-road fuel economy. Third, expected increasesin highway speeds will further reduce highway fuel economies; an increase in average speeds from 55.8mph in 1975 to 59.7 mph in 1987 cost an estimated 0.8-percent reduction from EPA values in on-road fueleconomy, with an extrapolation to 66 mph for 2010 yielding an additional 1.6-percent reduction.

3

The estimated overall effect in 2010 of the three factors depressing on-road fuel economy fromEPA-estimated levels–expected increases in the urban share of driving, congestion, and highwayspeeds-is an additional 14.7-percent reduction from the EPA composite fuel economy on top of thecurrent 15-percent adjustment factor, or a total adjustment factor of 29.7 percent.

4

OTA judges that quantitative assessments of two of the three forces driving the expected change inadjustment factor are highly uncertain: rising urban congestion and increasing highway speeds. These

forces account for nearly four-fifths of the expected adjustment factor increase. In particular, since muchhighway driving is on urban highways, we consider it unlikely that a simple extrapolation of past increasesin highway speeds will yield a reliable projection of future highway speeds. We expect the projectedM-percent reduction in fuel economy due to increased highway speeds to be an overestimate.

Additional factors that Will counterbalance forces adding to the gap between EPA and on-road mile-age include:

• the large increase in fueI injection in new cars. The original 15-percent gap was calculated with afIeet made up of carbureted vehicles; the gap is smaller with fuel injected vehicles;

5

• regulations requiring on-board diagnostics will reduce the number of malfunctioning vehicles,with fIeetwide in-use fuel economy benefits;

• regulating evaporative and running losses will reduce fuel lost to evaporative emissions; and

. cold-temperature carbon monoxide emission regulation will reduce fuel enrichment during coldstarts at temperatures below 65°F, with in-use fuel savings not recognized by the EPA test, whichis conducted at higher temperatures.

We Conclude that the DOE estimate of a nearly 30-percent gap between measured and on-road fueleconomy in 2010 probably is directionally correct but significantly overstated.

1P . w~~bfw~ ~n ~ p Pat$erson, “C’hanging Driving Patterns and Their Effect on Fuel Economy,” paper prewnted at the 1989SAE Gcwernment/fndustry Meeting, W/ishington, DC, May 2, 1989.

‘hid.

31bid,

41bid.

5KG. Du}eep , D~ r ~ t o r o f En@eefing, Energy and Environmental Analysis, InC., personal communi@tiOn.

.Improvements and, above all, retirement of older, Longer-term projections of new vehicle fleetless efficient vehicles will allow fuel economy of fuel economy —to 2010 or beyond—are consider-the entire passenger vehicle fleet to rise during ably more speculative because this timeframe al-

the remainder of this century, but at a rate nota- 10WS sufficient lead time for new technologies tobly below what is achievable. play a major role. By 2010, technologies such as

q



Chapter 4–Market-Driven Fuel Efficienq q 37

two-stroke gasoline and diesel engines, direct injection diesels, even electric/fossil hybrid vehiclescould attain significant market shares, with largeimpacts on fuel economy.

Projections ofboth new-car and light-duty fleetfuel economy beyond the next few years are atbest educated guesses and should retreated assuch. Some recent projections include:

q

q

The Energy Information Administration’sprojection for the year 2000: for new auto-

mobiles, 32.6 mpg (EPA); for new lighttrucks, 24 mpg (EPA); for the entire light-duty fleet, 21 mpg (in use).19

Data Resources, Inc.’s projection for theyear 2000: for new automobiles, 30.8 mpg(EPA); for new light trucks, 23 mpg (EPA). 20

Fuel efficiency could, of course, easily differ

from these projections. For example, a combina-tion of factors—additional safety equipment, in-creases in vehicle performance, more stringentemission standards that are met by least-first-cost (but fuel-inefficient) measures, trends in im-ports towards larger and more luxurious (andpowerful) vehicles, and growing market share forvans and pickup trucks—could make it difficultfor the new vehicle fleet to improve significantly

beyond today’s level. Yet a renewal in consumerand public policy interest in fuel economy couldcause fleet efficiency to rise above the projectedlevels by shifts in market shares of alternativemodels, more rapid diffusion of existing technol-ogy into the fleet, and accelerated introduction of technologies.

Although 1995 fuel economy will be heavily in-

fluenced by existing industry plans, fuel economyin 2001 should be much less constrained by suchinfluence, and consequently, especially difficultto predict. Assuming relatively stable gasoline

prices and a general continuation of recent market trends in consumer preferences for vehicle perfom- ance, size, and other attributes, OTA’s “best guess” for new car fleet fuel economy in 1995 is 29 mpg(EPA value). We are far less certain of the likelyyear-2001 value; but under relatively optimisticconditions for increasing fuel economy—oilprices rising by about $10/bbl, fuel economy tech-nologies added to model lines achieving maxi-mum fuel economy benefits consistent with man-ufacturer tradeoffs with size and performance,

and trends to growing vehicle size, power, andluxury leveling out after 1995-we believe the fleetcould achieve 33 mpg. Lower oil prices, continued“horsepower wars,” less-than-optimal fuel econo-my performance from new technologies, and soforth, can lower this value significantly.

With the “optimistic” fuel economy scenarios,assuming the 15-percent EPA/in-use fuel econo-

my adjustment will still hold in the future, the in-use values are about 25 mpg for the 1995 new carfleet and about 28 mpg for the 2001 fleet. If urbancongestion increases significantly, however, thesevalues will be too optimistic. The correspondingvalues for the total fleet of cars in service are: 27.4mpg (EPA) and 23.3 mpg (in-use) for 1995; 29.6mpg (EPA) and 25.1 mpg (in-use) for 2001. With a

year-2001 fuel economy value of about 24 mpg(EPA) for new light trucks, the overall light-dutynew vehicle fleet average for 2001 would be about29 mpg (EPA), and the entire light-duty fleetwould average about 22 to 23 mpg in-use.21 If market trends or gasoline prices change signifi-cantly, obviously the projections will change, es-pecially for the later years. As will be discussedlater, increased consumer preference for the mostefficient vehicles in each size class could raise av-erage fleet fuel economy by several miles/galloneven without new technology or radical changesin the size mix of the fleet.

19u.s. Department of Energy, Energy Information Administration, 1991 Annuaf Ene~ Oudook, DOE~IA-0383(91), March 1991. In-useestimate assumes degradation of efficiency from increasing congestion.

zo~~d on Data Resources, Inc., Ene~ Review, winter 1990-91, table 18, using 0.844 as the ratio of in-use to EPA-rated fuel economY.

ZIAssumlng a 15-Prcent adjustment between fuel economy measured on the EPA test cycle and actual on-road fuel economy.



Chapter 5 Projecting Travel Demand q 41



Chapter 5–Projecting Travel Demand q 41

group-each about 18,000 miles per year, onaverage. This represents an average of 1.5

hours per day spent driving. Although“common sense” about saturation of driv-ing has been wrong before, it is at leastpossible that this group may be nearing sat-uration. One important area of uncertainty:Recent trends in car design making the ve-hicle interior a more hospitable environ-ment (comfortable seating, excellent cli-mate control, superb music systems,

availability of telephone communication,etc.) may increase the likelihood that driverswill tolerate spending more time on theroad.

Changing economic structure. The growthin part-time work and the shift in the econo-

my toward more services may increase driv-ing by bringing more individuals into theworkplace and by increasing delivery re-quirements. Providing certain types of ser-vices, especially information, electronicallymay eventually replace some transporta-tion, but such trends have not yet been ob-served.

Traffic congestion. More congestion of met-ropolitan areas will alter travel patterns.Congestion will decrease fuel efficiency of trips made; discourage other trips (or shiftthem to public transportation, or to elec-tronic media when possible); persuadesome people to work closer to home or live

closer to work; and encourage businesses torelocate to the less congested fringes, in-creasing travel requirements. Net effect onfuel demand is unpredictable.

In OTA’s view, the most probable aspects of theabove factors are a lower number of personsreaching driving age and a likely slowdown in the

rate of women entering the work force, both slow-ing growth in vmt. Nevertheless, uncertainty asso-ciated with various factors affecting travel de-mand allows a range of feasible growth rates of 1 to 3 percent without considering the potentialfor future oil price shocks. Unexpected large in-creases in gasoline costs or supply problemscould cause growth rates of personal travel

demand to fall below these levels, or even causetravel demand to decline. A period of price stabil-ity and continued improvements in vehicle de-signs would make the high end of the range quiteplausible.

We note that our projected range of vmt growthextends to a level lower than most projections(e.g., the three projections noted). At the lower

end of the range, total fuel use by the fleet willlikely decline unless negative effects on fuel econ-omy due to growing congestion are very large.

As a final note, we should point out that studiesof travel demand indicate that variable travelcosts, including fuel cost, affect the magnitude of travel demand. Higher fuel prices will tend to de-press travel demand; and increased fuel efficien-cy, which lowers the “per mile” cost of travel, willtend to boost travel demand. Since travel demanddepends on numerous factors that have variedsignificantly over time, it is not possible to predictprecisely how much additional demand for travelmight result from actions that boost fuel econo-my–but analysts agree the effect is significant. Inother words, the fuel economy savings expected

from an increase in the severity of CAFE stand-ards will be smaller—probably by 10 to 20 per-cent or so—than if demand for travel were as-sumed to be unaffected by the new standards.

Ch t 6



Chapter 6

Market-Driven Light-Duty Fuel Use

The effect of a combination of moderate im-provements in vehicle efficiencies, rising marketshare of light trucks, and a steady but slightlyslower increase in miles driven—which OTA con-siders the most probable future for personalhighway travel during the next decade–will bethat, ABSENT POLICY CHANGES, fuel con-

sumption of the passenger vehicle fleet is likely tochange only modestly between now and 2001; weproject that expected efficiency improvementswill nearly offset the expected increase in milesdriven.

To be more precise, the fuel efficiency and vmtprojections of the Energy Information Adminis-tration cited above, indicate that year-2000 fuel

use by autos and light trucks combined will be 3.3percent higher than in 1989. This is a smallchange for an Ii-year period, less than 0.3 per-cent/year. The range for scenarios varying from“low oil price-high economic growth” to “high oilprice” is + 10.5 percent to -1.3 percent for then-year period.

A projection of relatively stagnant light-duty

vehicle fuel consumption conforms to the experi-ence of the previous decade and a half. Between1973 and 1987, petroleum consumption of thelight-duty fleet went from 5.66 mmbd to 6.09mmbd, an increase of only 7.6 percent.1 Duringthis period, the in-use fuel economy of the U.S.automobile fleet improved from about 13.3 mpgto 19.2 mpg, and light-truck fuel economy im-

proved from 10.5 mpg to 12.9 mpg2

–but this in-creased efficiency was offset by the increase inmiles driven. Looked at another way, however,the improvement in efficiency amounted to a sav-

ings of about 2.56 mmbd over what oil consump-tion would have been had 1987 driving levels beenattained with 1973 fleet efficiency (at $1.00/gallonthis would bean annual savings to U.S. drivers of about $40 billion per year).

Alternative projections show only small varia-tions from this. For example, a recent Chevron

forecast (World Energy Outlook, April 1990) pro- jects an increase of 0.5 percent per year in gaso-line demand through 2000.

GOING BEYOND THE MARKET:IMPROVING NEW-CAR

FUEL ECONOMY

The next two chapters deal with alternativeways to improve new-car fleet fuel economy—byimproving technology and design within the con-

straints of existing and projected consumer prefer-ences, assuming no unexpected oil price shocks orlarge increases in gasoline taxes; and by changingconsumer preferences for fuel economy and other

vehicle attributes that influence fuel economy.These alternatives are not independent of eachother, because most advances in technology anddesign yield benefits that can be taken as a vari-able combination of increased fuel economy andimprovements in other vehicle attributes such asperformance. The extent to which one or the otheris favored is the automaker’s decision; the incen-

tive for improving technology and design and theprimary influence in making tradeoffs among fueleconomy, performance, size, and other attributesis consumer preference.

l~wd on table 2.9 inOak Ridge National Laboratow, Transpotiation Eneqy Data Book, Edition 11, ORN~649, January 1991. Note: ‘e=

values include all light trucks, whereas EIA and other projections generally try to exclude light-truck freight use.

%lak Ridge National Laboratory, op. cit., tables 3.11 and 3.19.

-43-

Ch t 7



Chapter 7

Technological Potential for Increased Fuel Economy

During the past year, Congress has heard avariety of testimony about the technological po-tential for improving new-car fuel economy. Mostof this testimony—including OTA’s

2

—focused ondefining technological potential in a given year(generally 1995 or 2000) as a single “miles pergallon” value. OTA’s motive for selecting a single

value was to avoid complicating the fuel economydebate with complex and confusing discussionsof scenarios and technical assumptions. We sus-pect the motives of other analysts discussing thisissue were similar.

The problem with this approach is that ana-lysts and others involved in the fuel economydebate have reached no consensus about what

“technological potential” really means. Congresshas been bombarded with a wide range of esti-mates of technological potential. Many differ-ences among the various estimates result notfrom actual differences in technical judgmentabout the efficiency improvement of specifictechnologies, though such differences clearly ex-ist, but instead from differences in assumptionsabout:

q

q

q

q

q

the nature of regulations accomplishing theefficiency change;

future shifts in the size mix of the fleet;

changes in acceleration capabilities or othermeasures of vehicle performance (see box7-A);

passage of new safety and emission regula-tions;

judgments about an acceptable level of eco-nomic disruption to the industry in re-sponding to new fuel economy regulations;

q

q

q

lead time available to the industry to re-design model lines;

the time required to develop, perfect, cer-tify, and bring to market new technologies;and

judgments about consumer response to

changes in vehicle costs and capabilities.Assumptions about these factors must be madein calculating technological potential, since eachfactor will affect the ultimate fuel economyachieved by the fleet. In addition, there is ongoingargument about whether it is reasonable to expectfuture average levels of technology performanceto equal the best examples present today, or

whether current average performance is a goodapproximation for performance level five or moreyears from now. Unfortunately, the focus on de-veloping a single number has tended to obscureassumptions underlying the numbers, with theresult that Congress is confronted with estimatesthat appear to be about the same thing, but arenot really comparable.

OTA is aware of four general groupings of recent estimates of fuel economy technologicalpotential:

1.

2.

Values based on estimates of the efficiencyincreases associated with individual tech-nologies developed by automobile engi-neers.3

Estimates based on statistical evaluationsof the current fleet of automobiles. Theseevaluations try to find correlations betweenthe presence or absence of specific efficien-cy technologies and differences in vehiclefuel economy. We are aware of two recent

IFrom the OffIce of ~chno]ogy Assessment, Department of Energy, International Association for Energy Conservation, American Councilfor an Energy-Eff]cient Economy, Ford Motor Co., Chrysler Corp., General Motors, and the United Auto Workers, among others.

zFor ~nmp]e, S*E. plotkin, ~lce of~chno]ogy Assessment, testimony to the Consumer Subcommittee, committee on COmmerCe> ‘cience~and llansportation, U.S. Senate, May 2, 1989, “Increasing the Efficiency of Automobiles and Light llucks-A Component of a Strategy toCombat Global Warming and Growing U.S. Oil Dependence.”

%%ese estimates have been made available to the Federal Government but have not been formally published.

-45-

46 I i A bil F l d d N A h



46. Improving Automobile Fuel Economy: New standards, New Approaches

Box 7-A–"Constant Performance” and Evaluating Fuel Economy Potential

Most technologies that can improve vehicle fuel economy can also boost performance. Generally,the vehicle designer chooses one to favor because there is a tradeoff between the two. This works asfollows: technology might boost engine output without changing engine size (e.g., turbocharging, use of four valves per cylinder, fuel injection, etc.), or instead it might diminish load by reducing friction (e.g.,roller bearings; advanced oils) or aerodynamic drag (flush windows, raked windshields). Both outcomeswould allow either downsizing the engine to compensate for the power boost or load reduction, therebyimproving fuel economy, or leaving the engine the same size and allowing performance to improve (withless or no improvement in fuel economy).

Today, automakers choose to boost performance at the expense of increased fuel economy, pri-marily because the market rewards performance with profits higher than those attained by adding to fueleconomy. In other words, an automaker might be able to charge much more for a boost in accelerationability than for an equivalent increase in fuel economy. Because many technologies available to improvefuel economy have been used instead to improve performance, measuring the potential fuel economyperformance of these technologies demands that their measured fuel economy effects be adjusted to abaseline of constant performance. There are two important analytical problems associated with thisadjustment.

First, the technology will have been developed for maximum performance rather than maximumfuel economy, so a simple adjustment to constant performance may hide some of the technology's poten-

tial. Second, there maybe disagreement about what “constant performance” actually means. As an ex-ample, 4-valve-per-cylinder engines allow a significant horsepower increase over baseline 2-valve en-gines without increasing engine displacement — 50-percent horsepower increases are not unusual. How-ever, maximum horsepower is achieved in a 4-valve engine at significantly higher rpm than in 2-valves;also, the low end torque (torque achieved at low rpm) is only modestly higher for the 4-valve than for the2-valve. This means that a downsized 4-valve engine with identical horsepower to a larger 2-valve willhave a considerably different, probably inferior, driving “feel”, and will have less low end response. Con-sequently, horsepower and the horse power/weight ratio are unsatisfactory measures of performance by

themselves. To complicate matters, different automakers, all of whom aim to distinguish the driving feel of their vehicles from those of other makers, will reach different conclusions about how much engine down-sizing, and thus how much added fuel economy, can be gained from a particular technology. Those willingto create a high-revving vehicle with an active automatic transmission might be willing to downsize en-gines considerably more than a maker intent on creating a vehicle with a smooth, low-revving feel.

This complexity creates a policy problem as well as an analytical one. Is it valid to argue that a newfuel economy standard is flawed because itwould require changing the feel of a company’s vehicles—es-pecially when vehicles with the type of feel that maybe required are successfully marketed (though notnecessarily to all types of customers)? This problem goes to the heart of the inherent tradeoff betweenregulatory goals and values such as consumer choice. Virtually any regulation that is at all stringent willtend to limit consumer choice. The issue is to define an acceptable limit.

statistical evaluations, both sponsored by the fleet, vehicle prototypes, and laboratorythe industry.4 results of specific fuel economy technolo-

gies, perhaps coupled with assumptions3. Estimates based on extrapolation from ex- about possible shifts in consumer prefer-

perience with ultra-high-mileage vehicles in ences. Early estimates by the energy conser-

QJ 0 &rger, M H Smith, and R.W. ~dre~, “A system for Estimating Fuel Economy potential Due to Technology improvements,” SePt.. . . .24, 1990, Preliminary Report; and W.V Bussmann, Chrysler Corp., “Potential Gains in Fuel Economy: A Statistical Analysis of TechnologiesEmbodied in Model Year 1988 and 1989 Cars,” Feb. 15, 1990.

Chapter 7–Technological Potential for Increased Fuel Economy q 47




4.

vation community relied heavily on esti-mates of this types

Values based on estimates of efficiency in-creases associated with individual technolo-gies and potential for increased penetrationof these technologies developed by Energyand Environmental Analysis, Inc. (EEA),under the sponsorship of OTA, the Depart-ment of Energy, and the EnvironmentalProtection Agency. DOE, OTA, and the

American Council for an Energy-EfficientEconomy (Ledbetter and Ross) have allpresented estimates of technological poten-tial based on the EEA estimates.6

In addition, two recently initiated efforts are con-sidering the same issue. The Motor Vehicle Man-ufacturers Association (MVMA) has contractedwith SRI International to conduct a study of the

fuel economy potential of existing technology andhas arranged access to confidential industry dataand analysis to complete the work. The Depart-ment of Transportation has asked the NationalResearch Council to undertake a similar study.Both studies are short-term in nature, due withinthe year.

Efforts thus far have produced results that fall

roughly into three categories. First, estimatesprovided by the energy conservation communityindicate a very high level of fuel economy poten-tial for the fleet. The American Council for anEnergy-Efficient Economy calls for a CAFEstandard of 45 mpg for cars and 35 mpg for lighttrucks by the year 2000. Other estimates of tech-nological potential range to 60 mpg and higher for

the early 21st century.Second, estimates produced by EEA for the

automobile fleet are in the 30- to 38-mpg rangedepending on timeframe (1995 or 2001) and sce-nario (from no change in fleet size mix and powerand conservative investment assumptions, to sig-nificant rollbacks in size and power and invest-

ment assumptions based on societal rather thanprivate interests). Recent EEA estimates for 2010project a considerably higher potential, to 45 mpg

or higher.

Third, industry estimates and industry-spon-sored statistical evaluations indicate minimalfuel economy potential for the near term (to 1995or 2000/2001), with much of that potential re-quired to offset fuel economy penalties asso-ciated with new emission controls and safetystandards.

Both EEA estimates and available industryand industry-sponsored estimates for 1995 and2000/2001 are basically conservative, at least froma technology standpoint, because they consideronly technologies already introduced into thefleet. As discussed below, in considering a time-frame that extends to the year 2000 and a bit

beyond, there is a distinct possibility-even aprobability-that technologies not yet in the fleetwill play a role in improving fuel economy.

ENGINEERING ANALYSES OFFUEL ECONOMY

TECHNOLOGIES PERFORMED

BY DOMESTIC AUTOMAKERS

The three domestic automakers—Chrysler,Ford, and General Motors–have attempted toduplicate the EEA fuel economy analyses usingvalues derived by their vehicle engineers for thefuel economy potential of each technology. Re-sults of these analyses were first presented anddiscussed at a meeting in Detroit on January 17,

1990, attended by representatives of the auto-makers, DOE, DOT EPA, and OTA and K.G.Duleep of EEA (the principal investigator forEEA’s work).

Tables 7-1, 7-2, and 7-3 present, respectively,the Department of Energy’s 1989 estimates of fueleconomy for 1995 and three scenarios for 2000

5For ~mmple, D*H. B]evix, me New ~“ 1 CfiiS and Fuel Economy Technolo@”es (westport, ~ Greenw~ press> 1988)”

bFor enmple: C. Difig]io, KG. Duleep, and D.~ Greene> “Cost Effectiveness of Future Fuel Economy Improvements,” 77ze Energy Jouma/,vol. 2, No. 1, 1990, pp. 65-83; M. Ledbetter and M. Ross, “Supply Curves of Consemed Energy for Automobiles,” Proceedings ofrhe 25rhlntenociery Ene~ Conservation Engineering Conference, American Institute of Chemical Engineers, New York, NY, 1990; and S.E. Plotkin,Ofilce of lkchnology Assessment, op. cit.



Table 7-1 -Passenger-Car Fuel Economy Projections: Assessment of Technology Potential at Hypothetical Usage Rates*(all figures given as percentages)

Department of Energy 1995 v. 1987 2000 v. 1995 2000 v. 1995 2000 v. 19951985 2000 DOE DOE DO E DOE

1987 Product Plan Product Plan Cost-Effective Max. Technology1987 l & 5 Industry mpg mpg

Technology F.E. Gain Usage Usage Gain Usage Gain Usage Gain Usage 1%?

Engine improvement

Intake Valve Control , . . . . . . . . . . . .Overhead Cam Engine . . . . . . . . . . .Roller Cam Followers . . . . . . . . . . . .Low-friction Pistons and Ring . . . . . .Adv. Friction Reduction. . . . . . . . . . .Throttle-body Fuel Injection . . . . . . .

Muitipoint Fuel Injection . . . . . . . . . .4-Valve 6-Cyl. for 8-CyL . . . . . . . . . .4-Valve 4-Cyl. for 6-Cyl. . . . . . . . . . .4-VaMe 4-Cyl. for 4-Cyl. . . . . . . . . . .

Transmission improvements

Electronic Control . . . . . . . . . . . . . . .Torque Converter Lock-up . . . . . . . .4-spd Automatic (v. 3-spd L/Up) . . .5-spd Automatic . . . . . . . . . . . . . . . .CVT . . . . . . . . . . . . . . . . . . . . . . . . . .

Other improvements

Front-wheel Drive . . . . . . . . . . . . . . .Weight Reduction (Materials) . . . . . .

Aero. Drag Reduction I . . . . . . . . . . .Aero. Drag Reduction II . . . . . . . . . .Electric Power Steering. . . . . . . . . . .Lubricants/Tires. . . . . . . . . . . . . . . . .Tires . . . . . . . . . . . . . . . . . . . . . . . . . .Accessories . . . . . . . . . . . . . . . . . . . .

Total FueilEconomy Increase . . . . . .

10.06.01.52.0

3.0

3.010.010.0

1.53.04.5

10.0

2.3

1.0

1.0

10.06.0

2.0

3.010.010.05.0

2.52.5

10.06.6

2.31,0

0.51.0

209995

10080

2.001.80

5099

9510080

5.001.80

709995

10080

7,001.80

1.60

1.200.801.202.50

1.001.00

1.305.28

1.840.60

0.50

27.6

245520

69 2.7095 0.60

100 1.601.60 1.60

28

48

40 0.36

60 0.3612 1.2018 1.80

100162410

1.200.400.600.50

100203040

1.200.801.20

2.00

100203050

80 1.2080 0.6080 1.80

6040

4040

1010

0.250.25

20 40

0.501.00

86 1.20

100 1.84

1.30 9980

74

20

95 0.90 99

105

20

0.230.05

0.10

105

100

0.230.05

0.50

8060

100 1.00

100 0.80

17.1

100

20

17.29.9

* Ueage ratee are for comparleon onfy Their use doee not Imply manufacturing or marketing feaelblllty.

SOURCE: General Motor% Ford, Chryeler



50) q Improving Automobile Fuel Economy: New Standards New Approaches



50) q Improving Automobile Fuel Economy: New Standards, New Approaches

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OJo UJoOm OF

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olQlnotb. .tm

Ino

0

i

i

Chapter 7-Techological Potential for Increased Fuel Economy q 51



(these estimates have since been revised); Chrys-ler Corp.’s alternative estimates for 1995 and twoof the three year-2000 scenarios, assuming thesame technology penetrations used by EEA, forcomparison; and a direct comparison between anearlier OTA fuel economy estimate for 1995 andthe three automakers’ combined estimate. DOE’sand OTA’s estimates were produced by EEA.

STATISTICAL ANALYSES OF

FUEL ECONOMY PERFORMANCEOF TECHNOLOGIES IN THE

EXISTING FLEET

The domestic industry has sponsored two sta-tistical analyses of the existing auto fleet to deriveregression equations relating the fuel economy of autos to both measured variables (vehicle weight,

engine displacement, and so forth) and the pres-ence or absence of specific technologies. Theequations can be used to estimate the fuel econo-my impact of the technologies, and this in turncan be used to project the fuel economy impact of a fleet employing these technologies to a differentdegree. The Bussmann (Chrysler) analysis7 usesdata from the 1988 and 1989 fleets; the Ford-

sponsored Berger, Smith, and Andrews, or BSA,analysis

8uses 1988-90 data.

The BSA analysis derives regression equationsfor fuel economy in a form having the dependentvariables as the natural logs of city and highwayfuel economy and the independent variables asthe natural logs of such vehicle-related variablesas test weight, the ratio of engine rpm to vehicle

velocity in top gear, engine displacement andcompression ratio, and so forth. The natural logform was chosen because, according to the au-thors, many improvements associated with vari-ous technologies should be multiplicative ratherthan additive. A number of the independent vari-ables are “indicators,” set to 1.0 if a certain tech-

nology (multipoint fuel injection, overhead camengine) is present and zero if it is not. Sinceadding technologies to the fleet has often been

accompanied by changes in performance, theequations are adjusted to find the effect of eachtechnology at constant performance. This is ac-complished by asking Ford engineers, “If thistechnology improvement is added to a vehicle, inorder to keep performance constant, what othercharacteristics of that vehicle will have to change,and by how much?” Asking this question rather

than the more direct, “If this technology is added,what will be the impact on fuel economy?” mini-mizes bias on the part of industry engineers whomight answer conservatively if the question werein the latter form.

The BSA analysis estimated that the U.S. fleetwould obtain an increase in fuel economy from1987 to 1995 of 7.19 percent from the technologies

in table 7-1, not counting the effects of low-fric-tion pistons and rings, lubricants, and accesso-ries, which were not modeled. The comparableDOE value9 is 13.66 percent, whereas the corre-sponding industry values range from 7.23 to 7.64percent. For the 1995-2000 period, BSA estimatesa 12.91 percent gain for the technologies in table7-1 not counting intake valve control, advanced

friction reduction, five-speed automatic trans-mission, continuously variable transmission, andelectric power steering. Comparable figures are16.42 percent for DOE’s analysis and between9 and 11 percent for the analyses of the threedomestic automakers.

The Bussmann analysis consists of a multipleregression analysis of data from 1,400 cars in the

1988- and 1989-model-year EPA databases,supplemented with industry-supplied informa-tion on camshaft arrangement, number of valvesper cylinder, type of fuel injection, use of low-fric-tion internals, and turbocharging.10 Unlike theBSA analysis, Bussmann uses no engineering

judgments –his is a purely statistical approach,

7See footnote 4.8See footnote 4.gAccording to the BSA anal~ts.

10v. Bussmann, Op. cit.

52• Improving Automobile Fuel Economy: New Standards, New Approaches



with the only judgment being the selection of independent variables. Of particular interest inthis selection is Bussmann’s dividing engines into

four basic categories that incorporate groups of engine technologies. He found that, given a pauci-

ty of data on separate engine technologies, thisarrangement yielded a more reliable statisticalmodel than one using individual engine technolo-gies as the independent variables.

The group of technologies that OTA calculatedwould yield a 17.3-percent fuel economy increase

from 1987 to 1995 would instead, according toBussmann’s model, give a 5.4-percent increasefrom 1989 to 1995. Although the baseline yearsare different, there is no doubt the OTA (EEA)model and Bussmann’s are radically different.For example, Bussmann’s estimate of the unitgain for aerodynamic improvements is 1.8 per-cent versus EEA’s 3.4 percent; and Bussmann’s

estimate for all engine improvements is 6.2 per-cent versus EEA’s 17 to 20 percent.

ARGUMENTS OF THE ENERGY

CONSERVATION COMMUNITY

Analysts from the energy conservation commu-

nity have marshaled a variety of arguments sup-porting the proposition that efficiency of the U.S.light-duty new car fleet can be greatly increased

11 In general, they assertover the next 20 years.that U.S. auto fleet fuel economy can be raised to45 mpg or higher by 2000, and considerably more

within the following one or two decades. Unlikethe industry and EEA analyses, which focus pri-

marily on technological change,

12

the conserva-tion community clearly envisions change in bothtechnology and customer preferences.

First, the conservation community argues thatgovernment action could change market pressuresthat have held down gains in fleet efficiency dur-ing the 1980s. In particular, lower gasoline prices

have reversed trends toward smaller cars anddropped the market shares of fuel efficiency lead-ers such as the VW Rabbit diesel. Presumably,government actions to raise gasoline prices, raisethe purchase price of fuel-inefficient vehicles, andpossibly lower the purchase price of fuel-efficientvehicles could substantially increase fleet effi-ciency even without new technologies, by encour-aging purchasers to choose cars in lower sizeclasses or more fuel-efficient models in each sizeclass, and encourage manufacturers to use avail-

able fuel efficiency technologies more widely intheir fleets. In the longer run, these actions wouldencourage manufacturers to develop new tech-nologies and consumers to purchase them.

Second, the conservation community claims avariety of fuel efficiency technologies exist, infully commercialized form, that are not dissemi-nated through the fleet as widely as they could be.

Table 7-4 lists technologies whose introduction orwider use offers a potential to improve fleet fuelefficiency.

Third, several car manufacturers have pro-duced vehicle prototypes reported to achievevery-high fuel efficiency (see table 7-5). The con-servation analysts contend the existence of theseprototypes provides concrete evidence of the

Table 7-4-Developed and Near-Term FuelEconomy Technologies

Engine Improvements4 valves per cylinderOverhead camshaftRoller cam followersLow-friction rings/pistonsThrottle-body fuel injection

Multipoint fuel injectionIntake valve control

Four-speed automatic transmissionElectronic transmission controlAerodynamics, CD = 0.30Tire improvementsLubricants (5W-30)High-efficiency accessories

SOURCE. Energy & Environmental Analysis, Inc

llsee F. Von Hi p p e l a n d B. 1 A, “Au t om o b i le Fue l Efficiency: The Opportunity and the Weakness of Msting Market Mechanism%” Re-

sources and Consemation, pp. 103-124, 1983, and D.L Bleviss, The New Oil Crisis andFuel Economy Technologies: Preparingthe Light Transpotia-

tion Zndus@ for the 1990s (WestPort, CT: Quorum Books, 1988).

I%ough these analpes do allow the potential for a rollback in ~rformance and she to 1987 levels.




.

Table 7-5–High-Efficiency Automobile Prototypes

FuelEconomy Passenger

Prototype Fuel (mpg) Capacity

VW Auto 2000 . . . . . . . diesel 66 4-5Volvo LCP 2000 . . . . . . multifuel 69 2-4

Renautt EVE+ . . . . . . . diesel 70 4-5Toyota Ltwt Compact . . diesel 98 4-5

NOTE. Fuel economles converted to equivalent EPA test values, using conversion

factors recommended by the Internatlonal Energy Agency. Details and fur-

ther descrlptlons of the vehlcles are In the source document. Vehicles do notnecessarily meet all U,S, emissions or safety requirements

SOURCE: Table 10. ‘cFuel Economy for Passenger Automobiles,” ln J Goldemberg

et al,, Energy for a Sustainable World, World Resources Institute, Washing-

ton, DC, September 1987.

high, long-term potential for improving fleetefficiency.

Finally, technologies at various stages of devel-opment have been identified that show promiseof large efficiency gains. For example, new de-signs of a two-stroke engine for automobile appli-

cations are said to be capable of fuel economygains of 20 percent or more over conventionalfour-stroke engines with concurrent reductions in

13 Another engine said tomanufacturing costs.hold considerable promise is the direct-injectiondiesel. Table 7-6 lists potential efficiency technol-ogies identified by one conservation analyst. Ad-vocates of higher fuel economy standards and

other efficiency-oriented policy actions believesuch measures will speed development and intro-duction of these technologies.

Analysts associated with the American Coun-cil for an Energy-Efficient Economy have pro-posed a year-2000 efficiency goal for new vehiclesof 45 mpg (EPA) for autos and 35 mpg for lighttrucks.

14

Achieving these goals would raise aver-

age in-use fleet fuel economy to about 27 mpg by2000, up from a projected level of about 22mpg. If total annual mileage traveled were 2.21 trillionmiles, this efficiency improvement (27 v. 22 mpg)would save about 1.2 mmbd of oil or, at $l.OO/gal-lon, over $20 billion per year by 2000, and more in

Table 7-5-Future Technologies for Improving Light-Duty Vehicle Efficiency

Variable-geomet~ turbochargers. Increases effectiveness of

turbocharging at low loads, allows engine downsizing.

Improved electronic controls. Adjustment of engine operatingparameters (e.g., ignition timing) based on direct measurementof cylinder pressure and other operating conditions.

Advanced lubricants (solid and gaseous).

Oxygen enrlchnent of air intake. Using membrane technologyto enrich oxygen content of intake air. Effect similar to, but moreeffective than, turbocharging.

Adiabatic diesel. Low-heat-rejection engine achieved by heavyuse of ceramics. Couples removal of cooling requirement and

capture of exhaust energy through turbocharging or super-charging.

Continuously variable transmisslons. Allows engine to be keptat optimum operating speed throughout the driving cycle. Cur-rently available for small engines only.

Advanced materials. Substantial weight reduction through use

of improved plastics and future use of high-strength steels, alu-minum, magnesium, ceramics.

Advanced tires. Reductions in rolling resistance through im-provements in design or use of advanced materials (e.g., liquid-

injection-molded polyurethane).Engine stop-start and energy storage. Engine shutdown dur-ing idle and braking, coupled with flywheel storage to power ac-cessories and aid to restart.

SOURCE” D:L. Blevlss, The New Oil CfisS andFue/Economy Tmhr?ologies: Prepaf-mg ftre Light Transpo#lafron /ndusrryfor the 7990s (Westport, CT Quorum

Books, 1988).

future years as the technology diffused into thefleet. The energy conservation community argues

that these goals are both technically attainableand cost-effective even at today’s gasoline prices,based on available vehicle prototypes and costand performance analyses for a variety of individ-ual technologies.

THE EEA ESTIMATES

EEA has developed estimates for 1995 and 2001fuel economy (under alternative conditions) forthat portion of the U.S. automobile fleet man-ufactured by General Motors, Ford, and Chrys-ler, and the portion manufactured by the fivelargest Japanese manufacturers. Estimates for

Is’’ Detroit Gets serious About ~o-stroke Engines, ’’l3~sznes~ Week, July 18, 1988. Also, see D. Plohberger, LA. Mikulic, and K ~ndfahrer~

A~-List GmbH, Graz, Austria, “Development of a Fuel Injected ~o-Stroke Gasoline Engine,” SAE’lkchnical Paper Series #880170, 1988.

14w.u, chandler, I-I.$j. Geller, and M.R. bdbetter, EnergY Eficzenq: A New Agenda, American council for an Energy-Efficient ~onomy,Washington, DC, July 1988. The authors suggest several policies to complement and help achieve this goal, including gasoline taxes, new “gas-guzzler” taxes, and a “gas-sipper” rebate program. They also suggest that efficiency standards be carefully structured to avoid past problems of unfairness, for example, by basing them on vehicle interior volume.

54 Improving Automobile Fuel Economy: New Standards, New Approaches



p g y pp

the entire fleet can be developed by estimatingrelative market shares and adjusting for vehiclesmanufactured by automakers not included (e.g.,Volkswagen, Hyundai).

EEA’s methodology, described in more detailin appendix A, first specifies a baseline of fueleconomy and vehicle technology attributes foreach market class.15 For each vehicle type, EEAhas identified individual fuel economy technolo-

gies applicable to that type and the fuel economybenefits associated with each technology.l6 Themethodology then adopts these technologies andcalculates total fuel economy benefits subject toconstraints about synergism between technolo-gies and non-additivity of certain types of bene-fits. Selection of the technologies is also subject toa variety of assumptions adopted by the client,including lead-time constraints and rules defin-ing cost-effectiveness (discount rates, total yearsof fuel savings in the analysis). For the near term(1995), announced company product plans areused to define minimum technology improve-ments associated with major subsystems. As alast step, the estimates of total fuel economybenefits are adjusted for expected changes inweight and performance of the fleet, and changes

in emissions and safety standards.

The list of technologies and fuel economy bene-fits used in the analysis was compiled using datafrom research papers, actual benefits from ve-hicles already featuring the technology, manufac-turer submissions to the Department of Trans-portation, and in some cases, information

obtained directly from manufacturers. The EEAestimates of individual technology benefits havebeen extensively discussed with domestic man-ufacturers and some foreign manufacturers aswell, and EEA has revised some of their indi-vidual estimates on the basis of manufacturers’comments.

Tables 7-7 through 7-11 provide EEA’s projec-tions for 1995 domestic and Japanese new carfleet fuel economy assuming a “product plan”scenario wherein industry installs technology atrates that correspond to published plans for mostmajor components and make economic sensefrom a purely market-driven perspective for mi-

l7 The projection further as-nor components.sumes a continuation of current trends in increas-ing vehicle size and performance and applicationof expected emissions and safety standards. Inother words, in 1995:

q

q

With no new fuel economy regulations norother policies that could alter fuel economy

(e.g., gasoline taxes), and no significantchanges in market forces, domesticallymanufactured new car fleet fuel economywill be about 28.3 mpg. The import car fleetwill beat about 31.1 mpg. Total new car fleetfuel economy will be about 29.2 mpg assum-ing a 35-percent import share.

If the size and performance of the new carfleet could somehow be rolled back to 1987levels, and if emission and safety standardscould be met without fuel economy penal-ties, the domestic and total new car fleet fuel

economies would be about 31 mpg and 32.5mpg. This is a theoretical case to show theeffects of market and regulatory changes, not

a realistic scenario.

The above discussion focuses on attainablelevels of fleet fuel economy in the absence of significant changes in consumer preferences forfuel economy, power, and other features that af-

fect fuel economy. If buyer preferences d ochange, in response to higher oil prices, actual orexpected gasoline shortages, or strong leadershipon the part of the President or Congress, 1995 newcar fleet fuel economies could be higher than thevalues cited. The mechanism for higher valueswould likely be an increased preference within

l~ e market classes are minicompact, subcompact, compact, sports, intermediate, large, and IUXUIY.l~e fuel economy benefits are ~lculated at constant performance and interior volume. This is necessary because uel economy technologies

can typically be used to increase performance or interior volume with lessor no improvement in fuel economy, if the vehicle designer so desires.17ComPnentS are axumed t. be adopted if they ~ve enough fue] t. comPnsate for a n y i n c r e a s e in vehic l e s a l e s price caused by adoption,

using a discounted cash flow calculation.




Table 7-7–Projection of U.S. Domestic Manufacturers Fuel Economy1995 Product Plan Case (does not include test adjustments)

PenetrationFuel Economy Increase from 1995 Fleet

Teohnology Gain (%) 1987(%) Penetration (%) Fuel Economy Gain (%)

Front Wheel Drive . . . . . . . . . . . . . . . . . . . 10.0 12 86 1.20

Drag Reduction (CD = 0.33) . . . . . . . . . . . 2.3/4.6** 65/15 100 2.19

Four-speed Automatic Transmission . . . . . 4.5 40 80 1.80

Torque Converter Lock-up . . . . . . . . . . . . 3.0 20 80 0.60

Electronic Transmission Control . . . . . . . . 0.5 80 80 0.40

Accessory Improvements . . . . . . . . . . . . . 0.5 80 N/M*** 0.40

Lubricant/Tire Improvements . . . . . . . . . . 1.0 100 100 1.00

Engine ImprovementsAdvanced Pushrod . . . . . . . . . . . . . . . . 3.0 (40)**** (30) 1.20Overhead Camshaft . . . . . . . . . . . . . . . 3.0 45 69 1.35Roller Cam Followers . . . . . . . . . . . . . . 2.0 40 95 0.80Low-friction Pistons/Rings . . . . . . . . . . 2.0 80 100 1.60Throttle-body Fuel Injection . . . . . . . . . 3.0 12 40 0.36 Multipoint Fuel Injection . . . . . . . . . . . . 3.0 12 60 0.36

(over throttle body)

4-valves-per-cylinder-Engine4-Cylinder replacing 6-cyIinder* . . . . . 8.0 18 186-Cylinder replacing 8-cylinder* . . . . . 8.0 12 12 0 . 9 6

Total Fuel Economy Benefit (%) . . . . . . . . 15.66q 1987 dlstributlon, 20 5% V-8, 29,5% V-6, 50% 4 cylinder.q *Drag reduction for Iarge/luxury cars from CD = 0.42 baseline.

***N/M - not meaningful****( ) this Includes upgrades from old pushrods to both advanced pushrods and overhead cam engines (for which an Incremental benefit Is taken)

SOURCE. Energy & Environmental Analysls, Inc.

Table 7-8-Import Manufacturers Fuel EconomyFive Largest Japanese Manufacturers Only (does not include test adjustments)

Penetration 1995Fuel Economy Increase from 1995 Fleet

Technology Gain (%) 1988(%) Penetration (%) Fuel Economy Gain (%)

Front-wheel Drive . . . . . . . . . . . . . . . . . . . . 5.0 3 90 0.15

Drag Reduction I . . . . . . . . . . . . . . . . . . . . 2.3 80 100 1.84

Four-Speed Automatic Transmission . . . . 4.5 16 47 0.72

Torque Converter Lock-up . . . . . . . . . . . . 3.0 9 53 0.27

Electronic Transmission Control . . . . . . . . 0.5 44 47 0.22

Accessory Improvements . . . . . . . . . . . . . 0.5 80N/M***

0.40Lubricant/Tire . . . . . . . . . . . . . . . . . . . . . . . 1.0 100 100 1.00

Roller Cam Followers . . . . . . . . . . . . . . . . . 2.0 50 50 1.00

Low-friction Pistons/Rings . . . . . . . . . . . . . 2.0 80 100 1.60

Throttle-body Fuel lnjection** . . . . . . . . . . 2.0 25 20 0.50

Multipoint Fuel Injection . . . . . . . . . . . . . . . 3.0 20 75 0.60

4-valves-per-cylinder Engine . . . . . . . . . . . 5.0 20 44*

Total Fuel Economy Benefit (’%0) . . . . . . . . 9.30

*Addltlonal 6 percent are 3 Wvas/cyllnder,**~nefft of TSFI IS lower than for domestic cars because air pumps are not used In carbwenad Import ~.

***N/M - not meaningfulSOURCE Energy & Envkonmental Analysls, Inc.




Table 7-9–1995 Product Plan U.S. Domestic AutoFleet (does not include test adjustments)

(mpg)1987 fuel economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.7

1995 fuel economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30.9(without size or performance increase)

Size/weight increase . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.4

Performance increase . . . . . . . . . . . . . . . . . . . . . . . . . . -0.7

Effect of emission/safety standards . . . . . . . . . . . . . . . -0.8

1995 product plan fuel economy . . . . . . . . . . . . . . . . . 28.0

SOURCE: Energy &Environmental Analyses, Inc.

Table 7-10–1995 Product Plan ImportManufacturers (does not include test adjustments)

(mpg)

1988 fuel economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.4

1995 fuel economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.32(without size or performance increase)

Size/weight increase . . . . . . . . . . . . . . . . . . . . . . . . . . . -1.66

Performance increase . . . . . . . . . . . . . . . . . . . . . . . . . . -0.90Effect of emission/safety standards . . . . . . . . . . . . . . . -0.94

1995 product plan fuel economy . . . . . . . . . . . . . . . . . 30.82

SOURCE Energy &Environmental Analyses, Inc

size classes for the more fuel-efficient models anda shift toward smaller, lower-power cars. Thepotential for increased fuel economy levelsthrough changes in buyer preferences is ex-amined in chapter 8.

Tables 7-12 and 7-13 present EEA’s projectionsfor the year-2001 domestic fleet under two scenar-ios: a “product plan” conceptually similar to the1995 product plan, and a “max technology” casedriven by extremely strong pressures to improvefuel economy–presumably new regulations. Theproduct plan assumes automakers install tech-nologies that pay for themselves in four years (theaverage length of ownership for a new car’s firstowner) assuming a 10-percent discount rate and$1.50/gallon (in 1989$) gasoline. The domesticfleet fuel economy of 32.1 mpg, import fleet fueleconomy of 34.6 mpg, and total fleet fuel economyof about 32.9 mpg obtained under this plan pre-sume current trends in fleet size distribution andperformance continue until 1995 and then pla-teau. If gasoline prices remain at current levelsand trends of increasing performance and vehiclesize continue past 1995, these projections will

prove overoptimistic.

The max technology plan represents a majorindustry shift: the 37.3 mpg domestic fleet fueleconomy (about 38.3 mpg total fleet fuel econo-my) by 2001 is achieved by returning to 1987 levelsof size distribution and performance; rapid diffu-sion of a range of fuel economy technologiesthroughout the fleet essentially regardless of cost

(the technologies actually would pay for them-selves in 4 years with gasoline valued at

Table 7-1 1–Technology Definitions

Technology Base Technoiogy Comment

Front-wheel drive . . . . . . . . . . . . . . . . . . . . Rear-wheel drive Assumes constant interior room

Drag reduction I . . . . . . . . . . . . . . . . . . . . . 15°/0 drag reduction from 1987 base Assumes drivetrain adjustment toC D = 0.37 capture benefit

4-speed automatic . . . . . . . . . . . . . . . . . . . 3-speed automatic Assumes no change in performance inlower 3 gears

Electronic transmission control . . . . . . . . . Mechanically controlled transmission Assumes shift points optimized for FTP

Tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Improved rubber formulation and design Evolutionary improvements

Accessories . . . . . . . . . . . . . . . . . . . . . . . . 2-speed accessory drives, improved Combination of evolutionarypumps, etc. improvements and new technology

A-cylinder/q-valve . . . . . . . . . . . . . . . . . . . . 4-cylinder/2-valve overhead cam engine Engine downsized for constantperformance

Overhead cam . . . . . . . . . . . . . . . . . . . . . . Pushrod (overhead valve) engine Engine downsized for constantperformance

Roller cam follower . . . . . . . . . . . . . . . . . . Sliding cam follower Benefits up to 4% demonstrated

Low-friction rings and pistons . . . . . . . . . . Low-tension rings and low-mass pistons Includes effects of better manufacturing

SOURCE: Energy & Environmental Analysls, Inc




Table 7-12–Potential Domestic Car Fuel Economy in 2001 Under Alternative Scenarios(does not include test adjustments)

Fuel Product Plan Max TechnologyEconomy % Market Pen. Fuel Economy % Market Pen. Fuel EconomyTechnology % Benefit 1995-01 % Gain 1995-01 % Gain

Weight Reduction . . . . . . . . . . . . . . . . . 3.3/6.6Drag Reduction . . . . . . . . . . . . . . . . . . . 1.15/2.3Intake Valve Control* . . . . . . . . . . . . . . . 6.0Overhead Cam Engine . . . . . . . . . . . . . 3.06 cyl./4-valve replacing 8-cyl. . . . . . . . . 8.04 cyl./4-valve replacing 6-cyl. . . . . . . . . 8.04 cyl./4-valve replacing 4-cyl. . . . . . . . . 5.0Multipoint Fuel Injection (over TBl) . . . . 3.0Front-wheel Drive . . . . . . . . . . . . . . . . . . 0.05-speed Automatic Transmission** . . . 2.5Continuously Variable Transmission** . 3.5Advanced engine friction reduction . . . 2.0Electric Power Steering . . . . . . . . . . . . . 1.0Tire Improvements . . . . . . . . . . . . . . . . . 0.5

80804030

46

1040

52015

1005

100

2.640.922.400.900.320.480.501.200.500.500.522.000.050.50

8080 70308

125040134030

10030

100

5.281.844.200.900.640.962.501.201.301.001.052.000.300.50

Total Fuel Economy Benefit (%) . . . . . . 13.03* 22.67*Unadjusted CAFE (mpg) . . . . . . . . . . . . 31.65 36.9

NOTE, Product plan scenario starts from a different 1995 base than the maximum technology scenario which holds performance and size constant at 1987 levels.

q Synergy of Intake valve control with 5-speed/CVT transmissions results In a loss of 2 percent In fuel economy**Over 4-speed automatic transmlssion with Lock-up

SOURCE Energy & Environmental Analysis, Inc.

,

Table 7-13-import Manufacturers Fuel Economy in 2001Five Largest Japanese Manufacturers Only (does not include test adjustments)

Fuel Product Plan Max TechnologyEconomy % Market Pen. Fuel Economy % Market Pen. Fuel Economy

Technology % Benefit 1995-01 % Gain 1995-01 % Gain

Weight Reduction . . . . . . . . . . . . . . . . . 3.3/6.6Drag Reduction . . . . . . . . . . . . . . . . . . . 1.15/2.3

Intake Valve Control* . . . . . . . . . . . . . . . 6.04-valve Engine . . . . . . . . . . . . . . . . . . . . 5.0Multipoint Fuel Injection . . . . . . . . . . . . . 3.0Front-wheel Drive . . . . . . . . . . . . . . . . . . 10.05-speed Auto Transmission . . . . . . . . . . 2.5Continuously Variable Transmission . . . 3.5Advanced Friction Reduction . . . . . . . . 2.0Electric Power Steering . . . . . . . . . . . . . 1.0Tire Improvements . . . . . . . . . . . . . . . . . 0.5Roller Cam Followers . . . . . . . . . . . . . . . 2.0

9080

30 102506

26100

1010030

2.970.92

1.800.500.750.000.150.912.000.100.500.60

9080

605025

51240

10035

10030

5.941.84

3.602.500.750.500.301.402.000.350.500.60

Total Fuel Economy Benefit (%) 11.00 19.78

2001 CAFE (mpg)34.2 40.0

*Synergy with 5-speed automatic transmission/Cm results In 2-percent loss In fuel economy when both technologies are used In the same vehicle.

SOURCE. Energy & Environmental Analysls, Inc

$2.50-$3.00/gallon, or in 10 years with gasoline at bill–the max technology fuel economy levels$1.55-$ 1.90/gallon);

18and abandonment of prod- would be closer to 36 mpg and 37 mpg, respective-

uct lines well before their normal replacement ly, for the domestic and total fleet. Unless con-times. Alternatively, if the size-and-performance sumer demand shifts strongly to more efficientrollback were only to 1990 levels—the appropri- autos, the max technology plan could cause sig-

ate criterion for S.341, the Senate Energy and nificant economic disruption to the industry, notNatural Resource Committee’s proposed energy unlike industry adjustments of the early 1980s-a

lgAt 10 percent discount rates.

297-903 0 - 91 - 3 QL:3




period in which the domestic manufacturers ex-perienced considerable losses.

Note that this level of fuel economy can beobtained only if each company improves its fueleconomy up to the technological potential of itsfleet. A uniform standard such as the currentCAFE standard is unlikely to achieve a total fleetfuel economy this high unless legislators set thestandard at levels unattainable by companieswhose fuel economy potential is lower than aver-

age—most likely including Ford and GeneralMotors.

If the marketplace itself does not change, and if no new technologies are available to enter thefleet by the end of the 1990s,19 the product planand max technology scenarios represent ex-tremes: atone end, a future with no changes from

pre-Mideast crisis trends–possibly unaccept-able considering today’s oil situation; and at theother end, a major disruption to industry productplanning, also possibly unacceptable consideringthe United States’ current economic woes. Apractical “technological potential” under existingmarket conditions and using only existing tech-nology probably lies somewhere in between. Of course, the max technology scenario would notnecessarily seem extreme if buyer preferencesshifted dramatically towards higher fueleconomy. This possibility is examined in the nextchapter.

In practical terms, what would buyers of auto-mobiles under the EEA max technology scenarioactually get? They would pay more for their ve-

hicles, but contrary to the grim picture drawn bysome critics of higher mpg standards, vehicleswould perform much the same as today. Box 7-Bdescribes changes the max technology scenariowould bring to one of the most popular U.S. cars,the Ford Taurus.

EEA has also taken a more speculative look atthe long-range technological potential for fueleconomy improvement, estimating the fleet fueleconomy impact of a number of new technologiesin the year 2010. This analysis is described indetail in a recent report to the EnvironmentalProtection Agency.20 The analysis substitutes a

series of engineering equations for fuel consump-tion for the less exact approach used to developthe 1995 and 2001 forecasts. EEA obtained infor-mation on advanced technologies incorporated in

the analysis primarily from detailed interviewswith Toyota, Honda, Nissan, and Volkswagen.The analysis builds on the year-2001 max technol-

ogy case, so that fleet size and performance aresimilar to the 1987 fleet.

Table 7-14 provides the EEA 2010 projectionsfor three levels of technical and marketing risk:

q

q

q

Level I—technologies most automotive en-gineers agree are likely to be commercial-ized by 2010.

Level II—technologies about which opinion

is sharply divided as to benefits or commer-cial prospects.

Level III—technologies considered esoteric

by most, but still within the realm of possi-bility.21

Values for Levels I and II in table 7-14 reflect thebasically conservative assumption that the mix of cars sold in 2010 matches the year-2000 fleet, withno consideration of specialized vehicles such as aone-seat commuter vehicle or even a very-low-performance conventional vehicle. In other

words, the analysis assumes the car market doesnot change in any basic fashion, and that consum-ers still seek features such as space, luxury fea-tures and options, smooth ride, and good acceler-

bation and handling performance. The onlynon-conservative assumption is use of the 1987

l~ e year.2~1 ana]wis incovrates only those technologies currently installed on at least one commercial car model; consequently, theanalysis is basically conservative. New technologies could allow similar improvements in fuel economy to occur under less extreme conditions

than the “max tech,” or allow even higher levels of fuel economy to occur under max tech assumptions.zOEnergy & Environmental Ana~is,~~sessmnt ofPotential PassengerC’ar Fuel Economy Objectives for2010, draft final report prepared for

the Environmental Protection Agency, Februa~ 1991.

zlEnergy & Environmental Analysis, Februa~ 1991, op. cit-221bid.

Chapter 7–Technological Potential for Increased Fuel Economy .59



Box 7-B—Feshing Out the Maximum Technology Scenario: Transforming the Ford Taurus

In describing OTA's analysis of future fuel economy potential, we have presented lists of technolo-gies and associated fuel economy improvements. These lists and numbers do not, we believe, deliver areadily understandable picture of the likely physical results of actually enacting new fuel economy legis-lation. We would like to make these results more understandable by tracking the changes that wouldprobably occur to an actual ear.

We have chosen a popular, current mid-size ear model to track the changes required to satisfy themaximum technology scenario for 2001. We have used the Ford Taurus, as it is safe, relatively fuel-efficient, and can seat six passengers. The analysis could have selected other comparable ears such as theBuick Century or Eagle Premier with only slightly different results. The Ford Taurus is more efficient

than the average domestic car as it already incorporates an aerodynamic design, a low-friction V-6 enginewith multipoint fuel injection, and a four-speed automatic transmission. Hence, the percentage increase(from a 1987 or 1990 base) in fuel economy will be somewhat lower than the average for the fleet.

The particular model used is the Taurus sedan with a 3-liter V-6 rated at 140 hp and 220 Newton-meters of torque. It can accelerate from O to 60 mph in 9.8 seconds and has a CAFE rating of 27.4 mpg.our analysis of future fuel economy potential traces possible technology improvements assuming that 1)new technologies are optimized for fuel economy and 2) the 2001 vehicle has the same interior room andacceleration performance as the current vehicle.

The most significant source of fuel economy improvement is advanced engine technology. The cur-rent 3-liter V-6 is a 2-valve pushrod type design. It can be replaced by an overhead earn 2. O-liter 4-cylinderengine that has 4 valves per cylinder, a compression ratio of 10:1, and intake valve control. This enginewould actually have a higher horsepower rating (145 hp) but a lower torque rating (190 Newton-meters).Torque is a better measure than horsepower of low-speed performance (e.g., around town), and to com-pensate for decreased torque, a higher axle ratio must be used.

Car size (both interior and exterior) is held constant, but the weight is projected to decrease from3,090 to 2,810 pounds.

1Part of this will be due to the engine size reduction. If the new engine is made

from aluminum, engine weight alone would be reduced by 100 pounds. Another 240 pounds would be

eliminated by using advanced plastics for the front fascia, the fenders, hood, etc.; using aluminum, mag-nesium, and high-strength steel alloys in load-bearing structural components; and redesigning structureto capture secondary benefits. The 1990 Taurus already has an airbag but the future side-impact require-ments and new emission standards will add about 60 pounds to the weight. The ear is assumed to meetTier I emission standards mandated in the Clean Air Act, but not Tier II standards that maybe imposed in2003.

The hypothetical 2001 Taurus would be more aerodynamic than today’s model, with a drag coeffi-cient of 0.30 which is equal to the best of today’s cars. It would use a five speed-automatic transmissionelectronically controlled to optimize gear shifts, and torque converter lock-up. The car would also fea-ture improved tires with lower rolling resistance and low-friction oils in the crankcase and drivetrain.Table 7-B-1 summarizes major differences between the 1990 and hypothetical 2001 Taurus.

According to our estimates, these technologies will allow the 2001 Taurus’ fuel economy to be 35.3mpg, or a 29-percent improvement over the 1990 car. The vehicle is forecast to have nearly equal acceler-ation performance at low speed and slightly better performance at high speed. Physically, the car willhave the same exterior and interior size, but will look sleeker due to reduced drag coefficient. We believeride quality will be equal to or better than today’s Taurus. Moreover, the 2001 car will save 470 gallons of

I Ford argues that “customer.d~ven features” ]ike better sound detenting and more powerful air conditioning will add 60 pounds

to%mrus weight by 1995 and more by 2001. (D.L. Kulp, Manager, Fuel Economy Planning and Compliance, Ford Motor Co., letter

to S.E. Plotkin, OTA, June 17, 1991). OTA agrees that continuation of current market trends toward increased luxury featureswillimpede improved fuel economy.

Continued on next page




fuel over 50,000 miles, assuming on-road mpg is 15-percent lower than the EPA test mpg. Any forecastinvolves some degree of uncertainty, and we believe the fuel economy forecast is accurate to O.5 MPG. Itis possible that the technology changes could adversely affect drivability and maintainability, although wehave no reason to suspect this.

We should note the technologies described are not the only way to attain 35.3 mpg. If, for example,the two-stroke engine is commercialized by 2001, the car may attain an even higher level of fuel economyin 2001 at lower cost.

The changes described in table 7-13 will not be easily made by 2001. The 2001 car as described willrequire completely new designs for the body, engine, and transmission, all involving substantial capitalinvestment. On a discounted cash-flow basis, gasoline must cost over $2.00 per gallon for the consumer to

recoup the increased first cost of the car over 50,000 miles. Hence, fuel economy improvements made tothe Taurus will not be cost-effective to the buyer if gasoline sells at much lower than $2.00 per gallon.

The contemplated schedule will also adversely affect the manufacturer’s ability to recoup his capitalinvestment on the preceding Taurus model. The industry operates on a product cycle of at least eightyears and the Taurus was first introduced in 1986. Industry analysts expect Ford to introduce anew-modelTaurus in 1994/5, and the product cycle suggests that the next model will be introduced in 2002/3. It is toolate to influence the new model planned for 1994/5; under normal circumstances Ford could introducethe car forecast under a maximum technology scenario only in 2002 or 2003. Forced to introduce on orbefore 2001, Ford will lose 2 to 3 years of product life, which will result in significant lost revenues for

Ford. Since the capital investment is amortized over an expected sales volume, reduced product life willnegatively impact Ford profits. The current 5-year lead time and 8-year product cycle suggest that 2005 isa better target year if legislation requiring the complete redesign of all products is considered.

It is important to be aware of these factors when considering mpg targets defined by a maximumtechnology scenario.

Table 7-B-1 –Comparison of Vehicle Technologies Table 7-14–Fleet Fuel Economy in 2010 at Different

in 1990 and 2001Risk Levels

1990 Ford Hypothetical Class Mix* Level I Level II Level III**

Taurus “2001 Taurus” M i n i c o m p a c t 3.3 68.5 83.4 110.0

Weight . . . . 3,090

Interior volume (cu. ft.) . . . . 100 + 17(passenger + cargo)

Drag coefficient . . . . . . . . . 0.33

Engine size . . . . . . . . . . . . . 3. O-liter V-6

Valve train . . . . . . . . . . . . . . 2-valve/

pushrod

Compression ratio . . . . 9.3

Power . . . . . 140 hp

Torque . . . . . . . . . . . . . . . . . 220 Nm

Transmission . . . . . . . . . . . . 4-speed(automatic) with lock-up

0-60 mph time . . . . . . . . . . 9.8 sec.

Fuel economy (EPA 27.4 mpgComposite) a “maximum

technology” scenario.

SOURCE Energy & Environmental Analysls, Inc

2,810

100 + 17

0.30

2.0-liter 11-4

4 valve/

DOHCwith variablevalue timing

10.0

145 hp

190 Nm

5-speed withelectronic

control andlock-up

10,0 sec.

35.3 mpg

Subcompact 26.5 51.5 63.4 86.6

sports . . . 7,3 39.7 47.8 68.9

Compact . . . . . . . . 23.2 46.4 57.0 74.0

Intermediate . . 22.4 42.2 51.3 69.7

Large . . . . . . . . . . . . 6.1 39.9 48.6 65.8

Luxury 11.2 37.2 46.2 62.1

Fleet . . . . . . . . . . . . 100.0 44.8 54.9 74.1

NOTE This table assumes no new emlsslon standards are legislated In thepost-2000 timeframe Additionally, the table holds vehicle attributes con-

stant at 1988 levels, except for Risk Level Ill

q Unchanged from 2001 estimateq * Based on (fossil fuel + fossil equivalent) mpg

SOURCE Energy & Environmental Analysls, Inc

baseline for fleet size and performance, whichimplicitly assumes a moderate reduction from1991 size-and-performance levels rather than thecurrently expected gradual increase in these at-tributes. This assumption is important—the fueleconomy “penalty” associated with a continua-




tion of trends to higher-power, larger, and moreluxurious vehicles, as opposed to a reduction to1987 levels of these attributes, is at least a fewmpg in fleet fuel economy.

Tables 7-15 and 7-16 present, respectively, thebasic assumptions on technologies for risk levelsI and II, and a brief description of technologiesincluded in all three levels.

The results presented in table 7-14 show that,given enough lead time and assuming successfuldiffusion of new technologies into the fleet, veryhigh levels of fleet fuel economy can be reachedwithout drastic shifts in size and performanceoften claimed as inevitable with such levels. Forexample, even using only technologies widely con-sidered as high-probability candidates for com-mercialization after the turn of the century, a fleetfuel economy of 45 mpg can be achieved. Levelsas high as 55 mpg can be reached without impor-tant changes in consumer attributes if certainmedium-risk technologies can be moved into thefleet. And a fleet average of 75 mpg may eventual-ly be feasible as well, though with both importanttechnological advances and important changes inconsumer preferences.

LEDBETTER/ROSS ANALYSIS

Marc Ledbetter of the American Council for

an Energy-Efficient Economy and Marc Ross of the University of Michigan have estimated poten-tial U.S. new car fleet efficiency for the year 2000by using a variation of the EEA approach.

z3

Led-better/Ross uses EEA fuel economy improve-ment estimates for individual technologies butalters the EEA analysis by:

using a 7-percent discount rate rather than10 percent as does EEA;

calculating fuel savings over a 10-year esti-mated useful life; EEA’s base case uses a4-year fuel payback to simulate the averageuse by the first owner, but a 10-year payback for “max technology” cases;

assuming a $1.37/gallon gasoline price;

multiplying individual fuel economy per-centage increases rather than adding themas does EEA; and

for a specialized case, adding two technolo-gies not on EEA’s list of available technolo-gies.

Ledbetter/Ross concludes new car fuel economycould be improved to 40.1 mpg by 2000, at an

Table 7-15–Assumptions on Technologies at Different Risk Levels for the Year 2010 (relative to baseline)

Level I Level II

Weight reduction . . . . . . . . . . . . . . . . . . . . 1870 weight reduction on all cars 25% weight reduction on all cars

Drag reduction . . . . . . . . . . . . . . . . . . . . . . CD = 0.24 for all cars CD = 0.20 for all cars

Frontal area reduction . . . . . . . . . . . . . . . . 0 0 for minicompact to 5 for iarge/luxury

Improved packaging . . . . . . . . . . . . . . . . . 0 for minicompact to 5 for large/luxury 3 for minicompact to 8 for Iarge/luxury

Engine friction reduction . . . . . . . . . . . . . . As per table 7-16 As per table 7-16

Pumping loss reduction . . . . . . . . . . . . . . 450/0 6 6 %

Thermal efficiency improvement . . . . . . . . 5.3% 6.87%

Rolling resistance reduction . . . . . . . . . . . 15% 25%

Diesel engine market penetration . . . . . . . 0 20% of mini, sub, and compact classes

SOURCE. Energy & Environmental Analysls, Inc.

1lM. ~dbetter and M. ROSS, SUpp& Curves Of Cm.wrvet/ Ene~ for Automobiles, report prepared for the hwence %rkeley ~boratowtMarch 1990.




Table 7-16 –Fuel Economy Technologies at DifferentRisk Levels for the Year 2010

Level IImproved packaging efficiencyExtensive use of aluminum and Fiberglas-reinforced

plasticsAdvanced tires, reduction of rolling resistance coefficient to

0.0075Engine friction reduction (ceramic valves/titanium springs,

two-ring pistons, 5-valve per cylinder engines, fiber-reinforced magnesium pistons and connecting rods)

Increased compression ratio to 11

Level II

All Level 1 technologies plus:Extensive use of graphite-reinforced plasticsAdvanced engines - either modulated displacement or lean

burn or direct injection stratified charge 2-stroke, forsmaller cars (to assure NOX emission compliance)

Level IllLevel 1 and II technologies plus:All vehicles use turbocharged direct injection dieselsDiesel/electric hybrid drive

SOURCE: Energy & Environmental Analysis, Inc.

average cost of $.52/gallon saved, if average auto-mobile interior volume and acceleration perform-ance were reduced to 1987 levels. Two technolo-gies that would change driving “feel’ ’-aggressive

transmission management and idle-off—wouldincrease the fleet average to 43.8 mpg at virtuallythe same cost/gallon saved.

WHO IS RIGHT?

Substantial differences among the various esti-mates of fuel economy potential present policy-makers with a significant dilemma: which analy-sis should seine as a starting point for making fueleconomy policy. Examining the available esti-mates as well as evaluating the nature of project-ing fuel economy potential convinces us that Con-gress cannot expect a technical analysis to delivera fuel economy estimate that truly represents a“correct” value of industry potential. The reasonsfor this are:

1. There is a subjective component to all fueleconomy projections, especially regardingthe level of penetration of technologies.

2.

3.

Technology costs cannot be estimated with-

out ambiguity because industry accounting “traditionally involves some models subsi-dizing others; also, most (perhaps all) tech-nologies affecting fuel economy affect othervehicle attributes as well, further complicat-ing estimates of specific costs of improvingfuel economy.

Fuel economy estimates are extremely sen-sitive to policy assumptions about appro-priate risk levels, and to the proper role of nonconsumer (societal) costs in determin-ing technology acceptability, and so forth,as well as to economic and market assump-tions about consumer preferences, oilprices, etc.

A further problem is that the subjective nature of parts of the projection process (particularly esti-

mating technology penetration), the lack of apublicly-accessible data base for automotivetechnologies, and the paucity of academic re-search on fuel economy during the past decadeconspire to make adequate review of a particularestimate or set of estimates extremely difficult.

For this study, OTA has examined the variousestimates of fuel economy potential; attended a

meeting of industry engineers, EEA, the Depart-ments of Energy and Transportation, and the En-vironmental Protection Agency, during which theindustry and EEA methodologies and resultswere presented and debated extensively24; at-tended the 1990 Society of Automotive Engineersannual government-industry meeting where in-dustry and EEA estimates were again presented

and debated; and examined several reviews of theestimates. Based on this, we conclude that theEEA analysis, modified recently to reflect newinformation provided by automakers, represents

the best available basis for decisionmaking aboutfuel economy policy. However, we note that theEEA analysis must be used in context: each indi-vidual estimate of fuel economy potential for aparticular scenario is associated with a set of critical assumptions that is a powerful determi-

zAHeld Jan. 17 , 1990, at Ford Motor Co. World Headquarter, Dearborn, MI.




nant of the magnitude of the reported fuel econo-

my values. The estimates have little value if usedwithout understanding their associated assump-

tions.

The scenarios contain some assumptions that

may be viewed as conservative, and others asoptimistic. For example, in its 1995 and 2001analyses, EEA includes only those technologiesalready in commercial production. To the extentthat new fuel economy technologies might enter

the fleet, especially by 2001, the EEA estimates of fuel economy potential will be conservative. Fur-

ther, EEA has not included the potential forstrong market penetration by advanced diesels,because diesels have not done well in the recentU.S. market. To the extent that diesels couldovercome market resistance and emissions prob-lems, fleet fuel economy could benefit. On the

other hand, some EEA scenarios assume a strongincrease in oil prices, early retirement of modellines (despite likely shortfall in cost recovery),adoption of technologies irrespective of cost-ef-fectiveness, and rollbacks in vehicle perform-ance, size, and luxury equipment, all of whichmay be viewed as quite optimistic from the stand-point of maximizing fuel economy potential. Tothe extent that policymakers do not agree with

these assumptions, they must adjust the fueleconomy projections associated with them up-ward or downward, or rely on alternative scenar-ios with more agreeable assumptions.

The strongest direct challenge to EEA method-ology has come from domestic automakers. Asdiscussed earlier, the automakers’ estimates of fuel economy potential are much lower than cor-responding EEA estimates. For 1995, the auto-makers’ estimates for the potential percentageincreases in fuel economy are about four-tenthsof EEA estimates; for 2000, depending on thescenario, the industry estimates range from lessthan one-third to about one-half EEA estimates.Consequently, the three automakers have re-

jected EEA’s analysis. Briefly, the automakersclaim the EEA analysis:

q

q

q

q

q

Inhave

fails to consider synergism between technol-

ogies;

relies on a few empirical studies rather thanbasic physical and thermodynamic laws;

ignores investment, lead time, and market-demand issues;

counts benefits from certain technologiesonce as individual subsystems and then in-advertently counts them again as part of an

overall separately identified system im-provement; and

estimates benefits inaccurately for actualmodels where the fuel economy technolo-gies have been applied.25

some instances, the automakers appear tomisunderstood EEA’s methodology and

technology descriptions. EEA’s methodologydoes consider synergism between technologies,takes investment, lead time, and marketing issuesinto account (though probably not as manufac-turers would), and has not counted twice ascharged. On some technologies, the automakershave chosen very narrow definitions of what tech-nologies entail (e.g., front-wheel drive includingonly drivetrain efficiency effects); in doing so, the

automakers’ own analyses omit potential fueleconomy improvements, because they include

only the (narrowly interpreted) EEA set of tech-nologies. Further, part of the difference betweenthe automakers’ results and EEA’s results aredifferences in baseline years—EEA used 1987 inthe analyses examined by the automakers; theautomakers chose 1989, which has higher average

weight and performance than the earlier fleet.Finally, we do not believe that the automakershave uniformly applied the required assumptionof constant performance and interior volume totheir own analyses, thereby forgoing some poten-tial fuel economy benefits of the technologies.

An important point of disagreement betweenEEA and the automakers is the EEA assumptionthat the average technology application in 1995

~Workshop pa ckage d i s t r i bu t e d by Ford at industry/government/EEA review meeting held at Ford Motor CO. world Headquarters, Dear-born, MI, Jan. 17, 1990.




will be better than the average application in1987; the automakers appear to assume tech-nology performance will not improve over thistimeframe. Another area of disagreement, dis-cussed in box 7-A, is the extent to which automo-tive design can compensate for changes in driving“feel” —for example, a vehicle’s ability to acceler-ate briskly without the necessity of flooring theaccelerator pedal and attaining very high enginespeeds—without reducing customer satisfaction.This disagreement can translate into differences

in the degree of engine downsizing consideredacceptable.

As discussed earlier, in addition to their engi-neering analyses, domestic automakers have pro-duced or sponsored statistical analyses of U.S.fleet fuel economy. The use of statistical modelsraises troubling issues:

1. The current fleet contains vehicles and tech-nology applications significantly inferior tothe fleet average. The automobile industry’sgeneral direction toward fewer companiesand more uniform technological and designcapabilities implies that these inferior outli-ers bear little relationship to future techni-cal capabilities—yet they are included in

the data set.

2. Most fuel economy technology applicationscan be used for either fuel economy im-provement or performance improvement,or a combination of the two. Generally, au-tomakers prefer maximizing performance,because most of today’s consumers strongly

favor performance over fuel economy.When technologies are optimized for per-formance, adjustments to calculate fueleconomy improvement potential from thetechnologies will not account for this opti-mization.

3. Even if a statistical model avoids normalpitfalls associated with attempting to model

fuel economy improvements by searchingfor statistical correlations among stronglyinterdependent variables, at best it canpredict the current fuel economy benefits

associated with particular technologies.However, using such models for projectionassumes that the average fuel economybenefits obtained in the fleet during thebaseline year–probably 1989 or 1990-willapply to the predictive year, 1995 or 2001 incurrent analyses. It is almost certain, how-ever, that 1995 or 2(X)1 technology designswill reflect significant learning over the ear-lier fleets, as well as manufacturers copyingfrom the best examples of the technologies,

with one possible result being that better-than-average outliers in the 1989-90 fleetmight represent the 1995 or 2001 average.Unfortunately, some outliers were dis-carded from the data series used by theindustry-sponsored statistical analyses.

4. Construction of useful statistical modelsdemands not searching for correlationsamong variables, but a technical foundationof cause and effect. Although some engi-neering judgment was used to create someof this foundation in one of the two models,it was supplied by the industry itself ratherthan independent sources.

Aside from these general issues associated with

statistical analysis of future fuel economy, themethodologies used by BSA and Bussmann raisefurther issues.

First, BSA assumes that using the judgment of engineers from their sponsoring organization(Ford Motor Co.) is legitimate because of theindirect nature of the questions BSA posed. Thevalidity of this assumption is unclear, and usingthe expertise of the sponsoring organization inthis manner is, at best, quite risky for the objectiv-ity of the analysis. Further, there is some potential

that engineers may be influenced by the basicdesign and performance philosophy imposed bytheir company. For example, U.S. companies maydeem it critical that shift smoothness or avoid-ance of high engine speeds be maintained even

though maintenance of these and other condi-tions can affect fuel economy potential, and de-spite evidence that such conditions could be re-laxed under the right circumstances.

Chapter 7–Technological Potential for Increased Fuel Economy • 65



Second, BSA adopted a log model because of the supposed multiplicative nature of the sepa-rate fuel economy effects of each variable. How-ever, several factors affecting fuel economy do soin an additive, not multiplicative, fashion—e.g.,rolling resistance, weight, aerodynamic drag, and

26 Consequently,accessory energy consumption.the form of the model adopted by BSA does notrepresent a good physical model of fuel economydependence on vehicle attributes.

Third, BSA eliminated about half the availablenon-duplicative data points in the EPA data setbecause they were, in some sense, outliers.

27The

outliers included vehicles powered by rotary ordiesel engines; police cars; vehicles with technolo-gies that have only a few observations (5-speedautomatics, turbochargers); and vehicles judgedexotic and which did not fit the correlation coeffi-cients of the model constructed without them inthe data base. The implication of the need to dropso much data is that shifts in design can readilypull a vehicle away from the modeled results. Thisfurther implies that the modeled technology ef-fects may not represent the true potential of thetechnologies, but simply the central tendency atthe current time and for that partial group of vehicles used to create the model. This point of-

fers strong support to point 3 above.The Bussmann analysis apparently makes no

attempt to correct for changes in performanceand interior volume necessary if the fuel economyeffect were measured using criteria of constantperformance and interior volume inherent in theEEA estimates to which they are compared. Forexample, the analysis evaluates weight reduction

at constant engine displacement and an increas-ing horsepower/weight ratio, whereas the appro-priate evaluation would downsize the engine andkeep horsepower/weight approximately con-stant. 28 Errors such as this can have a large im-

pact on fuel economy estimates—a 10-percentweight reduction at constant engine displacementwill produce about a 4-percent gain in measuredfuel economy, whereas the same weight reductionat constant peeformance, with a smaller engine,will yield more than a 6-percent gain in fuel econ-omy. Other problems include an important mis-take in the grouping of automatic transmissionimprovements, 29

engine groupings that mix dif-ferent engine types and cannot evaluate the bene-fits of individual technologies, and some inter-

nally inconsistent results that differ severely fromChrysler’s engineering analysis.

Except for a small change in methodology andthe addition of two technologies, the Ledbetter/ Ross study is basically an application of EEAmethodology to a more conservation-orientedscenario. The basic idea of exercising the EEA

model with policy-oriented input assumptions isboth sound and valuable, and OTA has adoptedthis approach in developing the scenario de-scribed in the next section. However, the Ledbet-ter/Ross study raises important concerns.

First, the methodological change—multiply-ing, rather than adding, individual fuel economy

improvements— is theoretically incorrect. Al-though some fuel economy improvements may bemultiplicative, others are not, including reduc-tions in rolling resistance, weight reduction, im-proved aerodynamics, and improved accessoryEfficiency.so EEA chose to be conservative byadding the individual effects, and, to conserva-tion-oriented reviewers, this may be overly con-servative. The difference in the two approachesleads the Ledbetter/Ross method to yield some-what higher results. It would also yield higherresults than a hybrid method combining additiveand multiplicative terms according to the natureof the technologies.

zbEnerW & Environmental Analysis, Februa~ 1991, oP. cit.

ZYD.L Greene, Oak Ridge National Laboratory, letter to J.O. Berger et al., University of Michigan, Ann Arbor, MI, Aug. 7, 1990.

~~pt for technologies for which changes in the torque cume do not match changes in the horsepower cume (e.g., 4-valve-Prc-ylinderengines).

%e appropriate comparison is a 4-speed transmission with lock-up versus a 3-speed transmission with lock-up; Bussmann compares thecombination of 4-speed and 3-speed lock-up transmissions to a 3speed without lock-up.

sOEnerW & Environmental Analysis, February 1991, op. cit.




Second, the scenario may be more severe thanmany policymakers are comfortable with, thoughthis judgment must await policymakers’ review.

In devising their conservation-oriented scenario,Ledbetter/Ross builds on the rates of technologypenetration in the EEA “max technology” sce-nario, which EEA has openly characterized as anextreme case that represents “a heavy burden of retooling for the industry and would require un-precedented and risky changes to every productsold.”

31

Even assuming costs do not rise with the

rapidity of retooling necessitated and ignoringthe impact on the industry of not recovering ini-tial capital investment on models retired early,EEA has calculated that the max technology casewould not be cost-effective (for a 10-percent dis-count rate, versus Ledbetter/Ross’s 7 percent)until gasoline prices reached $2.50-$3.00/gallonfor a 4-year payback and $1.50-$1.90/gallon for a10-year payback.

Third, Ledbetter/Ross maybe overstating theprobable effects of the two technologies theyadded. The effects of aggressive transmissionmanagement are unclear; and idle-off does notwork well with gasoline engines and is notincluded in future plans of even the company(Volkswagen) that initiated it.32

The remaining estimates are a series of asser-tions by various conservation groups about theability of the U.S. fleet to reach fuel economylevel/s of 45 mpg or higher in a relatively shorttime.

To the extent these estimates are based, at leastin part, on drastic changes in buyer preferencesand fleet composition, these groups are right. As

we show in chapter 8, changes in consumer pref-erences that result in movement toward the mostfuel-efficient car in each weight or size class andin a shift toward smaller vehicles could yield largeincreases in the average fuel economy of the new

car fleet. However, these changes are predicatedon consumer acceptance of the loss in ameni-ties—mostly interior space, acceleration capabil-

ities, and automatic shifting—that consumershighly value, as shown by surveys and by actualvehicle purchasing patterns. Although significantshifting of consumer preference occurred duringtimes of strong concern about gasoline availabil-ity and the potential for rationing and large futureprice increases, it is not clear that shifts could beachieved in the absence of pressure.

OTA believes that much of the reliance of highestimates on optimistic assumptions about newtechnologies and on the performance of high-effi-ciency vehicle prototypes is not firmly grounded.Performance projections about technologies notyet in mass production are extremely difficult-insome cases, impossible—to confirm at this time.However promising advanced technologies ap-

pear, their costs and performance will be highlyuncertain until they are fully developed and inmass production and use. Similarly, the perform-ances of “one of a kind” vehicle prototypes areinstructive but far from conclusive in determiningmarket acceptability. And we note that mosthigh-efficiency prototypes use diesel engines,which have uncertain market acceptance and sig-

nificant emissions problems in the United States.In a previous study, OTA concluded that in-creases in fuel efficiency to very high values “in-volve significant technical and economic risks,”and an “increased risk that. . . insufficient devel-opment and testing will lead to poor on-the-roadperformance and/or product recalls.”33 In addi-tion, OTA concluded in that study that the con-sumer costs of increased fuel efficiency, meas-ured in dollars per gallon of gasoline saved, arequite speculative. For example, OTA’s estimate of the consumer costs (in 1982 dollars) to achieve its1995 new-car fuel efficiency targets varied from$.35/gallon saved to as high as $2.60/gallon

slEnergy & Environmental Analysi5,Ana@is Ofthe Fuel Economy Boundaq for2010 and Cotqpation to prototypes,draft final report preparedfor Martin Marietta Energy Systems, November 1990.

szIt is fe]t t. be tm unneMng t. drivers, esWcially in making a left turn against traffic. Joseph Kennebeck, Director, Government Affairs,Volkswagen of America, Inc., personal communication, June 19, 1991.

S3U.S. Congress, Offlce of ~chno]ogy Aessment, Increased Automobile Fuel Eficien~ and S’nthetic Fuek: Alternatives for Reducing oil

Zmports (Washington, DC: U.S. Government Printing Office, September 1982).




saved.34

These estimates range from economical-ly attractive costs to costs that will be unaccept-able to new-car purchasers without large in-creases in gasoline prices.

Although some elements of the EEA scenariosare distinctly optimistic, some elements of thebasic EEA methodology will tend to yield conser-vative estimates of future fuel economy. Theseare:

1.

2.

Multiplicative vs. additive benefits. As notedin the discussion of the Ledbetter/Ross ap-proach, some types of fuel economy bene-fits-efficiency improvements for trans-missions, reductions in engine friction, im-provements in engine thermodynamic andmechanical efficiency-are multiplicative,whereas EEA treats all as additive. Thiscreates a small conservative bias.

Consideration of new technologies. The EEAprojections for 1995/1996 and 2001/2002 ex-amine only the effect of technologiescurrently present on at least one model inthe fleet. Possibly by the mid-1990’s, andcertainly by 2001/2002, new technologies al-

lowing improved fuel economy will begin toenter the fleet. Consequently, EEA projec-tions for these years are overly conservativeregarding the full array and penetration of fuel economy technologies. We note, how-ever, that the levels of penetration of newtechnologies are unlikely to be high by 2001

because of lead time constraints, some

imposed by automakers to guaranteereliability.

3.

4.

Technology performance. As discussed, incalculating the technology performance forindividual technologies, EEA assumes that

the better examples of fuel efficiency per-formance in the current fleet are likely to bereasonably representative of performanceattainable by the average use of the technol-ogy by 2001-especially considering thatmany technology applications are opti-mized for maximum performance benefitsrather than maximum fuel economy bene-

fits. However, this shift in average perform-ance levels is applied only to the incremen-tal (new) use of these technologies over theintervening years. For that fraction of thefleet for which each technology is already inuse, EEA does not assume any improve-ment in fuel economy performance levels.This is a conservative assumption.

Diesel engines. Although diesel engines pro-vide higher fuel economy than spark igni-tion engines, they have not done wellrecently in the U.S. market and consequent-ly have not figured in automaker planning.Also, although diesels are exempt from the0.4 g/mi NO

Xstandard for automobiles until

2004, this exemption may be in jeopardy if

diesels were to attain a bigger market share,and future emissions compliance is indoubt. EEA has not included diesel tech-nology in their analyses of fuel economypotential, but large-scale penetration of die-sels—especially advanced diesels such asturbocharged diesels or direct injection die-sels—could increase fleet fuel economy to

higher levels than possible with spark igni-tion (gasoline) engines.

JdIbid. me cost range reflects an assumed moderate shift towards smaller cars.

Chapter 8

The Potential for Improving Fleet Fuel Economy by



The Potential for Improving Fleet Fuel Economy byChanging Vehicle Buying Patterns

The fuel economy of the new car fleet is asdependent on vehicle attributes determined byconsumer preference—especially, the size mix of the fleet, general performance attributes, and theprevalence of luxury features—as it is on basicvehicle design and technology. Although furtherimprovements in vehicle design and technology

can yield significant gains in fuel economy for thenext 5 to 10 years, particularly if certain newtechnologies prove successful, very large fueleconomy gains may be possible only with changeseither in consumer preferences or in the availabil-ity of preferred features.

The potential effect of changes in consumer

preferences can be approximated by examiningwhat such changes could mean in the currentfleet. OTA first examined this possibility in its1982 report, Increased Automobile Fuel Efficiency

and Synthetic Fuels,l reporting that the 1981 auto-

mobile fleet fuel economy could have been33 mpg, instead of its actual 25 mpg, if consumershad consistently chosen the most efficient vehicle

in each of the nine EPA size classes and produc-ers had been able to meet demand.

More recently, the Environmental ProtectionAgency has conducted a similar but expandedexamination of the potential effect of changedconsumer preferences on the 1990 fleet.

2Using a

detailed data base for the 1990 fleet, EPA eval-

uated the effect on fleet fuel economy of the fol-lowing shifts in consumer preference:

auto purchasers buy only vehicles amongthe dozen most fuel-efficient in each weightclass;

auto purchasers buy only vehicles amongthe five most fuel-efficient in each weightclass; and

auto purchasers buy only the most efficientcar in each weight class.

For each scenario as well as for the actual pur-

chasing pattern in each weight class, EPA alsoexamined the effect on fleet fuel economy of con-sumers shifting purchases towards smaller,lighter cars. For example, for the moderate weightmix shift, with average vehicle weight reducedfrom 3,171 pounds to 2,974 pounds (a 6.2-percentdecrease), purchases of cars in the 3,500-poundclass decline from 31.3 percent to 20.2 percent of all sales, and purchases of cars in the 2,250-pound

class rise from 1.4 percent to 7.5 percent. For amore severe shift, with average weight reduced11.7 percent to 2,802 pounds, cars in the3,500-pound class go from a 31.3 percent share to12.1 percent, and cars in the 2,250-pound class gofrom 1.4 to 9.6 percent. Table 8-1 presents thechanges in weight class market shares for bothscenarios.

EPA’s analysis, results of which are presentedin table 8-2, shows that changes in consumer pref-erences for fuel economy, performance, and ve-hicle size can have very large effects on fleet fueleconomy. For the case of purchasing only thedozen most fuel-efficient cars in each weightclass, with a 6.2-percent shift in weight class mix,the fleet fuel economy improves from 27.8 mpg to

33.2 mpg, or 20 percent. About two-thirds of thefuel economy improvement is due to consumersselecting the more efficient vehicles in eachweight class, with the remainder due to the actualshift in weight class market shares. The “cost” of the improvement in terms of loss of basic con-

Iu.s. Congrew, Office of ~chnology ~wment, 1ncreasedAuto~bile Fuel Eficiency and Synthetic Fuel: Altemativesfor Reduc ing a - i zm-

ports, OTE-E-185 (Springfield, VA: National ‘lkchnical Information Service, September 1982), table 1.

ZR.M. Heavenrich, J.D. MUrrel], and K.H. Hellrnan, L“ght-Duty Automotive Technolo~ and Fuel Economy Trends Though IW1, U.S. En+

ronmental Protection Agency report EPA/A4/CI’AB/91 -02, May 1991.

-69-




Table 8-1 –Hypothetical Shifts in Weight ClassMarket Shares for the 1990 U.S. Auto Fleet

1990

Weight Re-mix Re-mixWeight Mix

(lb) (%) (%) (%)

1,750 . . . . . . . .2,000 . . . . . . . .2,250 . . . . . . . .2,500 . . . . . . . .2,750 . . . . . . . .3,000 . . . . . . . .3,500 . . . . . . . .4,000 . . . . . . . .4,500 . . . . . . . .5,500 . . . . . . . .

0.011.31.4

12.610.431.031.311.0

1.070.013

0.7

1.37.5

11.421.731.220.2

5.60.490.006

Average weight. 3,171 2,974

Change from status quo (%): -6.2

1.44.79.6

17.0

. 26.925.112.12.8

0.220.003

2,802

-11.7

SOURCE: US. Environmental ProtectIon Agency, Ann Arbor, Ml

Table 8-2–”Best in Weight Class”Analysis, 1990 Model Cars

1990 Re-mix Re-mix3,171 lb 2,972 lb 2,802 lb Consumeraverage wt average wt average wt Purchase

Average miles/gallon34.4 . . . . . . . . 37.5 40.332.5 . . . . . . . . 34.7 36.831.2 . . . . . . . . 33.2 35.327.8 . . . . . . . . 29.6 31.5

Average cubic feet

98 . . . . .......94 93

103 . . . . .......99 98102 . . . . .......99 98107 . . . . . . . . . . 103 100

Average O to 60 mph time, seconds14.2 . . . . . . . . 15.1 15.613.1 . . . . . . . . 13.5 13.713.1 . . . . . . . . 13.4 13.512.1 . . . . . . . . 12.4 12.7

Best in classBest five in classBest dozen in classAll Cars

Best in class

Best five in classBest dozen in classAll Cars

Best in classBest five in classBest dozen in classAll cars

SOURCE U.S. Environmental ProtectIon Agency, Ann Arbor, Ml

sumer attributes is a 7-percent decrease in theaverage interior volume of the fleet (from 107 to99 cubic feet.) an n-percent increase inO-to-60-mph acceleration time (12.1 to 13.4 sec-onds), and a general shift away from automatictransmissions. The “average car’’—the car thatattains the average fuel economy of thefleet-shifts from a Dodge Dynasty or Volvo 740

to a Toyota Camry.

A more extreme shift in consumer preferenceswill yield a significantly higher gain in fuel econo-my. If consumers had selected only the best mod-

el in each class and absorbed a 12-percent shift inweight classes (that is, an overall reduction in ve-hicle weight of 12 percent), fleet fuel economywould have been 40.3 mpg, a 45-percent improve-ment over the actual 27.8 mpg, with responsibilityabout evenly split between the shift to higher-fuel-economy models and the weight-class mixshift. The cost in consumer attributes is a 13-per-

cent decrease in average interior volume (107 to93 cubic feet), a 29-percent increase in O-to-60time (12.1 to 15.6 seconds), and, as before, a gen-eral shift from automatic to manual transmis-sions. The average car shifts from the Dodge Dy-nasty or Volvo 740 with automatic transmissionto a Pontiac Lemans or Ford Escort—muchsmaller cars—with manual transmission.

There can be endless argument about the real-ism of the above scenarios given the relative sta-bility of fleet average interior volume over time,the general rising trend in O-to-60-mph accelera-tion time, and the popularity of automatic trans-missions. In particular, many might question thelikelihood of a massive shift away from automatictransmissions. If a change in transmission type is

not allowed, the fuel economy benefits are about60 percent of those where a large shift takesplace.

3

Only a portion of the reduction in benefitsis due to the transmission change alone. Somehigh-efficiency models such as the Honda CivicCRX HF do not have a model with automatictransmission, but have other attributes that con-tribute to fuel economy (in the HF’s case, an effi-cient low-horsepower engine). These features arenot available to purchasers of vehicles with auto-matic transmissions.

It is worth noting that most lost fuel economycould be recaptured—at a price—with advancedautomatic transmissions with efficiencies close tothose of a manual, for example, five-speed elec-tronically controlled automatics with lock up in

all upper gears.

JJohn Geman, Ceflification Di~sion, IJ.!5.Environmenta] Protection Agency, Ann Arbor, MI, Wmonal communi~tion, June 1l ? 1991”

Chapter 8–The Potential for Improving Fleet Fuel Economy by Changing Vehicle Buying Patterns q 71



Although these shifts are not realistic as mea- years—with some changes, especially those asso-sures of what could happen instantaneouly (they ciated with selecting the dozen most efficient carsdo not account for problems of expanding pro- in each weight class and the moderate mix shift,

duction capacity, for example), they do illustrate happening even sooner.what could happen over time, perhaps 10

Chapter 9

Designing A New Fuel Economy Bill



Designing A New Fuel Economy Bill

Policymakers who are convinced new CAFElegislation is a desirable approach to improvingfleet fuel economy must confront a number of keyissues. The two overriding issues are, first, howthe standards should be structured, and, second,how high the target fuel economy should be. Se-lecting a structure for the standards may be as

important as selecting the numerical target.

ESTABLISHING THE STRUCTURE

OF NEW CAFE STANDARDS

The current CAFE standard assigns a goal of 27.5 mpg to every automaker regardless of thevehicles they produce. Domestic automakers

have severely criticized this regulatory structurebecause manufacturers producing larger vehiclesor a variety of vehicle sizes must meet a moredemanding technological standard than man-ufacturers who concentrate on smaller vehiclesthat normally are more fuel efficient.

1This leaves

automakers who focus on small cars far moreflexibility than “full line” manufacturers to intro-duce features that are attractive to consumers butfuel inefficient-e. g., four-wheel drive, high-per-formance engines, etc. Further, the fuel economystandard selected under such a structure will tendto be heavily influenced by the (relatively low) fueleconomy level that can be reached by the compa-ny with the most difficult task (i.e., the largest,most powerful mix of vehicles). Since such a

standard would provide little challenge to com-

panies manufacturing primarily small vehicles,the fleetwide fuel economy level achieved will belower than could be achieved if all automakerswere forced to improve fuel economy to the maxm-mum extent possible.

Another problem with the current approachinvolves the separation of domestic and import

fleets according to the percentage of parts man-ufactured in the United States (the “local con-tent”). Because the “import” fleets of the domes-tic automakers have high CAFE ratings (in 1990,35.6 mpg for Ford, 37.6 mpg for General Motors’),the domestics have been able to manufacturemore of some low-efficiency models’ parts over-seas and move those models to the importfleet-thus improving the CAFES of their domes-tic fleet while leaving the import fleet’s CAFESsafely within standards. Ford recently switchedits Crown Victoria model to an “import” by in-creasing its foreign parts content to 25 per-cent —trading away U.S. jobs for an improvementin Ford’s regulatory position vis-a-vis CAFE en-forcement with no actual fuel economy improve-

ment. On the other hand, earlier in the history of the legislation, CAFE rules forced automakers to

build small cars as part of the U.S.-madefleet-with a positive effect on domestic jobcreation.

In spring, 1989, Senator Richard Bryan of theConsumer Subcommittee (Senate Committee onCommerce, Science, and Transportation) intro-duced legislation calling for all automakers toimprove their companywide fuel economy levels20 percent by 1995, and 40 percent by 2001, overlevels achieved by model year 1988. This legisla-tion sought to overcome criticism leveled at thecurrent uniform standard by forcing all automak-ers to improve by the same amount. The structurecalled for in the legislation generally is referred to

as a “uniform percentage increase.” Senator Bry-an has reintroduced this legislation for 1991, asS.279.

Another CAFE proposal would base each au-tomaker’s standard on the size mix of vehicles itmanufactures, giving makers of small cars a high-er mpg target to reflect the inherent fuel economy

lob~ou~ly, ~me ~mall cam that are high.power sP~ models obtain relatively low fuel economy levels. However, vehicle s~ e is a criti=l

factor in fuel economy, and manufacturers of small vehicles generally will have an easier task than manufacturers of large vehicles in meeting thesame fuel economy standard.

-73-




advantage small cars have over large cars.2

Ideal- sales-weighted average of the various fuelly, to meet individual mpg standards, each com- economy targets assigned to all of its mod-pany would have to install about the same level of els. This company standard, or Volume Av-

fuel economy technology as every other company. erage Fuel Economy (VAFE) standard,In other words, a correctly set standard would not could be computed at the beginning of thecreate any market advantage or disadvantage. year, based on last year’s sales mix, or at the

The standard would work as follows:

1. Each vehicle model would be assigned a fueleconomy target determined by a formula relating required fuel economy to vehicle inte-

nior volume. (Alternatively, each vehicle sizeclass could be given a fuel economy value,and each vehicle would then be given a tar-get based simply on its size class.

3

) As dis-cussed in box 9-A, interior volume must bedefined carefully to allow a single standardto apply to a range of auto types, includingstation wagons.

2. Each company’s fuel economy standardwould then be calculated by taking the

end of the year based on actual sales.

3. It is worth noting that each model in anautomaker’s fleet would not have to meet itsfuel economy target so long as the sales-weighted average of all of the maker’s mod-

els achieved the assigned VAFE standard.This leaves each company the flexibility of deciding how to allocate fuel economy tech-nology across its fleet, and further allows itto have a mix of family-oriented, commuter,and high-performance models so long as theaverage of their fuel economies satisfies thecompany standard.

4. The formula for assigning fuel economy tar-gets can be established by the government

Box 9+4-Measuring Interior Volume for Application to a Volume-Based Standard

An examination of how fuel economy varies with vehicle interior volume shows that the simplest mea-sure of volume (all available space within the automobile) is not the best measure for use with a fuel econo-my standard based on interior volume. Figure 9-A-1 shows how the average fuel consumption of differentclasses of automobiles varies with total interior volume. The figure demonstrates that the fuel consump-tion rates of subcompact through large sedans forma straight line on the graph; all station wagons fall on adifferent straight line. Minicompacts and two-seaters fall outside these lines, generally having high fuelconsumption for their interior space compared to other classes—not surprising because most cars in thesetwo categories are basically sports cars and have high power-to-weight ratios.

The fuel comsumption/interior volume relationships for sedans and wagons tend to converge toward asingle line on the graph interior volume measurements for the wagon class do not give full “credit” to theadded cargo volume in wagons. Using this more restricted definition of interior volume, it should be possi-ble to design a single interior-volume-based fuel economy standard applicable to all sedans and wagonsexcept sports cars that approaches the goal of creating a uniform technological challenge regardless of car

size.If Congress chooses this approach, it must decide how to deal with minicompacts and two-seaters,

since these classes would tend to have great difficulty in attaining target fuel economy levels based on their(low) interior volumes. Companies focusing on these classes are likely to find it impossible to meet theircompany standards unless these classes are treated differently than the rest of the fleet. This would imposepenalties on these classes, raising their purchase price and presumably lowering demand. Congress mightbe comfortable with such a result, but if not, it must allow separate treatment for these vehicles.

@TA discussed this CAFE structure in its May 2,1990, testimony to the Consumer Subcommittee. Also, Barry McNutt of the Department of Energy discussed interior-volume-based standards and size-class standards in a May1985 talk.

%1’his formulation has the disadvantage of providing an incentive for automakers to enlarge models at the upper limits of any size class to movethem to the next higher class.

Chapter 9–Designing A New Fuel Economy Bill q 75



Figure 9-A-1 –Fuel Consumption and Volume,1990 Sedans and Wagons

gal/100mi4.6 r 1 A

4.4Large

Largewagon

4.2

4.0-— Mini compactMidsize

3.8 wagon

3.6s Two-seater

3.4Compact

Small

3.2 - —

Subcompact

wagon

3.0 , I r , , r , r r

60 70 80 90 100 110 120 130 140 150 160 170

Volume (cubic feet)

SOURCE U S Environmental ProtectIon Agency, 1991

to aim for any fleetwide average desired.The VAFE formula would have to be based

on extrapolating from the most recent dataon fleetwide size distribution, so unex-pected shifts in sales, for example, fromlarger to smaller cars, would result in thefleet attaining a fuel economy level slightlydifferent than predicted. Differences wouldnot be large unless large shifts in sales oc-curred.

Both Senator Bryan’s “uniform percentage in-crease” and an “interior-volume-based-VAFE-standard” represent improvements over the cur-rent CAFE approach because they account fordifferences in fleet makeup among the variousautomakers. Simpler in concept, the Bryan ap-proach is easier to understand and explain. How-ever, it makes no allowance for differences in the

degree to which automakers have applied fueleconomy technology. To the extent that some au-tomakers may have used a higher level of technol-ogy during the proposed base year, this approachpenalizes them with a more difficult mpg targetthan other automakers with fleets similar in sizemix but who used inferior efficiency technology(see box 9-B). In doing so, it rewards companies

that have made less effort thus far, since thesehave the most technological “headroom” to im-

prove their fuel economies. Furthermore, assign-ing standards based on company fuel economiesachieved years earlier will make it difficult for

automakers to shift sales strategies unless theseshifts are toward a fleet with smaller vehicles.This will tend to discourage Japanese automak-ers from pursuing their current strategy of com-peting in the luxury and larger-car markets. Inother words, the proposed legislation may beviewed as anticompetitive.

Some of the tendency of the “uniform percent-

age increase” approach to reward companies thathave low baseline fuel economies and penalizecompanies with high baselines can be mitigatedby placing floors and caps on the company re-quirements —i.e., by demanding that companiesachieve a minimum level of fuel economy regard-less of baseline value, and placing an upper limiton the company standard, even if its baseline

value is very high. S.279 places a floor of 27.5 mpgand a cap of 40 mpg for 1996, and a floor of 33mpg and cap of 45 mpg for 2001. This means thatfor 1996, companies with baseline fuel economiesbelow 22.9 mpg must attain a percentage increasehigher than 20 percent to achieve their target fueleconomy, and companies with baselines above33.3 mpg will need increases less than 20 percent.

For 2001, the baseline floor and cap breakpointsare 23.6 mpg and 32.1 mpg, respectively. Thismeans companies such as Isuzu (34.9 mpg in19884), Suzuki (50.3 mpg) and Hyundai (35.0mpg), as well as domestic import fleets (Fordobtained 35.6 mpg in 1988, General Motors, 37.6mpg), will not be required to improve the full 20and 40 percent by 1996 and 2001. However, nei-

ther Toyota (32.6 mpg) nor Honda (32.0 mpg),companies with superior fuel economy perform-ances in 1988 even accounting for their size mix,really benefit from the cap.

A uniform percentage increase approach, be-cause it is based on past relationships, must takespecial care in dealing with new market entrantswith no “baseline” fuel economy values. If new

entrants are treated more leniently than estab-lished automakers, the latter may form new com-

dFleet fuel economy values from U.S. Depaflment of llansportation, National Highway llaffic Safety Administration, “SummaV of FuelEconomy Performance 1988,” U.S. DOTN-ITSA NEF-31.



Figure 9-A-1 –Fuel Consumption and Volume,1990 Sedans and Wagons

gal/100mi4.6 I I A

4.4Large

Largewagon

4.2

4.0-— MinicompactMidsize

3.8 wagon

3.6s Two-seater

/ /

3.4Compact<

/ f z m a , , - - - - i 3.2R subcompact

~wagon~3.01 [, 1I , , I r 1 , 160 70 80 90 100 110 120 130 140 150 160 170

Volume (cubic feet)

SOURCE’ U.S. Environmental ProtectIon Agency, 1991

to aim for any fleetwide average desired.The VAFE formula would have to be based

on extrapolating from the most recent dataon fleetwide size distribution, so unex-pected shifts in sales, for example, fromlarger to smaller cars, would result in thefleet attaining a fuel economy level slightlydifferent than predicted. Differences wouldnot be large unless large shifts in sales oc-curred.

Both Senator Bryan’s “uniform percentage in-crease” and an “interior-volume-based-VAFE-standard” represent improvements over the cur-rent CAFE approach because they account fordifferences in fleet makeup among the variousautomakers. Simpler in concept, the Bryan ap-proach is easier to understand and explain. How-ever, it makes no allowance for differences in the

degree to which automakers have applied fueleconomy technology. To the extent that some au-tomakers may have used a higher level of technol-ogy during the proposed base year, this approachpenalizes them with a more difficult mpg targetthan other automakers with fleets similar in sizemix but who used inferior efficiency technology(see box 9-B). In doing so, it rewards companies

that have made less effort thus far, since thesehave the most technological “headroom” to im-

prove their fuel economies. Furthermore, assign-ing standards based on company fuel economiesachieved years earlier will make it difficult for

automakers to shift sales strategies unless theseshifts are toward a fleet with smaller vehicles.This will tend to discourage Japanese automak-ers from pursuing their current strategy of com-peting in the luxury and larger-car markets. Inother words, the proposed legislation may beviewed as anticompetitive.

Some of the tendency of the “uniform percent-age increase” approach to reward companies thathave low baseline fuel economies and penalizecompanies with high baselines can be mitigatedby placing floors and caps on the company re-quirements —i.e., by demanding that companiesachieve a minimum level of fuel economy regard-less of baseline value, and placing an upper limiton the company standard, even if its baseline

value is very high. S.279 places a floor of 27.5 mpgand a cap of 40 mpg for 1996, and a floor of 33mpg and cap of 45 mpg for 2001. This means thatfor 1996, companies with baseline fuel economiesbelow 22.9 mpg must attain a percentage increasehigher than 20 percent to achieve their target fueleconomy, and companies with baselines above33.3 mpg will need increases less than 20 percent.

For 2001, the baseline floor and cap breakpointsare 23.6 mpg and 32.1 mpg, respectively. Thismeans companies such as Isuzu (34.9 mpg in19884), Suzuki (50.3 mpg) and Hyundai (35.0mpg), as well as domestic import fleets (Fordobtained 35.6 mpg in 1988, General Motors, 37.6mpg), will not be required to improve the full 20and 40 percent by 1996 and 2001. However, nei-

ther Toyota (32.6 mpg) nor Honda (32.0 mpg),companies with superior fuel economy perform-ances in 1988 even accounting for their size mix,really benefit from the cap.

A uniform percentage increase approach, be-cause it is based on past relationships, must takespecial care in dealing with new market entrantswith no “baseline” fuel economy values. If new

entrants are treated more leniently than estab-lished automakers, the latter may form new com-

dFleet fuel economy values from U.S. Department of lkansportation,National Highway llaffic Safety Administration, “SummaV of FuelEconomy Performance 1988,” U.S. DOTN-ITSA NEF-31.

76. Improving Automobile Fuel Economy: NeW Standards, New Approaches



Box 9-B--What Accounts for the Difference in CAFE Among DifferentAutornakers?

The fairness of a fuel economy standard demanding that each automaker attain a uniform percentageincrease over its fleet fuel economy in a base year depends in part on the extent to which some automakersmight have done very much more (or less) than the average in making their fleets efficient in that year. Tothe extent that an automaker may have installed more fuel efficiency technology, or used more fuel effi-cient design than the average, he would, in effect, be penalized by having a more stringent target to meetwith less technological “headroom” than available to the average automaker. Similarly, a less-efficient-than-average automaker would be rewarded with a lower target and greater degree of technologicalheadroom.

one way of measuring design and technology efficiency of different corporate fleets is to remove the

effect of differing vehicle size mixes from each company’s CAFE value. To do this, OTA devised a set of company-by-company size-class-mix-weighted standards to reach actual fleet new-car fuel economy in1%8—28.3 mpg—and compared these standards to the manufacturers’ achieved fuel economies. Whereachieved values were above, below, or the same as the standards, the manufacturers’ cars were better than,worse than, or the same as the industry average fuel economy adjusted to account for the sales mix of thefleet.

Figure 9-B-1 compares the company-by-company targets with the actual fuel economy valuesachieved in 1988. The figure shows that two U.S. companies are within 1 percent of their targets; that is,their fleet fuel economies are near the industry average taking into account the size class mix of their fleets.

Half of the Japanese companies are well over the industry average, with the other half at or near the aver-age. The European company is considerably below the average.

This comparison shows that differences in the size class mix of domestic and import fleets account for much, though not all, of the differences in the fuel economies of these fleets.For example, of an 18-percent dif-ference in the fuel economy levels between often-compared U.S. and Japanese manufacturers (GeneralMotors and Toyota), approximately 12 percent—two-thirds-is explained by the size class mix. The re-mainder presumably is due to differences in technology, design, and vehicle performance.

The comparison indicates that a “uniform percentage increase” standard based on a 1988 baseline–as specified in the legislation sponsored by Senator Bryan-would penalize some Japanese manufacturers,though not nearly to the extent that might be presumed from examining only the large differences betweentheir CAFES and those of U.S. companies. Because some Japanese companies-particularly Toyota andNissan-have increased the size of their vehicles in the 1988-91 period relative to U.S. automakers, thedisadvantage posed by this type of standard will be greater than implied by the above analysis.

panics to market their less efficient models, im- ing small cars as difficult a standard as largeproving the CAFE position of the remaining

models in their fleet at little cost and with noactual improvement in fuel economy.

If the volume-based or VAFE standard weredetermined from actual sales (i.e., standardswould be computed at year-end based on thatyear’s sales figures), automakers would have flexi-bility to change sales strategies without makingtheir fuel economy targets impossibly difficult to

attain. This also avoids penalizing automakers if market trends change unexpectedly, since stand-ards would reflect changing sales figures. Howev-er, the VAFE standard’s “size neutrality’’-giv-

cars—means there is no incentive for an auto-

maker to boost sales of small cars, a feature of thecurrent CAFE standard and, indeed, any stand-ard based on a formula that does not change withshifts in fleet size mix. The more that Congressmight want to encourage consumers to drivesmaller cars, which tend to be more fuel efficient,the less a VAFE-type standard might be favored.

The VAFE approach has been criticized be-cause it cannot specify an exact fleet fuel economytarget. Because relative sales of large and smallcars may shift over time, the fleet fuel economy




5 0

4 0

3 0

2 0

10

0

Figure 9-B-1 -Size-Class-Weighted Fuel Economy for 1988

To reach 28.3 mpg (actual 1988 U.S. fleet average)

1

GM Ford Chrysler Toyota Honda Mazda Nissan Hyundai Volvo

= 1988 m p g t a rg e t = 1988 mpg actual — 2 8 . 3 m p g

SOURCE: Office of Technology Assessment, based on Oak Ridge data 1989.

target established by VAFE standards wouldshift as well. If more small cars are sold, the fleettarget will increase; if more large cars are sold, itwill decrease. In contrast, the current uniformCAFE guarantees a fleet minimum fuel economy,assuming all automakers are in compliance.

It has been presumed that the uniform percent-

age increase approach to fuel economy standardswill not have this problem because required in-creases are based on previously established com-pany fuel economy levels, and thus each compa-ny’s target fuel economy cannot change.However, the fleet target will change with anyshifts in the market shares of the companies. If acompany with a high target gains market share,

the fleet target will increase, and if a companywith a low target gains market share, the fleettarget will decrease. Consequently, neither cur-rently proposed approach to new fuel economystandards can guarantee a minimum fleet fueleconomy other than the minimum for any onecomponent of the standard-for the uniform per-centage increase, the target for the least efficient

company; and for the VAFE approach, the targetfor the largest vehicle.

Recently, Mercedes-Benz, BMW, and Porscheproposed an alternative structure for fuel econo-

my standards that relies on several factors—thevehicle curb weight, the ratio of curb weight tointerior volume, and the ration of curb weight totorque—to define allowable fuel economy levels.The proposal establishes a fuel economy baselinefor each model using a formula for fuel consump-tion derived from a regression analysis of all EPA

certified 1990 models, with the above variables asregression variables. In other words, the proposalstarts with a formula of the form:

Fuel consumption = A x curb weight

+ B x C u r b w e i g h t + Cx curb weightinterior volume torque

where A, B, and C are constants,

which approximately defines the fuel consump-tion of vehicles in the 1990 fleet. For a 20-percentimprovement in fleet fuel economy, new vehicleshave to achieve a fuel consumption level 20-per-cent lower than given by the formula using the newvalues of curb weight, interior volume, and torque.If these values do not change from their 1990

levels, the vehicles must simply attain a 24)-per-cent reduction in fuel consumption.

This system has the advantage of allowing corn-panies that compete in niche markets to satisfy




fuel economy standards by improving technologywithout abandoning its niche or being forced toadd model lines of lighter or lower-power ve-hicles, as would be the case with other proposedstandards. The system also demands technologyimprovements: simply adding a model line of small cars of the same design and technology level will not help; the formula will demand the samekind of efficiency improvement from that modelas well.

The system has some interesting characteris-tics. Most important, although increasing a ve-hicle’s torque and weight while holding its interi-

or volume constant will allow the vehicle to besubject to a higher allowable fuel consumptionstandard, basing the new allowable fuel economy

on the regression equation implies that the allow-able level will be technically more difficult to meet.In other words, there is a positive incentive toreduce weight and torque while holding interiorvolume constant, because it will be easier to meetthe allowable fuel consumption level. This is illus-trated by figure 9-1. This incentive is important,because high fleet fuel economy levels will bedifficult to meet unless the “horsepower race” isended and unless weight reduction measures con-tinue.

Second (and less favorable to this system’s like-ly attractiveness to Congress), it allows a vehiclethat is more powerful than another but otherwiseidentical to meet a lower fuel economy standard.

5

This may be difficult for a Member of Congress to

Figure 9-1 -Change in Level of Compliance With the Type of Fuel Economy Standard Proposed by

Mercedes-Benz, BMW, and Porsche if Curbweight and Torque Are Reduced

Technology-based fuel efficiency (TBFE)based on model year 90 data

Actualfuelconsumption[gal/mile]

0.048--

/ “

0.046- -

. //0.044- -

0 ./ “

0“0“

0.042-

/

/“ /“ ./”’0.040

- ‘ [

. 0. 0

00 “

. /Less curbweight

0.038 - 7 ” ’ less torqueboth improve efficiency

— T B F E

— — - T B F E - 5 %

‘O —“- TBFE-10%

27.5 mpg

q Curbweight-10%

x Curbweight-l O%, torque-10%

0.036 ! I 1 I 1 1 } t I

0.042 0.043 0.044 0.045 0.046 0.047 0.048 0.049 0.050

Calculated regression value based on

curbweight, curbweight/torque, curbweight/total volume

The square on the graph represents an automobile wlth a fuel economy Ievel about 5-percent hlgher thanthe average automobile of the same welght, Interior space, and torque. If theauto’s designers reduce Its welght by 10 percent through design changes and material substltutlon, the auto wlll reach a fuel economy level slgnlflcantly In excess of 5 percent better

than the average for a vehlcle with its new welght/space/iorque comblnatlon, as shown by the dotted Iine Lowerlng torque by 10 percent (represented by the solid Iine between the

circle and cross) will allow the auto to Improve still further, to greater than lo-percent higher fuel economy than average.SOURCE: Mercedes-Benz of North America, Inc., 1991

%ough, as noted, the lower standard will be technically more difficult to meet than the standard applied to the lower-power car.




explain to constituents. And third, this systemcannot “guarantee” meeting a particular fleet fueleconomy level because, like size-based standards,

changes in vehicle characteristics (here, weightand performance particularly) will change themagnitude of the standards. Nevertheless, in ourview the proposed system is worth further investi-gation.

DEFINING A FUEL

TARGET

Selection of the numerical

ECONOMY

fleet fuel economytarget demands consideration of the followingissues:

Whose analysis of fuel economy potential isto be believed? For that analysis, what as-

sumptions are appropriate for a publicpolicy analysis? And how can the results of that analysis be appropriately translatedinto an actual target for a fuel economyregulation?

How should consumer preferences for ve-hicle size, luxury characteristics, and per-

formance be taken into account in setting atarget? In other words, to what extent isCongress willing to demand levels of fueleconomy that may require changes in themakeup of the light-duty fleet that mightdisplease consumers? (Or, to what extent isCongress willing to take measures, such asincreased gasoline taxes, or vehicle taxesand rebates tied to efficiency levels, thatcould stimulate changes in consumer pref-erences?)

What are the possibilities for new technolo-gies, and how should the uncertainty in-herent in projecting the likely success andperformance of new technologies be takeninto account in standard setting? Should a

future fuel economy standard be “technolo-gy forcing” in nature?

How much economic pressure on the indus-try is reasonable given the importance of reducing U.S. oil consumption, the financial

strains on certain companies, and the im-portance of domestic auto production to theU.S. economy?

What might the safety effects of new stand-ards be, and how should these effects betaken into account in setting a standard?

SELECTING AND APPLYING ANANALYSIS OF FUEL ECONOMY

POTENTIAL

As discussed in chapter 7, OTA believes thefuel economy analyses performed by Energy &Environmental Analysis, Inc., as modified afterdiscussions with domestic and foreign auto man-

ufacturers, represent the most credible of theavailable analyses. In our view, the analyses pre-sented by several conservation groups lack anappropriate analytical foundation and, for the1996 to 2002 timeframe, rely too heavily on un-proven technologies; and those of the automakers

are skewed toward low fuel economy values by theimposition of assumptions not compatible with a

strong regulatory push to higher fuel efficiency.EEA’s previous scenarios for future fuel econo-

my represent two extremes —the “product plan”case represents a guess at a future with no addi-tional regulatory pressures on fuel economy levelsand limited economic pressures; the “max tech-nology” case represents a relatively unrealisticscenario imposing “a heavy burden of retoolingfor the industry and would require unprecedent-ed and risky changes to every product sold.” 6 Inreality, however, the product plan for 2001 may beconsidered optimistic, because it assumes an in-crease in oil (and gasoline) prices, whereas manyanalysts believe oil prices can remain flat overthis timeframe—and because it assumes thatpost-1995 technological additions will be de-

signed to maximize fuel economy rather than toimprove performance. In other words, OTA con-

bEnerw & En~ronmental ~alpis) Inc., AnaZys& Of the Fuel Economy BoundaV for 2010 and CoWation to fioloQPes, draft final reportprepared for Martin Marietta Energy Systems, November 1990.




siders it quite plausible that fleet fuel economylevels could be well below the product plan levelof 33 mpg in 2001-though we believe it unlikelythat they might remain at today’s 28-mpg level.

As discussed previously, OTA’s product planprojection for 1995 is 29.2 mpg for the fleet. Howmuch higher could fleet fuel economy be pushed?There is not a great deal of time between now and1995 for manufacturers to make importantchanges to their product plans. EEA has not

developed a “maximum technology” plan—a sce-nario that assumes much greater penetration of fuel economy technologies—for the 1995 date,because it feels significant increases in technolo-gy penetration are not realistic for this early date.However, the companies are not without somedegree of flexibility in this timeframe, since theymust be prepared to respond to rapid changes in

consumer preferences or unforeseen consumerresponses to new products. Further, the fueleconomy penalty associated with new emissionand safety standards will depend somewhat onmarket and regulatory pressures to improve fueleconomy; the penalty need not be as high as esti-mated by EEA (nearly 3 percent) for “business asusual.” Consequently, we believe Congress couldrealistically set a 1995 fuel economy goal for the

total U.S. fleet somewhat higher than the EEA“product plan” value of 29.2 mpg. Further, com-panies can achieve fuel economy credits for pro-ducing alternative-fuel vehicles, so they can raisetheir official CAFES by over 1 mpg by producinglarge numbers of these vehicles.

OTA concludes Congress could realistically set

a fuel economy goal for the 1995 model year of 30.0 mpg for the total fleet, to be achieved bysome combination of expected increases in pene-tration of fuel economy technologies coupled withreductions in expected vehicle performance in-creases and compliance with emissions and safe-ty standards with minimum losses in fuel econo-

my. The companies could also producealternative-fuel vehicles to reach the goal, thoughthe fleet then would not physically attain the full

30 mpg. If Congress includes the potential tomanufacture altfuel vehicles in setting the stand-ard, the standard could be raised to about 31mpg—but this would transform the alternative-fuel credit from an incentive to produce thesevehicles to a virtual requirement.

7

This level of fuel economy can be obtained onlyif each company is required to improve its fueleconomy according to the technological potential

of its fleet; a uniform standard such as the currentCAFE-type standard cannot achieve a total fleetfuel economy this high, since, to be politicallyacceptable, it will likely have to accommodate thefuel economy achievable by the major domesticcompanies, whose potential is lower than theabove averages.

8

For 2001, automakers have considerably moreflexibility to raise their fleet fuel economy. OTAhas defined a “regulation-driven” scenario for2001 that represents an attempt to define a set of criteria for incorporating societal energy goalsinto vehicle design decisions. The criteria are:

1.

2.

3.

4.

Technologies are selected if they provide

fuel savings that, with a 10-percent discountrate, will pay back extra first costs in 10years at $2.00/gallon gasoline (high priceand long payback period selected to reflectsocietal costs of gasoline consumption*);

Some allowance is made for inclusion of new technologies (not yet in the fleet) by2001;

Size and performance of the 2001 fleet isrolled back to 1990 levels; and

Penetration rates for technologies are con-strained to correspond to normal model re-design schedules, so costs are held down,sufficient time is allowed for recouping ini-

7&d ~Olate the spirit of the alternative fuel credit k’gislation.8Domestic full-line manufacture d. not, however, have the lowest potential a m o n g m a j o r manufacturers. ne Cornpanks with the mOSt

difficult task are likely to be the European limited-line manufacturers producing luxury and performance vehicles.

*In other words, the $2.00/gal cost-effective price reflects the expected market price plus an additional cost representing national security,pollution, and other concerns associated with gasoline consumption.




tial capital costs of preceding models, andengineering-and-design manpower does notbecome a limiting factor.

Table 9-1 shows the technology-by-technologydetails of the OTA scenario for the domesticautomobile fleet. The scenario is similar to themaximum technology scenario discussed in chap-ter 7 in that all technologies associated with thatscenario are justified by the combination of $2.00/gallon gasoline and 10-year payback in theOTA scenario. However, the less severe condi-tions for the rate of technology penetration in theOTA scenario slows down these rates; the level of technology penetration achieved in 2001 by themax technology scenario is not achieved in theOTA scenario until 2005. The slowdown in therate of technology penetration affects six technol-ogies: weight reduction, drag reduction (improve-ment in aerodynamics), intake valve control, five-

speed automatic transmissions, continuouslyvariable transmissions, and four-valve engines.The details of this slowdown are explained in box9-C. The net effect of the slowdown is to reduce

the total percentage benefit (over 1995 fuel econo-my levels) in 2001 by 5.58 percent for domesticmanufacturers. This yields a net fuel economybenefit (over a 1995 baseline assuming 1990 sizeand performance) of 17.09 percent versus 22.67percent for the maximum technology scenario,with a resulting domestic fleet fuel economy of about 34.5 mpg (including a 0.4-mpg test adjust-ment) by 2001. A similar calculation for importsresults in a 37.4-mpg average, with a total fleetfuel economy of 35.5 mpg.

As discussed in box 9-C, all body, engine, andtransmission changes can be completed by 2005within the normal lifecycle limits of these compo-nents. Consequently, by 2005, this scenario willresemble the 2001 maximum technology scenarioexcept that weight and drag reduction can havehigher levels of penetration than in max technolo-gy. Shifting weight reduction from 80 percent

(max technology) to 100 percent (regulation-driven) and drag reduction from 80 percent to 90percent9 yields an additional 1.55-percent fueleconomy benefit. This yields a domestic fuel

Table 9-1 –Potential Domestic Car Fuel Economy in 2001 Under Product Plan and Regulatory

Pressure Scenarios (does not include test adjustments)

Fuel Product Plan Regulatory PressureEconomy

Market Pen. Fuel Market Pen. FuelBenefit 1995-01 Economy 1995-01 Economy

Weight Reduction . . . . . . . . . . . . . . . . . . . . . . 3.3/6.6

Drag Reduction . . . . . . . . . . . . . . . . . . . . . . . 1.15/2.3

Intake Valve Control * . . . . . . . . . . . . . . . . . . . . . . 6.0

Overhead Cam Engines . . . . . . . . . . . . . . . . . . . . 3.0

6-cylinder/4-valve replacing 8-cyl . . . . . . . . . . . . . 8.04-cylinder/4-valve replacing 6-cyl . . . . . . . . . . . . . 8.0

4-cylinder/4-valve replacing 4-cyl . . . . . . . . . . . . . 5.0

Multipoint fuel injection (over TBI) . . . . . . . . . . . . . 3.0

Front-wheel drive . . . . . . . . . . . . . . . . . . . . . . . . . 10.0

5-speed automatic transmission ** . . . . . . . . . . . 2.5Continuously variable transmission q * . . . . . . . . . 3.5

Advanced engine friction reduction . . . . . . . . . . . 2.0

Electric Power Steering . . . . . . . . . . . . . . . . . . . . . 1.0

Tire improvements . . . . . . . . . . . . . . . . . . . . . . . . . 0.5

80804030 4

6

10

40

5

2015

100

5

100

2.64

0.92

2.40

0.90

0.32

0.48

0.50

1.20

0.50

0.500.52

2.00

0.05

60604030

57

28

40

13

2515

100

30

100

3.96

1.382.40

0.90

0.40

0.56

1.40

1.20

1.30

0.630.52

2.00

0.30

Total Fuel Economy Benefit (%) . . . . . . . . . . . . . . 13.03* 17.09’

Unadjusted CAFE (mpg) . . . . . . . . . . . . . . . . . . . 31.65 34.07

NOTE: Product plan scenario starts from a different 1995 base than the regulatory pressure scenario which holds performance and size constant at 1990 levels,

qSynergy of Intake valve control with 5-speed/CVT transmlsslons results In a loss of 2 percent In fuel economyq * Over 4-speed auto transmission with lock-up

SOURCE: Office of Technology Assessment, 1991, based on analysis by Energy& Environmental Analysls, Inc.,

%is is limited because some 1990 cars already have extremely low aerodynamic drag coefficients.




Box 9-C–The OTA Scenario for 2001: Max Technology Without Enforced Early Retirements

OTA’s "regulatory pressure” scenario for 2001 postulates that Congress Wishes to incorporate the “so-cietal costs” of gasoline-costs not included in gasoline prices, including environmental damages and na-tional security costs—into the selection of new fuel economy standards. The scenario values gasoline at

1$2.00/gallon, more than its expected price, and selects technologies that offer 10-year fuel savings at leastas high as the added cost of the technologies. Unlike the “maximum technology” scenario, this scenariorespects the normal lifecycle requirements of automobile components, allowing automakers to recovertheir capital costs according to usual product development and sales schedules.

The design and product development lead time is 4 to 5 years, indicating that products for the 1996model year are now being finalized, while products for 1995 have moved to a stage where tooling orders are

being placed. Mainstream products sold at high volumes (over 150,000 units per year)will have a lifecycle of 7 to 8 years prior to redesign, so the 1996 products could last to 2004.

Products with lower sales volumes (30,000 to 100,000 units per year), including sports and luxury carsor specialized “niche-market” ears, have lifecycles of 10 years. These products include Camaro/Firebird(last redesigned in 1982), the Corvette (1984), and the Cadillac Brougham (1978) for GM; the Mustang,MarkVII, and Continental for Ford; and the Dodge Daytona for Chrysler. These models account for about6 percent of total domestic car sales, and all are well along the product replacement cycle and would notnormally be redesigned again by 2001.

Assuming none of the specialty cars (with 6 percent of sales) will be redesigned by 2001 and all high-volume lines will be redesigned between 1996 and 2004, normal turnover of model lines between 1996 and2001 will be about:

0. 94 x 2001-1996 .

2004-1996 = 0.587

In other words, about 60 percent of all model lines can be redesigned with material substitution anddrag reduction without altering the product lifecycle of designs introduced between 1992 and 1996.

Engine and transmission redesigns must be considered separately from body redesign. Engines andtransmissions typically have lifecycles of 10 years. However, most domestic OHV engines are based on veryold designs which have been improved over the years, and a lifecycle concept cannot be readily applied toestimate the fraction of these engines that will be terminated during any period. Moreover, conversion of OHC engines from two-to four-valve can be accomplished by changing the cylinder head alone. However,a 100-percent conversion to four-valve will require the introduction of smaller engines, to maintain con-stant performance and get maximum fuel economy benefits, but the domestic industry has no track recordof large-scale introduction of several new engines to replace the existing product line (Toyota did introducefour-valve engines into their entire product line from 1987-1990). In the absence of historical benchmarksto guide an estimate, we assume a penetration of 70 percent for four-valve engines without significant dis-

ruption by 2001, based on conversion of current and future OHC two-valve engines.Transmissions have a typical lifecycle of 10 years, and a new generation of electronically controlled four-

speed automatic transmissions are being introduced over the 1989-95 period. Conversion to five-speed au-tomatics or CVT's can occur over the 1999-2005 period without disrupting the lifecycle, suggesting that only30 percent of automatic transmissions [(2001 - 1999)/(2005 - 1999)] can be converted to five-speed automat-ics or CVT's. Since large car transmissions were the first converted to four-speed designs and will be the firstto receive five-speeds, and CVT's can be used on small cars only, we expect five-speed automatics to domi-nate the 30 percent of transmissions to be converted during the 1999-2001 period. CVT penetration by 2001should be only about 5 percent.

l~ls value is no t ~A’s estimate of the true societal cost of gasoline. We have not attempted to estimate such avahIe. Mso, webelieve the such a value would have a large subjective component, so that individual policymakers would select different values even if they had complete knowledge of the physical and societal impacts of gasoline use. The $2.00/gallon figure is simply one value out of awide range of possibilities.

-

continued on nexl page




30X 9-C–The OTA Scenario for 2001: Max Technology Wtihout Enforced Early Retirements-Continued

The 2001 penetration rates (beyond 1995 levels) of key fuel economy technologies will be:

qweight reduction 60 percent• drag reduction 60 percent• intake valve control 40 percentq five-speed automatic 25 percent• CVT 5 percentq four-valve engine 40 percent

It appears that all body, engine, and transmission changes can be completed by 2005 without disruptingthe normal lifecycle of these components. Consequently, by 2005 this scenario should start resembling themaximum technology scenario, because the economic assumptions of the regulatory push scenario wouldhave matched the max technology scenario had lifecycle disruptions been allowed. In 2005, however,weight and drag reduction can reach 100 percent and 90 percent, respectively, versus the limit of 80 percentpenetration of these technologies allowed in the max technology scenario because of insufficient industrydesign and retooling capacity. Further, addition of new technologies is more likely between 2001 and 2005,so that two-stroke engines and possibly other technologies may enter the fleet.

economy increase of 24.22 percent over 1995, or Translating the scenario results into an effec-36.55 mpg (including a 0.4-mpg test adjustment).The corresponding import fleet average would beabout 38.4 mpg, for a 37.1-mpg overall fleet aver-age assuming imports capture about one-third of U.S. sales volume.

The two-stroke engine is one of the most prom-ising technologies for this timeframe, with somecompanies claiming such engines could enter thefleet by the mid-1990s. The primary benefit of thetwo-stroke would be more to allow high efficiencyat relatively low cost than to greatly increase effi-ciency. However, advanced four-stroke engineswith four-valves per cylinder and intake valve

control will be almost as efficient as the two-stroke though at much higher cost. If the two-stroke is successful in demonstrating commercialreliability and satisfactory emissions control, itcould add about another mile per gallon to thefleet average, primarily by its use in small carsthat might not use intake valve control. To make asignificant contribution by 2001, however, this

engine would have to demonstrate its emissionscapability within the next few years. Expecting amajor contribution by 2005 might be more realis-tic.

tive fuel economy target demands considerationof both the structure of fuel economy regulationsand the credits available to the automakers. Theresults represent the fuel economy obtainable bythe fleet if all manufacturers use the full comple-ment of technology derived by the analysis. How-ever, each manufacturer would not attain the fleetfuel economy level specified by the scenario anal-ysis —manufacturers building a range of carssmaller than the fleet average would tend to reacha higher-than-fleet-average fuel economy at thislevel of technology, and manufacturers with larg-er vehicles would attain a less-than-average fuel

economy. Further, to the extent individual man-ufacturers build vehicles with higher or loweracceleration performance than the fleet average,their company fuel economies will tend to belower or higher. Consequently, a standard similarin structure to the current uniform CAFE stand-ard of 27.5 mpg and set at the fleet average mpgwould not be achievable by several major auto-

makers without radical changes in their size andperformance mixes. They would have to sell agreater proportion of small or low-performance-cars than they currently do.


If C i h d t if CAFE lli dit B 9 D b i fl di th



If Congress wished to use a uniform CAFEtarget that would not force widespread violations,it would have to set the target a few mpg below the

scenario results. As an alternative, it could allowcredit trading between companies, so that a com-pany exceeding the standard could sell its accu-mulated credits to another unable to meet thestandard. However, it is not clear that credit trad-ing would be effective with a standard set at thelevel defined by the scenario. This level consider-ably exceeds the level that would be chosen ac-

cording to consumer values alone. In other words,unless credits have a very high monetary value, acompany would likely choose a lower fuel econo-my level by retaining more consumer-desirableattributes (or by avoiding the most expensive fueleconomy technologies, thereby obtaining the op-portunity to sell its vehicles at a significantly low-er price), rather than exceeding the standard and

selling credits. Box 9-D briefly discusses the na-ture of this decision.

If regulations take the form of a size-class orinterior-volume (VAFE) standard, Congressshould be able to use the results directly in defin-ing a target, since both the regulatory structureand the analytical method seek to give each auto-maker an equal technological challenge. In thiscase, a series of size-class standards or a singleVAFE standard that would reach the target fueleconomy can be constructed based on the proj-ected size-class distribution of the fleet.

If regulations take the form of a uniform per-centage increase over a baseline year, as in theBryan proposal, Congress could likely set a stan-dard fairly close to, though somewhat below, thepercentage that would yield the scenario targetand still make the standard achievable by most or

Box 9-D–CAFE Fines and the Availability of Mileage Credits

The fine for failure to comply with Federal fuel economy standards currently is $50 for each mile/gal-lon under the standard multiplied by the number of vehicles in an automaker’s fleet. The proposed SenateEnergy bill raises the fine to $200 for each mile/gallon by the year 1996. Although the Priciple of harmonic.averaging of fuel economy values complicates the arithmetic, the size of the fine means roughly that, if acompany is out of compliance, it should be willing to pay at least $200 per car to add a technology that wouldimprove fuel economy by 1 mpg, assuming the technology does not adversely affect other vehicle attributes.If consumers value fuel economy and will pay more for a more efficient car, or if the technology affectsother important vehicle attributes positively, the company might be willing to pay more than $200 for thetechnology; if the technology adversely affects performance or other vehicle attributes; the company mightpay less.

What does this mean in real terms? A 5-percent fuel economy improvement is a large improvement,given today’s advanced designs. For a 30 mpg car, 5 percent equals 1.5 mpg or $300 in avoided fines at the$200 rate, only $75 at the current rate.

The size of the avoided fine and likely low values for mileage credits (if credit trading is allowed) call

into question the probability that significant credits will be available for trading. A company with the oppor-tunity of accumulating credits also has the opportunity of using the fuel economy potential to instead boostthe performance of its fleet. It is quite possible that the performance increase available by “trading off” 1.5mpg—perhaps 1 or 2 seconds in O-to-60-mph time— might be worth more to the company than $300 in mile-age credits.

To gain another perspective on the decision, it is worth examining the value of fuel economy gains interms of gasoline savings. The example cited above, a potential 1.5-mpg savings from a 30-mpg-base ve-hicle, represents a gasoline savings of about 19 gallons per year based on 12,000 miles of driving. Assuminggasoline prices in the $1.10-$1.50/gallon range, this is a very low savings. It implies that a company could

justifiably add fuel economy technology well past the “consumer cost-effective” point if the potential pay-back from selling credits is $300. Put another way, the payback from selling credits justifies adding technolo-gy that would otherwise (without credits) require a high gasoline price, perhaps $3.00/gallon or more, for acost-effective return.


all companies The gap between an “attainable” one hand if these changes can be accomplished



all companies. The gap between an attainablestandard and the scenario result is caused bydifferences in the level of technology among com-

panies in the baseline year (see box 9-B) andchanges in company size mixes that may haveoccurred in the intervening years. Credit tradingmay reduce this gap and allow a higher standardto be set, assuming marketable credits becomeavailable (box 9-D).

Congress may also wish to account for avail-able CAFE credits in setting new standards. In

particular, manufacturers may produce alterna-tive-fuel vehicles and gain CAFE credits equiva-lent, for flexfuel vehicles, to half the gasoline theo-retically saved if the vehicles are fueled exclusive-ly with the alternative fuel, or to all the gasolinesaved for vehicles dedicated to alternative fuels.The credits for flexfuel vehicles are capped at 1.2mpg for 1995 and 0.9 mpg for 2001, so Congress

could add these values to the scenario results toreach an attainable (adjusted) fuel economy.Congress should note, however, that adding thepotential value of these credits to the estimatedvalue of attainable fuel economy is contrary to theletter and spirit of the legislation establishing thecredits: the legislation demands that the potentialto earn credits no? be used as an excuse to in-crease fuel economy standards. Such use wouldchange the establishment of credits from a re-ward to manufacturers producing altfuel vehiclesto essentially a requirement to produce those ve-hicles, since the standards would not be attain-able without such production.

CONSUMER PREFERENCES

As shown, a significant shift in the new car fleetaway from higher performance and larger ve-hicles and toward high fuel economy could yieldvery large increases in fleet fuel economy evenwithout advances in technology.

Potential for large fuel economy gains throughshifts in basic consumer-oriented attributes of

the fleet poses a dilemma for policymakers. On

one hand, if these changes can be accomplishedby changing consumer preferences, the UnitedStates will achieve significant conservation bene-

fits without likely long-term negative impacts onthe industry-assuming domestic automakersmaintain relative competitiveness.

On the other hand, if Congress tries to accom-plish such changes through regulation, it risksreducing the attractiveness of new cars to con-sumers and possibly slowing vehicle turnover asconsumers keep their old cars longer. Substantial

difference between the fuel economy of new andold cars—1975 cars had fuel economies abouthalf those of new cars—makes fleet turnover apowerful though diminishing force in increasingtotal fleet fuel economy. The danger of a standardhigh enough to require significant changes in con-sumer-oriented vehicle attributes is that it con-ceivably could slow net improvement of total fleet

fuel economy. Further, making vehicles smallerdoes represent a potential safety problem, thoughone that can be mitigated by improvements indesign and safety equipment (see discussion be-low).

Thus, if Congress wishes to set new fuel econo-my standards at levels likely to require largechanges in vehicle performance and size charac-

teristics, it must consider measures that wouldhelp shift consumer preferences toward high fueleconomy. Obvious measures include gasolinetaxes and vehicle purchase incentives (“gas sip-per” rebates, “gas guzzler” taxes). This reportdoes not evaluate the likely effectiveness and costof such measures. However, given the relativelysmall difference between U.S. fleet fuel economy

and those of the various European and Japanesefleets, with their much higher gasoline prices, andthe limited sales success of domestic manufactur-ers in promoting smaller, more fuel-efficientmodels through favorable pricing and rebates, webelieve shifting consumer preferences througheconomic measures will be difficult. The highestpotential for success is likely to be sales shifts to

higher-fuel-economy cars within market classes.


DEALING WITH NEW bility of additions to the list outweighs the



DEALING WITH NEWTECHNOLOGIES

Those analyses projecting fuel economy poten-tial that have played a major role in the ongoingCAFE debate–analyses based either on theEEA model or on industry or industry-sponsoredtechnology estimates—generally deal with rela-tively low-risk technologies that have already be-gun to penetrate the fleet (e.g., four-valve engines,roller cams, aerodynamic improvements, and so

forth). By the year 2001 or 2002 (commonly cho-sen target years for the second stage of new fueleconomy standards), technologies not now in thefleet, and thus not included in analyses now beingused to inform policy choices, may play an impor-tant role in determining fleet fuel economy. Thisbelief is bolstered by a simple examination, inretrospect, of what a list of “available technolo-

gies” (as defined in the EEA analysis) would not have included had it been compiled 10 or 15 yearsago. In particular, the list would not have in-cluded four-valve-per-cylinder engines and elec-tronically controlled transmissions, importantcomponents of fuel economy improvement today.It may not have included multipoint fuel injectioneither, a critical component of improved engines.

An analysis based on existing technologies usedto project fuel economy potential will likely misskey components of the actual fuel economy po-tential of the fleet of 10 to 15 years in the future.Further, since the EEA technology list excludesdiesel technologies, a revival in market fortunesfor this technology also could substantially alterthe fleet’s fuel economy potential.

To be evenhanded, we should note that thetheoretical list could have included at least onetechnology-diesels —that plays almost no role intoday’s new car fleet. Although no technologieson the current list appear likely to be sidetrackedby regulatory changes or performance problems,it is conceivable that some will not play a role,possibly because of style (advanced aerodynam-

ics) or technical complexity (intake valve control).OTA believes the “upside” potential–the proba-

bility of additions to the list–outweighs thedownside, or likelihood that current technologieswill be dropped.

Potential new technology(and the possibility of a diesel revival) implies that estimated fuel econo-my potential for 2001 or beyond, when calculatedusing only available technology, may understatethese values. For example, successful develop-ment of two-stroke engines could lead to theirintroduction into the fleet in the 1996 to 1997timeframe. By 2001, if the first examples per-formed well, two-strokes could be used on severalmodel lines. Developers of two-stroke enginesclaim fuel economy increases over current four-stroke engines as high as 30 percent; l0 this esti-mate appears optimistic. The more appropriatecomparison is with advanced four-stroke engineswith intake valve control that would likely beavailable in the same timeframe; this yields about

a 3- to 4-percent improvement coupled with asubstantial cost reduction. Similarly, drive-by-wire technology (i.e., the mechanical linkage of accelerator pedal and throttle is replaced by anelectronic linkage with computer adjustment of throttle) could become widely available by 2001,especially for larger vehicles, yielding a specula-tive 2-or 3-percent “per vehicle” improvement in

fuel economy. And improved turbo diesel en-gines, though not a new technology, could yieldsubstantial benefits—up to 22 percent “per ve-hicle” —if they gained consumer acceptance nowwidely denied to diesels and could satisfy newemission standards.

What is the likely timing of these new technolo-gies? Estimating the year any particular technol-

ogy will be introduced into the fleet is difficult.Much of the information needed for the estimateis guarded by manufacturers and the decision tointroduce depends on variable factors such as thecompany’s competitive situation around the timeof potential introduction, consumer preferencesat that time, and so forth. However, certain tech-nologies seem advanced enough to begin entering

the market by or before 2001-weight reductionthrough extensive use of aluminum and Fiber-

l~e fuel ~conomy increaw is ~u%d by a combination of improved engine efficiency, reduced engine and associated vehicle weight> and

aerodynamic improvements made possible by the engine’s greatly reduced size.




manufacturing dies and other equipment years in include a large increase in gasoline taxes or tax



manufacturing dies and other equipment years inadvance of the model year, coupled with the sub-stantial risk involved in prematurely moving new

technologies into the fleet, presents Congresswith a significant dilemma in specifying fueleconomy standards for the relatively near future(e.g., 1996-98). If Congress does not specify strin-gent standards for this timeframe, it risks a faitaccompli of noncompliance by manufacturerslater on with little remedy other than massive, and

perhaps politically unacceptable, economic pen-

alties. On the other hand, demanding short-term,fleetwide fuel economy increases may exposesome automakers to large risks associated withmoving new technologies widely into their fleetswithout testing the technologies for a few years inone or two models. A potential solution to thisdilemma is to designate interim milestones forautomakers to demonstrate a few high-fuel-econ-

omy models with requirements for minimum pro-duction runs. In other words, have automakersshow they’re testing new designs and technologiesin a real-world situation, but don’t require themto risk their whole fleet.

ECONOMIC PRESSURE ON THE

INDUSTRY

New fuel economy standards pose both risksand potential economic benefits to automakers.Risks arise from the capital expenditures necessi-tated by the standards, possible negative reactionto vehicles meeting the standards and conse-quently slower purchase rates, and the potential

for vehicle reliability problems and other difficul-ties if the standards force technological change ata rate faster than companies can comfortablyaccommodate.

The risks associated with increased capitalspending and negative consumer reaction appearvirtually inevitable unless one assumes that eitheran oil crisis of some sort will occur or the Federal

Government will take important steps to alignconsumer preferences with the direction thatstringent fuel economy standards will take theindustry. Such a government effort —which could

include a large increase in gasoline taxes, or taxbreaks or rebates for buying vehicles with higherfuel economy–could serve well as market ad-

junct to fuel economy regulation.

Potential benefits to automakers stem from theunstable nature of the world oil market and thedifficulty individual manufacturers have inadapting their vehicles in response. If another oilcrisis were to send gasoline prices skyrocketing orlimit fuel availability, ultra-high-efficiency ve-hicles clearly would become extremely attractive.

Ironically, companies that unilaterally set out toproduce such vehicles might, in the short term,have a difficult time competing with companiesthat focused instead on performance and othervehicle attributes that conflict with high fueleconomy but nevertheless are attractive totoday’s vehicle purchasers. In other words, indi-vidual companies may find preparing themselves

to deal with a possible energy crisis difficult un-less they know other companies were doing thesame. A fuel economy standard that requireseach automaker to take similar steps to improvefuel economy could provide the type of pressurethat would allow this preparation without thecompetitive risk such preparation would other-wise cost.

The risks of reliability and other problems as-sociated with technology introduction can be re-duced or eliminated by sufficient lead times forthe standards, allowing companies to pacethrough the steps necessary to minimize prob-lems with new technologies and designs. Leadtimes are also critical to allow industry to recoverinvestment on existing models. The costs and

risks of any policy that forces the auto industrytoward very rapid redesign of all existing mod-els—a so-called “maximum technology” stan-dard—can be understood in the context of indus-try cost structure, product lifecycles, and productlead-time requirements.

The auto industry has large fixed costs that itincurs in developing and tooling up for a new

model. Currently, many high-sales-volume mod-els require spending $1 billion prior to the firstcar being rolled out of production. The automak-er hopes to pay off this investment over the life of


the model, which typically has averaged about 8years (longer for light trucks) Thus a large part

life, return on investment to the maker will besignificantly reduced



years (longer for light trucks). Thus, a large partof the “cost” of a new car is amortization of theinitial investment. The automaker must guess thesales volume over the 8-year model life to calcu-late the required per-car payback of this invest-ment. If the car is more successful than the auto-maker hoped for, the model line will be veryprofitable, but if it is less successful, the line willlose money. An automaker with several modelswill usually have winners and losers; on average,he hopes to realize an adequate return on total

investment.

The $1 billion initial cost for a new model isspent over the 5-year period when the model isconceived, developed into a prototype, tested,and certified to all applicable safety and emis-sions standards, and while the manufacturingplant is retooled to build the new model. The5-year lead time means that new models for 1996are now in the detailed planning stage. The 1996models need to remain in production until about2004 if the automaker is to obtain the expectedreturn on investment. For engines and transmis-sions, the lifecycle may be longer—some currentengines date back to the early 1970s, althoughthey have received evolutionary updates.

A maximum technology scenario requires thatautomakers redesign all of their products apply-ing all available technologies on or before thetarget year. It is obvious that such a requirementwill be meaningless for 1996, because lead time isinsufficient to redesign all products much lessproduce them.

If the target year is 2001 or 2002, it is possible in

principle to redesign all products to include maxi-mum technology. However, this will lead to twosignificant burdens on automakers. First, modelsthat will be introduced in 1994/1995 and cannotbe withdrawn at this late stage will have to bephased out a few years before the end of theirnormal lifecycle. If a model loses 2 or 3 years of

significantly reduced.

Second, instead of the U.S. industry experience

of 13 years, automakers would have only 9 or 10years to redesign all of their products, includingmodels that have just been redesigned. This canbe done if automakers accelerate the process byhiring more engineers (though there is a limitedpool of experienced engineers), increase over-time, or make the design process more efficient.However, shortened lead times could result indesigns that are not fully tested and would beatincreased risk of market failure. The risk is lessfor Japanese automakers, some of whom havereduced lead time to 4 years

12

and reduced initialcosts to the point that their product lifecycle canbe 4 years. U.S. automakers have not been able toduplicate this.

The burden associated with an early target yearfor a standard based on maximum technologyrequirements may be aggravated by recent CleanAir Act revisions and new safety requirements,which have imposed additional design burdenson all automakers.

Selection of an appropriate target date for amaximum technology scenario involves a tradeoff of the risks and costs associated with accelerateddesign schedules and shorter product lifetimesand the benefits of moving the fleet more rapidlytoward higher fuel economy. Given the U.S. cycleof 8-year model life and 5-year lead time, and theproximity of the 1992 model year, the 2005 modelyear might seem a good target date for policy-makers who are somewhat risk-averse.

13

A modelyear 2005 target would reduce risks to U.S. auto-makers and avoid the costs of prematurely intro-

ducing technology across all models on an accel-erated schedule. On the other hand, U.S.automakers have successfully accelerated prod-uct schedules in the past, for example during themiddle 1970s and early 1980s, and could do soagain, though at high costs (and perhaps at higherrisk than previously, because those accelerations

lz~obably longer for light trucks.IJIn other words, automake~ have already begun design process for 1996 or 1997 models, and these models ill not undergo amaJor change-

over until 2004 or 2005.

297-903 0 - 91 - 4 QL:3

90. 1mproving Automobile Fuel Economy: New Standards, New Approaches

were due primarily to market pressures). Also,some potential exists that U S automakers can

the relationship between fuel economy and safetyhas at times become overheated ls and assertions



some potential exists that U.S. automakers canachieve the shorter turnaround schedules of someJapanese makers. Depending on the value theyplace on the benefits of accelerating fuel economyimprovements, some policymakers might preferan earlier target date for a maximum technologyscenario.

POTENTIAL EFFECT OF

HIGHER FUEL ECONOMY

STANDARDS ONVEHICLE SAFETY

Industry and Administration opposition tonew fuel economy standards has included argu-ments that higher standards, such as proposed byS.279, would force consumers into a new fleet of smaller cars significantly less safe than anew fleet

with an unchanged size mix-and perhaps evenless safe than the current fleet. 14 In OTA’s view,unless sharp fuel economy improvements are de-manded over a period too short to allow vehicleredesign, or the fuel economy requirements are sostringent they can be met only with drastic down-sizing, it is unlikely that absolute levels of safetywould decrease. Continued introduction of safety

improvements and wider use of already-intro-duced improvements should compensate for ad-verse effects of moderate downsizing. Further, if given enough time, automakers can significantlyimprove fleet fuel economy without downsizing(though with some weight reduction), and withoutany likely safety impact. Nonetheless, there iscause for concern about the relationship between

fuel economy and safety, and there is a reason-able probability that further downsizing-espe-cially a reduction in exterior dimensions—wouldcause the fleet to be less safe than it would other-wise be. However, we also find the debate about

has at times become overheated, and assertionson both sides of the debate seeking to demon-strate the magnitude of risk are frequently flawed

or misleading.

Much concern about safety and vehicle sizestems from the physics of car crashes and anexamination of traffic safety records over the pastfew decades. Although there are very safe smallcars and relatively unsafe large ones, in compar-ing two similar-design cars of different size, thesmaller, lighter car will be inherently less safe,especially in vehicle-to-vehicle collisions. Givensimilar materials and design, a passenger in thesmaller, lighter car will experience greater decel-eration forces in such a collision than a passengerin the larger, heavier car. Further, the manage-ment of deceleration forces is inherently easier ina large car as there is likely to be greater “crushspace” —the volume of deformable structure

available to absorb the forces generated by anaccident. Also, cars made narrower and shorterwithout compensating for changes in center of gravity and suspension design–the center of gravity is not easy to change for sedans wherepassengers sit upright and adequate headroommust be maintained—are more prone to rollover,an accident type that exposes vehicle occupants

to a high risk of serious injury and death, particu-larly if seat belts are not used.

Actual safety records generally bear out thisanalysis. For example, the Insurance Institute forHighway Safety reports death rates associatedwith several GM cars that have been downsizedsince 1977 rose an average of 23 percent. Somesafety analysts have questioned the validity of the

comparison between old and new versions of thesame models, particularly because the Institutedid not correct for differences in miles driven. l6

However, the Institute has shown that there havebeen little or no differences in death rates be-

MFor enmp]e, see J*R. Cuv, Administrator, National Highway llaffic Safety Administration, statement before the Subcommittee onEnergy and Power, House Committee on Energy and Commerce, Oct. 1, 1990.l~e rheto~c has ranged from a=rting that ~fe~ and vehicle size are essentially unrelated to suggesting that S.279 be referred to as “me

Highway Fatality Act.”lb~lde from d r i ~ n g mor e , ~ c u p a n t s o f n ew ca r s a re more likely to use seat belts than are occupants of older cars. Th e two factors work in

opposing directions in affecting fatality rates.


tween old and new versions of the same model more likely due to size rather than weight differ-



tween old and new versions of the same modelthat had not undergone downsizing-implyingthat downsizing did have a negative impact onoccupants of the affected cars. Of course, it maybe possible that accompanying weight reductionsmade the downsized models less dangerous toother cars on the road, but this type of effectcould not be accounted for in the data.

Also, according to the National Highway Traf-fic Safety Administration (NHTSA), accident

statistics show that smaller cars are more proneto rollover17 and experience far more rolloverfatalities than large cars. NHTSA’S recent studyof car size and its relationship to fatality andinjury risk in single-vehicle crashes found a sig-nificant increase in occupant fatalities and mod-erate-to-serious injuries caused by the generalsize reduction of the fleet, with up to a 50-percentincrease in rollover propensity accounting for the

increased fatalities.18 The data presented in thisstudy appear to pin more blame for the increasein rollovers on the shift from full-size cars tocompacts and subcompacts, and to imports, thanto downsizing within vehicle classes,

19though the

data do show some of the downsizing effects ob-served by the Insurance Institute.

NHTSA’S analyses indicate that small cars areless safe in situations other than rollover. Theyhave calculated that the fleet size reduction isassociated with about a 10-percent increase infatalities and a 15-percent increase in seriousinjuries in single-vehicle nonrollover crashes, andthat a collision between two small cars has abouta 10-percent greater likelihood of resulting in se-

rious injuries than a similar collision between twocars that are 1,000 pounds heavier

20(as discussed

later, we believe the differential safety risk is

y gences between the two sets of vehicles). Also,NHTSA concludes that its crash-test data from

the New Car Assessment Program indicate thatin crashes into a barrier, “small, light vehiclesexpose the occupants to more danger than large,heavy cars... because crash forces are imposed onthe small car occupants quickly and in a concen-trated manner, while occupants of large cars ex-perience a more gradual deceleration.”

21(Again,

we believe the difference to be due primarily to

size.)NHTSA concluded that the changes in the size

composition of the new car fleet between modelyears 1970 and 1982, which resulted in a shrink-age in median curb weight of new cars involved infatal collisions by about 1,000 pounds, a wheel-base reduction of about 10 inches, and a trackwidth reduction of 2 to 3 inches, “resulted in

increases of nearly 2,000 fatalities and 20,000serious injuries per year”22 over the number thatwould have occurred had no downsizingoccurred.

To date, the above evidence may have played aless prominent role in communicating the per-ceived dangers of vehicle downsizing to Con-gress—and certainly has played a less prominent

role in communicating these perceived dangers tothe public—than other, less relevant evidenceabout crash test results between larger and small-er cars and overall fatality rates of cars of greatlydiffering size and weight. In reality, the compara-tively greater safety of a larger, heavier car dem-onstrated by this evidence is a two-edged sword,since the higher weight of that car also represents

more of a danger to other cars. Conversely, whilesmaller, lighter cars may offer less protection totheir occupants, their lower weight reduces risks

17C.J. ~hane, “Effect of Ca r Stie on the Frequency and Severity of Rollover Crashes,” National Highway llaffic Safety Administration, May1990.

18u.s0 De p a r tm e n t of ~answ~ation, National Highway Tkaffic Safety Administration, Effect of Car Size on Fatali& andInjUuRfik ~ S~gfe-

tihicle Crashes, August 1990.191bid., P. 33, fi@reS 1 and 2

“

20u.s. De p a r tm e n t of ~ansP~ation, National Highway ~affic and Safety Administration, “Effect of Car Size on Fatality and Injuxy Risk,”1991, unpublished paper widely distributed to Congressional Committees, hereafter referred to as NHTSA Car Size Summary.

211bid.

221bid.


to other cars. In particular, weight per se may notdd h ll f f h fl b h

tial injury and fatality rates between crashes of t ll h f t l (



add to the overall safety of the fleet, because theadvantage of greater weight to a heavy vehicle,

that it reduces relative crash forces, is counter-balanced by the greater crash forces it transmitsto any car it collides with.23 To state it anotherway, although an individual might wish to choosea heavy car to enhance his or her personal safety,society does not necessarily gain from this choicebecause the heavier car represents an addedthreat to other cars on the road.

The broadening of the debate to focus on socie-tal risk—the question of whether or not society asa whole benefits or loses from a shift to smaller,lighter cars —is the needed focus for policymak-ers trying to decide whether to set new fuel econo-my standards at levels that might require such ashift. From this focus, evidence about factorssuch as increased rollover danger, single vehicle

collision results, and the like are of dominantimportance. Data concerning collisions betweencars of greatly different size and weight are im-portant to individual consumer decisions and,hence, are relevant and often stressed in policyarguments, 24 but are of lesser or even little impor-

-

tance to the broader issues of societal risk of fleetdownsizing. In a fleetwide downsizing, large carswould get smaller and lighter also, and would be

less dangerous to small cars; the weight differ-ences among cars would not necessarily becomegreater.

Nevertheless, available data and analysis onsingle-vehicle crashes, on “before and after”fatality rates for downsized cars, and on differen-

two small cars versus crashes of two large ones (asnoted, occupants in the crash of two large cars

generally fare better than those in two smallcars25

) strongly imply that, to the extent that anyCAFE legislation leads to significant downsizingof the fleet (a shift to smaller size classes or de-signs that maintain interior volume but reduceexterior dimensions), safety will be reduced, allother things remaining equal.

This last statement is worded very carefully,

with good reason. First of all, policymakersweighing new fuel economy legislation shouldrecognize that improved fuel economy and down-sizing are not synonymous, and the extent of anyfuel economy/safety tradeoff depends on howmuch downsizing would be required. Accordingto OTA’s analysis, even a year-200l standard of 40mpg, as proposed by S.279, could be met withoutsignificantly reducing average vehicle dimensions

(both interior volume and exterior size) –thoughnot without cost.26 Although average vehicleweight would be reduced, it is not clear at all thiswill reduce overall fleet safety. By 2001, the newcar fleet could achieve about 38 mpg using exist-ing technology coupled with a reduction in per-formance and size to 1987 levels (the size reduc-tion is small), and probably gain sufficient credits

for the remaining 2 mpg by selling large numbersof flexfuel and dedicated alternative-fuel vehicles.On the other hand, S.279’s 34 mpg/1996 standardprobably is unattainable without a significantshift in sales to smaller vehicles.

Second, even if new cars are forced to be small-er than today’s, the condition of “all other things

ZSAS di~u~d el~where, some studies do tie vehicle weight to overall fleet safety, but most of these studies use weight as a general measure of size, and don’t try to separate out the effects of weight and other size measurements. We believe that variables such as wheelbase and track width,which are strongly “colinear” with weight (i.e., they are closely related to weight, getting larger or smaller as weight gets larger or smaller, so it ishard to separate out their effects from the effects of weight), are more important to overall fleet safety.

24For enmPle, N~A has fidely distributed a videota~ of two crash tests between cars of dissimilar siZe that show the small can beingdevastated by the crashes. The videotape states that the crash results demonstrate the danger inherent in new fuel economy standards and vehicledownsizing. However, the videotape shows only that cars are at a serious disadvantage if struck by another vehicle of much larger weight. Unlessfleetwide downsizing induced by new fuel economy standards were to lead to a large increase in collisions between vehicles of greatly dissimilarweight, the dramatic crash damage shown in the videotape has little relevance to the societal danger—measured in injuries and fatalities peryear– posed by the new standards. It is not at all clear that downsizing would have this effect, except possibly during a transition period. In fact,NHTSA has identified other types of crashes–particularly single-vehicle rollovercrashes– as the most likely source of increased fatalities fromfurther downsizing.

25NHTI-SA Car Size Summary.

26Achiev ing s u c h a h i g h fuel economy target in this timeframe would require a rollback in vehicle performance to 1987 levels, early retirementof several model lines, and the use of some technologies that could not recoup their costs through fuel savings unless gasoline were $2.00/gallon.


remaining equal” is not likely to apply. A long Figure 9-3–Relationship Between Deaths PerC



g q y pp y ghistory of analysis of accident statistics, crashtesting, and research into safety systems and pro-

totype safety vehicles demonstrates that vehicledesign is extremely important in vehicle crash-worthiness and crash avoidance. A great deal of safety equipment has already been added totoday’s vehicles, and their basic structural de-signs reflect considerable experience with crashanalysis. Considerable “headroom” for furthersafety improvements still exists, however. In fact,

data demonstrate that redesign efforts aimedsimply at improving the least safe cars in thecurrent fleet to the level of the most safe couldhave substantial positive impact on overall fleetsafety.

An examination of different models of thesame size or fuel economy shows large differencesin death rates. As shown by the plot in figure 9-3,which is used by the IIHS to illustrate that betterfuel economy can be detrimental to safety, a con-sumer can pick many cars in the 25- to 26-mpgrange that are safer than many in the 20- to21-mpg range. In fact, although the trend line infigure 9-3, as drawn, implies a direct correspon-dence between vehicle fuel economy (and size)and safety, the data are so scattered that a sub-stantially different line could be drawn by drop-ping a few outlying points. The data more clearlyillustrate the importance of factors other than fuel

economy and size in determining vehicle safety.27

It seems clear that, were significant downsizing

of the fleet to occur, a good portion, and perhapsall, of any resulting loss in safety could be bal-

anced by improvements in safety design. Howev-er, to the extent the improved designs would work equally well with larger vehicles and provide stillgreater safety to them, there will have been somesafety opportunity forgone—i.e., if the improve-ments were made without downsizing, the safetyof the fleet would be better still.

10,000 Registered Cars and Fuel Economy,1985-87 Four-Door Models

3.5 –

3.0

q q

2.5q Trend line drawn by IIHS

a)

q 0 0

~

~ 2.05

q

E q

q 01.5 ~

q 0 q 0q

qm

q

1.0

I I I I I I I I J 18 20 22 24 26 28 30 32 34

EPA fuel rating (mpg)

SOURCE: Insurance Institute for Highway Safety, 1990

Even when safety improvements work equally

well on small and large cars, improving the rela-tive safety of all cars will shrink the absolute safetygap between large and small cars (measured indeaths per 100 million miles traveled or per mil-lion vehicles). But not all safety improvementswork equally well on all car sizes. Safety improve-ments that focus particularly on problems thatafflict small cars more—e.g., rollover—would

tend to shrink the absolute and relative safetygaps between large and small cars. As an exam-ple: wider use of anti-lock brakes will providegreater directional stability in emergency brak-ing. Since loss of directional control is often aprecursor to rollover, wider use may also providea greater absolute benefit to lighter cars. Further,

27A statistical ana~is of the IIHS m~el demonstrates that the significance of the fuel economykafety relationship dewribed in the model is

low; that the shape of the cume is dominated by a few outlying dat~ points– inexcusable in an a~alysis ~hat attempis to distinguish immutabletruths in a field where simple design flaws ean cause high death and injury rates well out of proportion to what otherwise could be expected fromvehicle size characteristics; and that the model ignores variables clearly shown to play a major role in traffic fatality rates. J.D. Khazzoom, supple-mental material to testimony before the Consumer Subcommittee, U.S. Senate Committee on Commerce, Science,nd’llansportation, Apr. 10,1991.




mensions shrank as well, and when the supposedadverse safety impacts were felt the safety record

pears to be wide differences in weight amongvehicles on the road, with collisions between ve-



adverse safety impacts were felt, the safety recordof the U.S. fleet improved substantially—be-tween 1975 and 1989, death rates for passengercars declined from 2.43 per 1O,000 registered cars(2.5 per 100 million miles)to 1.75 per 10,000 regis-tered cars (1.7 per 100 million miles). 34 In otherwords, at worst the fleet changes somewhat re-duced the fleet’s overall improvement in safetyduring this period. Not surprisingly, this outcomeis interpreted in radically different ways: by pro-ponents of more stringent standards, as indicat-ing that better fuel economy was achieved with-out compromising safety, in fact with sub-stantially improved safety; by opponents, as indi-cating that nearly 2,000 lives per year that could

have been saved were not, because of forceddownsizing of the fleet.

35

Similarly, this past record is being used to pre-dict and interpret, from different viewpoints, the

likely outcome of future standards: in support (of new fuel economy standards), that increases toCAFE standards, even if accompanied by signifi-cant downsizing, would not necessarily be accom-panied by a net reduction in vehicle safety andthus do not represent a compromise of safety; andin opposition, that some portion of expected im-provements in safety will be nullified (and possi-

bly, that overall safety will actually decline,though we consider this doubtful except in ex-treme circumstances) by further downsizing if new standards are legislated. Both viewpointsare, at least in part, correct. The first focuses onmultiple goals (better fuel economy and im-proved safety) and implicitly accepts the possibil-ity of balancing one against the other; the other

focuses on safety as the primary goal, not to betraded off against fuel economy.

Third, to our knowledge, no statistical analysishas examined the effect of overall weight and size

distribution on safety. Yet in multiple car acci-dents, a major factor in overall fleet safety ap-

vehicles on the road, with collisions between vehicles of grossly unequal weight resulting in ex-treme danger to the occupants of the lighter (andgenerally smaller) vehicle. If the entire fleet wereto be reduced in weight, the weight distribution of the fleet need not become wider, and it mightbecome narrower–except, perhaps, during atransition phase when old (heavy, large) cars andnew (light, small) cars share the road. In fact,general weight reduction of the fleet over the pastdecade and a half has been characterized by atendency for the fleet to become more uniform inweight, with fewer vehicles at the extremes-dur-ing 1978 to 1987, for example, cars in the 2,500 to3,000-pound weight category, in the middle of themarket, soared in market share from 19.6 percentto 58.7 percent.36 We note, however, that the con-tinued presence of trucks sharing the roadwaywith autos, and the greater popularity of light

trucks, will act against this effect.

Fourth, the magnitude of the effect on injuriesand fatalities estimated by NHTSA for 1970 to1982 cars may be a poor predictor of—and, webelieve, would likely overstate—the potential ef-fect of future downsizing of similar magnitude,even if contrary to our expectations, the extended use of airbags and other safety technologies fails to narrow the safety gap between large and small vehicles. This is because, except for rollover acci-dents, the NHTSA analysis lumps together datafrom the earliest years of downsizing and shifts insize mix-when safety implications of downsizingmay not have been fully understood by vehicledesigners and when designs of some small importcars had not yet incorporated modern concepts

of crash protection —with data from later yearswhen vehicle designs began to incorporate im-proved understanding of crash protection(gained in large part through NHTSA testing).We are not aware of NHTSA analyses examining

trends in the effect of downsizing on fatality and

3QNationa] Highway ~affic Safew Administration, Fatal Accident Repom”ng System 1989, draft, table 1-2B. For all motor vehicles, death ratesdeclined from 3.23 per 10,000 vehicles (3.4 per 100 million miles) to 2.38 per 10,000 vehicles (2.2 per 100 million vehicles), table 1-1.35N~A Ca r Size Summa~.

sbFrom data in R.M. Heavenrich, et al., “Light Duty Automotive Fuel Economy and Ikchnology ‘Rends Through 1987,” U.S. EnvironmentalProtection Agency, 1987, compiled and analyzed by J.D. Khazzoom.


injury rates (again, except for rollover accidents),but we hypothesize that the magnitude of the

size mix and retain all the safety benefits thatwould have accrued with downsizing. This ig-



but we hypothesize that the magnitude of theeffect likely became smaller over the 1970-82 peri-od. In other words, we expect redesign and down-sizing of an older model or a shift downwardacross size classes during the end of the timeperiod would have had substantially less impacton fatality and accident rates than a similar shiftat the beginning.

As an interest ing footnote to this point,NHTSA has examined changes over time and

across weight classes of its crash-test results,37

but has not evaluated how differences amongweight classes have changed with time. This typeof analysis would be necessary to detect unequalimprovement of crash safety across weightclasses, the effect we suspect should have hap-pened during the 1970 to 1982 model years, andperhaps later as well . However, the paper

describing the NHTSA analysis does commentthat, “from closer examination of the individuald a t a . . . many of the poorer performing small carswere tested in the early years of the NCAP (Fed-eral crash testing program) and . . . attrition isgradually eliminating these vehicles.” 38 In otherwords, for the smaller cars, the combined data forall years during which downsizing occurred doesnot reflect rapid learning and vehicle improve-ment during the overall time period.

Fifth, the point of view that focuses on safetyforgone implicitly assumes future safety measureswill be taken essentially independent of circum-stance—i.e., whether or not further downsizingwere to occur. Thus, if the fleet downsizes, it losessafety from the downsizing but gains from other

measures ranging from the implementation of side-impact standards to increased sales of anti-lock brakes. If the fleet does not downsize, it willgain the safety benefits of maintaining its current

would have accrued with downsizing. This ignores the reality that consumers respond to theirperceptions of highway safety and adjust buyinghabits accordingly, automakers similarly adjustdesigns to consumer demands, and governmentsadjust regulatory behavior to perceived publicdangers as well as voter concerns. In other words,if new fuel economy standards lead to downsizingand the potential for a reduction in safety, futureconsumer, government, and automaker behaviorwill likely act to compensate.

We note that NHTSA’S rating of rollover astheir primary focus of regulatory attention is anexcellent example of a response to the effects of ashifting market, in this case, increasing sales of light trucks and small cars. If this focus leads torulemaking that improves auto safety, it will bedisingenuous to claim that the fleet could have

been safer had the market never shifted in a way

that led to the rulemaking in the first place.Another example of this process is occurring

today, this time based on public reaction. Al-though in the recent past many Americans didnot rate safety very high as an attribute they de-manded in a new car, this attitude clearly hasbegun to change. Consumer surveys report newinterest in safety 39 and automakers have re-

sponded with increased advertising emphasis onsafety features and plans to add more. Automak-ers clearly are adjusting their plans to move air-bags and anti-lock braking systems into lower-price models as inclusion of these systemsprovides a major marketing advantage. It seemsreasonable to project that any new safety con-cerns associated with new fuel economy stand-

ards will accentuate this process.We have a number of additional comments

about the safety/size issue. First, although weightmay be a factor in determining relative decelera-

3TJ R Hackney, W.T. Hol]owe]], and D.S. Cohen, “Analysis of Frontal Crash Safety Performance of Passenger Cars, Light mcksand Vansand. .an Outline of Future Research Requirements,”National Highway Tkaffic Safety Administration, International lkchnical Conference on Exper-imental Safety Vehicles, 1989.

381 bid., p. 6.

3gFor enmple, an Insurance Institute forHighway Safety survey of new cardealers in the Washington,

DCarea found that dealers

‘epOti

quality and safety as the top considerations of their customem, and a national survey conducted by the Roper Organization in June 1990 for theInsurance Research Council found that occupant protection has emerged as a leading factor in deciding which car to buy. B. O’Neill, President,IIHS, personal communication, June 10, 1991.


tion forces on passengers in vehicle-to-vehicle reduce the potential for efficiency improvements.H f th i di t ti i



crashes, weight reduction by substituting lighter-weight but equally strong materials need not af-

fect safety in other crashes (single-vehicle colli-sions), and may conceivably yield a net safety gainif substitute materials have strength and flexibil-ity characteristics superior to original materi-a l s .40 In other words, it may not be correct toassume that weight reduction per se will compro-mise safety. In fact, in its testimony to Congress,IIHS has carefully refrained from identifying

weight as the vehicle characteristic of primarysignificance to safety, instead focusing on exteriordimensions—length and width. Given the impor-tance of adequate crush space and the role of vehicle track width in rollover propensity, thismakes sense.

A number of studies have tied average vehicleweight to overall fleet safety. However, vehicle

weight is closely correlated with vehicle size vari-ables such as wheelbase and track width, so it isdifficult to separate out individual effects of sizeand weight on fleet safety. Unfortunately, many of the statistical studies identifying weight as a criti-cal fleet safety factor do not consider size vari-ables,41 and thus cannot conclude that weight isthe key factor in the fleet safety equation.

Second, although we are basically optimisticthat changes in design can compensate for con-siderable downsizing, we must also note thatsome safety equipment adds weight to vehicles ortakes up interior space; and those setting CAFEstandards must recognize that future governmentrequirements for equipment such as anti-lockbrakes, side-impact protection, padding to re-

duce head injuries, and air-bags will somewhat

However, some of the immediate negative im-pacts of new standards, such as increased weight,

may be reduced or eliminated over time as man-ufacturers innovate or adopt superior designs of competitors. An interesting case-in-point: man-ufacturers fought bumper standards designed toguard against property damage in low-speed col-lisions, primarily on the grounds of added weightand expense, and eventually managed to get stan-dards rolled back. Recent tests of numerous ve-

hicles in low-speed collisions show that the ve-hicle offering the best protection, the HondaAccord, also has one of the lightest bump-ers 42—the Accord’s bumper design a c h ie v e s

maximum protection with minimum weight gain.If Honda’s competitors adopted its bumper de-sign, the fleet could achieve significantly moredamageability protection at minimal weight in-

crease, and in some cases, at a weight reduction.

Third, although traffic accidents kill about45,000 Americans, injure an additional 4 million,and cost society about $70 billion (in 1986 dollars)each year, research to improve automobile safetyis funded at a low level in comparison to otherlife-threatening problems. As discussed in a re-cent Transportation Research Board report,43

Federal funding for safety research has been cutby 40 percent since 1981 despite growing prob-lems of an older driving population, use of largertrucks, and an increasingly inadequate highwaysystem. Currently, annual Federal funding is onlyabout $35 million. Given the recent history of theFederal safety research effort and reports thatsignificant opportunities still exist for improving

vehicle safety,” any arguments that more strin-

4CI~W ~ noted, weight’sprotecfivene~~ for Pa=ngem of the heavier vehicle in a crash translates into added danger to Passengers of the other

vehicle.he net effect of weight on overall safety may be neutral.

41A key ana~is by Crandal] and Graham (R.W. Cranda]l, and J.D. Graham, “The Effectof Fuel ~onomy Standards on Automobile Safet’Y!”

JoumalofLawandEconom”cs, April 1989), does not examine the size variables. Also, according to an analysis of the Crandall-Graham models byJ.D. Khazzoom (who is currently expanding this work under contract to the Congressional Research Service), the models use average weight onlyand take no account of the distribution of weight changes in the fleet. In fact, most analysts believe that narrowing the weight distribution of thefleet (i.e., reducing weight differences among the various models) will improve fleet safety, and previous changes in average weight were accom-

panied by large changes in weight distribution.d21nsurance Institute for Highway Safev, Statis Report; Special Issue: Annual Low-Speed Cr~h Tests, vol. 26 No. 2, Feb. 16, 1991.

d~ansP~ation Research ward, Safev Research for a Changing Highway Environment, Special Report 229, Washington, DC.

‘Ibid.


gent fuel economy standards will lead to vehicled i i d h l t d d th d

classes.46

This effect occurs both because poorer-performing vehicles have lower sales volumes and



downsizing and more crash-related deaths andinjuries should be reexamined in the light of the

existing potential to counteract some of this nega-tive impact with continued improvements, facili-tated with added research funding, in vehiclecrash avoidance capabilities, occupant protec-tion, highway safety design and operation, andother safety factors.

Fourth, some of the oft-used arguments aboutthe relationship of CAFE, fuel economy, and ve-

hicle safety are internally inconsistent. Many or-ganizations and individuals claiming that CAFEstandards have been ineffective in gaining largefuel economy benefits (i.e., most increases in fueleconomy, thus, most physical changes in the fleet,are said to have been associated with rising oilprices not regulations) also have been claimingthat CAFE standards have adverse safety im-

pacts because they have forced downsizing.These claims clearly are contradictory, sinceCAFE standards causing little fuel economybenefit would have caused little downsizing. In-deed, most downsizing over the past decade and ahalf occurred in the first half of the period, whenoil prices were both rising and uncertain andCAFE standards arguably may not have been theprimary cause of fuel economy improvements.During the latter half of the period (1980-88),when oil prices were falling and the only clearmotivator for increased fuel economy was thestandards, little downsizing occurred-new carfleet fuel economy improved 20 percent whilefleet average vehicle weight remained essentiallyconstant.

Fifth, although NHTSA has claimed in testi-mony to Congress45 that their NCAP crash testsshow that smaller cars fare less well than largercars in barrier collisions, NHTSA’S own examina-tion of the crash-test data, weighted to account for

difference in vehicle sales, shows virtually no dif-ferences in occupant danger across weight

performing vehicles have lower sales volumes andbecause many of the poorer-performing small

cars are earlier models gradually being elimi-nated from the fleet.47

In OTA’s view, one credibleinterpretation of this effect is that small cars areless forgiving of poor design, but there is littledifference in barrier-crash protection amongwell-designed small and large cars.

We conclude that potential safety effects of fueleconomy regulation will most likely be a concernif sharp increases in CAFE are required over aperiod too short to allow substantial vehicle rede-sign–forcing manufacturers to try to sell a higherpercentage of small cars of current design. In ourview, significant improvements in CAFE shouldbe possible over the longer term—by 2001, forexample—without compromising safety. Overthis time period, there are opportunities to im-prove CAFE without downsizing, and there alsoare opportunities to redesign smaller cars toavoid some safety problems currently associatedwith them. However, the potential for safety prob-lems will still exist if automakers emphasizedownsizing over technological options for achiev-ing higher fuel economy and if they do not focuson solving problems such as the apparent in-

creased rollover propensity of small cars of cur-rent design.

As a final point, we note that any safety con-cerns associated with new CAFE regulations willbe relevant to any incentives to improve fuel econ-omy, including gasoline taxes, gas guzzler or sip-per taxes and rebates, and even simply higher oil

prices, though compared to regulations, econom-ic incentives allow automakers more latitude tomake clearer tradeoffs based on consumer con-cerns. Consequently, if the United States desiresto save gasoline through improved fuel efficiency,it needs to face the safety issue regardless of theenergy conservation policy chosen.

J$5N~A Car Size Summary.

~Hackney et al., 1989, Op. cit., P. 5.

471bid.


FUEL SAVINGS OF S. 279 the vehicle production, then the standardsshould be given credit for any fuel savings



The magnitude of fuel savings likely from a new

fuel economy standard is both a critical compo-nent of the decision calculus for the policy debate

about standards and a source of great controver-sy because of large differences in estimates pre-pared by opposing interests. The source of thesedifferences is the set of assumptions associatedwith each estimate. Critical assumptions affect-ing the magnitude of estimated savings include:

1.

2.

Fuel economy values without new standards.Alternative assumptions about the fueleconomy of the new car fleet in the absence

of new standards will play a critical role inestimating fuel savings associated with newstandards. Factors affecting future fleet fueleconomy include future oil prices and priceexpectations, fuel availability, consumer

preferences for vehicle size and power, newsafety and emissions standards, and prog-ress in technology development. The span of credible assumptions about future fueleconomy is likely to be quite wide, especiallyfor the late 1990s and beyond.

Use of alternative fuel credits. Manufacturerscan claim up to 1.2 mpg in CAFE credits by

producing vehicles capable of using alterna-tive fuels. In other words, using such credits,automakers can satisfy fuel economy stand-ards while attaining about 1 mpg less in

actual fuel economy. Assuming that auto-makers would make full use of credits if stringent new standards were passed—highly likely, in OTA’s view-the validity of

reducing the estimated fuel savings by thefuel “lost” because of the lower actual fleetfuel economy hinges on the likelihood of thecredits being captured in the absence of thenew standards. If alternative fueled vehicleswould have been produced by the automak-ers solely because of the Clean Air Act re-quirements, with or without new fuel econo-my standards, then it is correct to subtractthe “lost” fuel. If, on the other hand, it is thenew fuel economy standards themselvesthat would provide the primary incentive for

3.

4.

g y gassociated with the alternative fuel use. It is

worth noting that a high baseline value forfleet fuel economy implies that the creditswill be worthless to the automakers, sincethey should all be well above the existing27.5 mpg standard.

Magnitude of a “rebound” in driving. Be-cause the magnitude of driving is at leastpartly a function of driving costs, an in-

crease in fuel economy, by reducing “permile” costs, may stimulate more driving andthus reduce the savings associated with theincreased fuel economy. The magnitude of a“rebound” effect is controversial because itis estimated using historical driving trendsthat were influenced by a variety of factorsaside from fuel costs, and many of these

factors have changed over time. We wouldguess that a reasonable estimate for a likelyrebound would be about 10 percent—inother words, for each 10 percent decrease infuel consumed per mile, the vehicle is driven1 percent more, and 10 percent of the ex-pected fuel savings from higher fuel econo-my is lost to increased driving.

Magnitude of vmt growth. Over the periodduring which new fuel economy standardswill take effect, small differences in thegrowth rate of vehicle miles traveled (vmt)can make a significant difference in the fuelsavings estimated to occur from a new stan-dard. As discussed in Chapter 4, actual vmtgrowth rates over the past few decades have

been much higher than the future growthrates projected by the Energy InformationAdministration and others, and the crediblerange of future rates is fairly broad, perhapsfrom 1 to 3 percent per year. Even with norebound effect (a large rebound would tendto exaggerate the effect of differences in theunderlying vmt growth rate), the range in

vmt growth rates can yield very large differ-ences in calculated fuel savings. For exam-ple, in the year 2010 the estimated fuel sav-ings from achieving the S. 279 standards

I00. Improving Automobile Fuel Economy: New Standards, New Approaches

vary by 1.3 mmbd as the assumed vmtgrowth rate changes from 1 to 3 percent. 48

sumptions. For example, ACEEE’S calculationsfor Senator Bryan assume that fuel economy lev-



5.

g g p

Effects of new standards on vehicle sales.

Some opponents of new fuel economy stan-dards have argued that stringent standardswill have the effect of slowing vehicle sales(because of higher vehicle prices and re-duced customer satisfaction with smaller,slower, less luxurious cars), reducing vehicleturnover and the positive effect this has onfleet fuel economy. Others consider the like-

lihood of a sales slowdown large enough toaffect fleet fuel economy in a significantmanner to be very small. Clearly, an effecton turnover is theoretically possible, andwould be likely if policymakers were to mis-calculate and set a standard beyond auto-makers’ technical capabilities.

There have been a number of different esti-

mates of the effects of S.279, Senator Bryan’s fueleconomy legislative proposal. The Findings of theproposed bill state that attainment of the 20 per-cent (1996)/40 percent (2001) improvements infuel economy levels will save 2.5 mmbd by 2005.

49

In contrast, the Department of Energy has esti-mated the fuel savings of S.279 to be about 0.5mmbd in 2001 and about 1 mmbd by 2010.50

Finally, the Congressional Budget Office (CBO)has estimated the fuel savings under three scenar-ios, with the base-case scenario having savings of 0.88 mmbd by 2006 and 1.21 mmbd by 20105l

CBO’S full range of estimates is 0.45 to 1.42mmbd by 2006 and 0.59 to 1.82 mmbd by 2010.

52

The differences among the above estimates canbe readily understood by examining their as-

els will remain unchanged from today’s in theabsence of new standards, i.e., about 28.5 mpg for

cars and about 21 mpg for light trucks. The De-partment of Energy has assumed that, withoutnew standards, new vehicle fleet fuel economy willrise to about 33 mpg for cars and 24 mpg for lighttrucks by 2001, and remain at that level thereaf-ter.53 This difference in baseline mpg assump-tions is the most important factor in accountingfor the difference between the DOE and ACEEE

estimates. The DOE assumption is in line withEEA’s “product plan” estimates for 2001 withhigher oil prices and optimistic assumptionsabout the performance of fuel economy technolo-gies. In fact, DOE’s baseline oil prices are$29/barrel (1990$) in 2000 and $39/barrel in2010–relatively high values. ACEEE’S assump-tions of “frozen” new car fuel economy assume

continued low oil prices and a continuation of consumer preferences for more horsepower, larg-er vehicles, and more luxury options. They clearlyare technologically pessimistic, and we believethat new car fleet fuel economy is unlikely to staythis low. CBO has chosen baseline mpg values of 30 mpg (range 28.5 to 33.0 mpg) for 2001, whichappears more realistic as a midline estimate,though we believe even this value to be somewhatpessimistic.

For other factors, DOE has consistently cho-sen assumptions that would tend to yield lowerestimated fuel savings than ACEEE. For exam-ple, DOE assumes that the automakers will cap-ture alternative fuel credits with or without newfuel economy standards, and thus register an offi-

~Assuming that the baseline (no new standards) case has an unchanging new car fleet fuel economy of 28 mpg, using a simplified model with 15

year vintaging (i.e., cars older than 15 years are retired, all other vintages assumed to drive the same amount)

@S.279, repo~ed Ap r . 25, 1991, WC. 2 (F indings). This value was derived by J. DeCicco of ACEEE (J.DeCicco, ~chnical Memorandumof Mar. 19, 1991, “Sensitivity Analysis of Oil Savings Projected for New CAFE Standards,” American Council for an Energy-Efficient Econ-omy, Washington, DC).

so~tter of June 5, 1991, A.E. Haspel, Director, Office of Economic Analysis, DOE, to R. Friedman, Office of ~chnology Assessment,Attachment: Summary of DOE Bryan CAFE bill analysis.

SIR D Farmer, Natural Resources and Commerce Division, Congressional Budget office, Staff Memorandum, “Fuel savings from ~ferna-. .tive Proposed Standards for Corporate Average Fuel Economy,” June 1991.

521bid.S3~ere has been confusion about DC)E’S ba se l i ne assumptions, and some analysts have concluded that DOE assumed that fleet fuel economy

would continue to grow after 2001 in the absence of standards. The assumption of constant new car fleet fuel economy after 2001 was confirmedby BarryMcNutt, DOE Office of Policy and Planning, personal communication, Aug. 16, 1991.


cial fuel economy value about 1 mpg less than actual fuel economy. The ACEEE does not con-

oil prices (and price expectations). The auto fueleconomy levels assumed in the Energy Informa-



ysider credits in its calculation, apparently assum-

ing that automakers are unlikely to build manyvehicles without the incentive of new standards.With the new California and Clean Air Act re-quirements for alternative fuels, the DOE posi-tion may be more realistic.

Similarly, DOE assumes a 20 percent reboundfrom lower fuel costs, whereas ACEEE ignoresany potential for a driving rebound. In OTA’s

view, it seems realistic to assume that a reboundwill occur, though we are skeptical that the effectwill be as large as DOE assumes. As noted, wewould choose 10 percent as a better estimate of the probable effect.

Finally, DOE has assumed a lower vmt growthrate than ACEEE, resulting in an estimated year2010 vmt that is about 20 percent lower than that

estimated by Senator Bryan.54 This accounts forabout 10 percent of the difference between thetwo estimates.55

OTA concludes that the DOE baseline esti-mate of 1 mmbd fuel savings from S.279 by 2010 isanalytically correct but very conservative. Al-though none of its assumptions are extreme, vir-

tually all push the final result towards a low val-ue.5 6

In our view, the likelihood of suchuniformity is small, although much less improb-able if oil prices follow their assumed (upwards)path. For example, most analysts believe that fu-ture fuel economy levels will be very sensitive to

y gytion Administration’s Annual Energy Outlook

1991

57

exhibit this sensitivity-the assumed year2000 new car fuel economy is 34.7 mpg with oilprices at $31.10/bbl (1990$) that year, and 31.4mpg with oil prices at $20.10/bbl.

In contrast to the DOE estimate, the Bryan/ ACEEE estimate of 2.5 mmbd by 2005 appearsvery optimistic because it discounts the potentialfor a driving “rebound” and, more importantly,

accepts unusually pessimistic assumptions aboutlikely fuel economy improvements in the absenceof new standards.

Although the range of potential fuel savingsfrom S. 279 is wide, OTA believes that the “mostlikely” value for year 2010 savings lies between 1.5mmbd and 2 mmbd. For a 10 percent reboundeffect, 2 percent/year vmt growth rate, baseline

fuel economy of 32.9 mpg in 2001 (frozen for thenext decade), and no accounting for alternativefuel vehicles, we calculate the fuel savings to be1.64 mmbd in 2010.58 Although the 32.9 mpgbaseline (no new standards) value is optimisticunless oil prices rise substantially, it is also likelythat the automakers will gain some alternativefuel credits in the baseline; these two factors will

tend to cancel one another. Figure 9-4 displaysthe projected U.S. oil consumption over time forthe baseline and S.279 cases discussed above. Thefigure also displays the consumption projectedunder OTA’s “regulatory pressure” scenario fornew car fuel economy.

SQ~tter of June 5, 1991, A.E. Haspel, Director, Office of Economic Ana&sis, DOE, op. cit.

551bid.

s~is may not be tme for Iateryeamo me DOE assumption that post 2001 fleet fuel economyIevelstill not continUe to improve maY be overly

pessimistic. Any DOE estimates of savings in years past 2010 may shift from conservative to optimistic because of this flat baseline fuel economyassumption.

‘7Energy Information Administration, Annual Energv Outlook 1991, DOE~IA-0383(91), March 1991.

SgOther assumptions: 15 year vintaging, fuel economy assumed to keep rising after 2001 (in regulated M*) to 50 mPg bY 2020.


Figure 9-4-U.S. Oil ConsumptionUnder Ahlternate Scenarios–with or WithoutHigher Fuel Economy Standards



Millions of barrels per day2 5

[ A - a% Baselinepressure I

\ S - 2 7 9 I

kaccelerated development ofalternative fuels to yield

— Alt. fuels added 1.8mmbd by 2020

5 -

01950 1960 1970 1980 1990 2000 2010 2020 2 0 3 0 2 0 4 0

1 is development of a large— Alaska II new oil field peaking at> Lower 48 .5mmbd by 2005

- A l a s k a\ NGL and o her

I I

Year

ASSUMPTIONS:1, Baseline assumes no new pollcy measures, new car fuel economy reaches 32.9 mpg In 2001 and stays constant thereafter.2. S 279 assumes new car fuel economy reaches 40 mpg by 2001 and 50 mpg by 20203. Regulatory pressure assumes new car fuel economy reaches 35 mpg by 2001 and 45 mpg by 2020.

SOURCE: Office of Technology Assessment, t991

Chapter 10

Regulation of Light-Truck Fuel Economy



Because light trucks make up a rapidly growingproportion of the passenger vehicle fleet, andconsumers can readily find transportation alter-natives to new cars in the light-duty truck fleet,fuel economy regulations must address light-truck fuel economy to assure an effective reduc-tion in total fuel use. Proposed legislation gener-

ally recognizes this necessity and sets standardsfor trucks similar to those for automobiles. Forexample, S.279 proposes that light trucks attainthe same 20- and 40-percent fuel economy in-creases (by 1996 and 2001, respectively) as auto-mobiles.

Although light trucks are commonly used forpassenger travel, they must remain capable of

performing tasks seldom expected of automo-biles. Dissimilarities between light trucks andautomobiles create differences in the fuel econo-my improvement potential of these vehicleclasses, as well as differences in the way the twoclasses might best be treated using standardsbased on vehicle capability (such as interior vol-ume). Because of diversity in capability and pur-

pose among classes of light trucks and amongtruck fleets of various manufacturers, a uniform-percentage-increase approach to fuel economyappears problematic.

FUEL ECONOMY POTENTIAL

Light-duty-trucks include those vehicles classi-

fied as pickups, vans, and utility vehicles with agross vehicle weight under 8,500 lb. These truckshave become an important source of fuel con-sumption as their sales now constitute 30 percentof light-duty (cars plus light trucks) vehicle sales.Although their fuel economy potential has notbeen analyzed as comprehensively as for cars,there are significant similarities between technol-

ogies available to improve car fuel economy andthose available to improve light trucks. This isbecause most light trucks utilize drivetrainsderived from car drivetrains, and vehicle struc-

-1o3-

ture-related improvements can follow similartrends. However, some limitations prevent light-truck fuel economy from improving at the samerate forecast for cars.

First, load carrying requirements for lighttrucks are significantly higher than for all but thelargest cars. With a much larger proportion of to-tal loaded weight being payload, there is less op-portunity for “flowthrough” weight reductionsfrom initial weight reductions due to enginedownsizing or use of advanced materials.

In addition, load carrying requirements of trucks do not favor front-wheel drive, becauseloading a truck decreases traction with a front-wheel-drive configuration, whereas a rear-wheel-drive truck achieves increased traction when car-rying a heavy load. Generally, front-wheel drive isused only in small vans.

Second, aerodynamic drag reduction is neces-sarily limited by the open cargo bed for pickupsand by the large ground clearance needed for util-ity vehicles. However, because of previous lack of

attention, there is room for significant improve-ments in truck aerodynamic design even withinthese limitations.

Third, the benefits of a four-valve engine aresmaller for trucks than for cars because the lowrpm torque tradeoff places greater limits on howmuch the engine can be downsized. Moreover,high rpm characteristics of the four-valve are

wasted to some degree on a truck, making it lessattractive from a marketing standpoint.

Fourth, trucks and cars currently do not havethe same safety and emission requirements, butthese are converging. As a result, future light-truck fuel economy penalties associated withsafety and emissions standards will be propor-tionately larger than for cars.

These limitations are partially offset by thegenerally less-advanced technology applied tomost light trucks, including their inferior aerody-namic design, less sophisticated engines and


transmissions, and more limited use of weight-saving materials and design This lack of techno

proach can work well for autos, but VAFE doesnot allow light trucks to be integrated into the



saving materials and design. This lack of techno-logical sophistication allows more “headroom”

for further advancement in some areas. Also,conflicting performance requirements for pas-senger use and heavy hauling can yield opportu-nities for powertrain components that can handleboth load regimes efficiently (e.g., multispeedtransmissions with load-sensitive final driveratios).

A preliminary estimate by EEA suggests that a

maximum technology scenario for light-dutytrucks will have a fuel economy increase potential5-to 7-percent lower than the increase calculatedfor cars. In 1988, domestic trucks averaged 20.2mpg, and a “maximum technology” scenario for2001 suggests domestic trucks can attain 26.0mpg. At the same time, it should be noted thatthis forecast excludes diesels, which could be as

popular in the 6,000-to 8,500-lb range of trucks asthey are in the 8,500-to 10,000-lb range currentlynot covered by CAFE legislation. Use of dieselengines could raise the 26.0 mpg forecast by 1 to 2mpg if diesel market penetration increases to 10or 20 percent.

DEFINING AN EFFECTIVEFORMAT FOR A LIGHT-TRUCK

FUEL ECONOMY STANDARD

The debate on CAFE suggests the widespreadbelief that current uniform mpg standards penal-izes many manufacturers while rewarding others.Current CAFE standards for light trucks are setfor two-wheel drive and four-wheel-drive trucksseparately, although manufacturers have the op-tion of meeting a combined standard. In 1993,separate standards will be eliminated and man-ufacturers will have to meet a combined stan-dard. Some observers have suggested that lighttrucks should be integrated into any new schemesproposed for cars, since consumers utilize these

vehicle types interchangeably. Among newschemes proposed for cars is an interior-volume-based standard. OTA concludes that a volumeaverage fuel economy (VAFE) or similar ap-

not allow light trucks to be integrated into thecalculation in a straightforward way.

Since light-duty trucks cover a variety of vehicle types, no single measure of consumerattributes such as interior volume provides a use-ful index for future fuel economy regulation.Light-duty trucks can be subdivided by body styleinto pickups, vans, and utility vehicles; thesethree main types of light trucks offer differentconsumer attributes.

Of the three, vans used for carrying passengers(as opposed to cargo vans) are very similar to pas-senger cars. Interior volume maybe a good meas-ure of consumer attributes for passenger vans.The relatively high roof of a van exaggerates theuseful interior volume for passengers, but (possi-bly) not for luggage. Hence a “corrected” or re-

duced passenger volume index can allow passen-ger vans to be integrated into the VAFEcalculation for cars.

Utility vehicles also have passenger-car-like in-teriors, but most are four-wheel-drive vehiclessuitable for rough terrain use. Four-wheel driveimposes a weight penalty as well as an increaseddrivetrain friction penalty. Moreover, the ability

to traverse rough terrain requires good groundclearance, resulting in poor aerodynamic drag co-efficients. All of these factors cause a utility ve-hicle of the same interior size as a passenger carto have much poorer fuel economy. Such vehiclescan be integrated into a VAFE calculation forcars if they are provided an mpg credit for rough-terrain capability. The credit must be on the or-

der of 15 to 20 percent for integration into a pas-senger-car VAFE calculation.

Pickup trucks and cargo vans are purchasedostensibly for cargo carrying capability ratherthan passenger room. Of course many purchaserssimply like the image of a pickup truck and rarelyutilize its load carrying capacity. Surveys by DOTin the late 1970s and early 1980s found that weight

capacity was rarely a limiting factor, but cargosize often was (i.e. typical loads have large vol-umes but not high weights). Hence, cargo floorarea or total cargo volume (for vans) is an impor-

Chapter 10–Regulation of Light-Truck Fuel Economy q 105

tant attribute, but weight carrying capacity maybe a factor if it is too low. Many customers use

omy rather than cubic feet of space. Of coursepayload tons alone can be utilized, but this does



be a factor if it is too low. Many customers usetheir trucks to tow a trailer or boat, and towing

capacity has been suggested as an important at-tribute to many customers. The ability to carry aheavy load is related to the towing capacity aswell, so that there is correlation between these twoattributes. One index of truck attributes may becargo area x load capacity, with some measurelike “square foot-tons” used to regulate fuel econ-

payload tons alone can be utilized, but this doesnot capture the size requirement. For example,

many compact trucks have the same payload ca-pacity as the basic full-size pickup truck (1,200 to1,400 lb), but offer a small cargo bed making itdifficult to carry construction materials. Hence, a“square foot-tons” measure appears superior to apayload-only measure (such as “tons”) as an at-tribute index for pickups and cargo vans.

Appendix A

EEA% Methodology to Calculate Fuel Economy Benefits of the Use of Multiple Technologies



OVERVIEW

Fuel economy behavior of a vehicle is depend-ent not only on individual technologies employed,but also on how they are applied and, to someextent, on what technologies are present simulta-neously. In the EEA methodology, the fuel econo-my benefit due to technology changes in a givenautomobile is always calculated holding vehiclesize, as measured by interior volume, and vehicleperformance constant. The second term is morecomplex to define; but each technology that af-fects horsepower or torque of the engine or weightof the vehicle is examined in detail, and appropri-ate tradeoffs to measure fuel economy benefit on

a constant performancedefined.

Individual technology

basis are identified and

benefits are defined rel-ative to a base technology and are expressed aspercent benefits to fuel economy. If the technolo-gy represents a change to a continuous variable(e.g., weight), the impact of a specific percentchange in the variable (e.g., 10) on fuel economy isestimated. If the technology represents a discretetechnology, the percent benefit for that technolo-g is defined relative to replacing abase technolo-gy (e.g., four-valve engine replacing a two-valveengine), holding the size and performance pa-rameters constant. Table A-1 provides a list of technologies discussed in this report and the

Table A-1 –Technology Definitions

Technology Definition

Front-wheel Drive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Drag Reduction I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Drag Reduction II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Torque Converter Lock-up . . . . . . . . . . . . . . . . . . . . . .Four-speed Auto Transmission . . . . . . . . . . . . . . . . . . .

Electronic Transmission Control . . . . . . . . . . . . . . . . . .

Accessory Improvements . . . . . . . . . . . . . . . . . . . . . . .

Lubricants (5W-30) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Overhead Camshaft . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Roller Cam Followers . . . . . . . . . . . . . . . . . . . . . . . . . . .Low-friction Pistons/Rings . . . . . . . . . . . . . . . . . . . . . . .

Throttle-body Fuel Injection . . . . . . . . . . . . . . . . . . . . . .

Multipoint Fuel Injection . . . . . . . . . . . . . . . . . . . . . . . . .

Four-Valve Engine (OHC/DOHC) . . . . . . . . . . . . . . . . .

Tires . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Intake Valve Control . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Advanced Friction Reduction . . . . . . . . . . . . . . . . . . . .

Benefits include weight reduction and engine size reduction starting from a late1970’s rearwheel drive vintage design

Based on CD decreasing from 0.375 in 1987 to 0.335 in 1995, on averagel

Based on CDdecreasing from 0.335 to 0.30 in 2001, on average l

Lock-up in gear 2-3-4 compared to open converterThree-speed automatic transmission at same performance level

Over hydraulic system, with electronic control of shift schedule and lock-up oftorque converter

Improvements to power steering pump, alternator, and water pump over 1987baseline

Over 1OW-4O oil

OHV engine of 44-45 bhp/liter replaced by OHC engine of 50-52 bhp/liter butwith smaller displacement for constant performance

Over sliding contact followerOver 1987 base (except for select engines already incorporating improvement)

Over carburetor (includes air pump elimination effect)

Over carburetor; includes effect of tuned intake manifold, sequential injectionand reduced axle ratio for constant performance

Over two-valve OHC engine of equal performance; includes effect ofdisplacement reduction and compression ratio increase from 9.0 to 10.0

Over 1987 tires, due to improved construction

Lift and phase control for intake valves; includes effect of engine downsizing to

maintain constant performanceIncludes composite connecting rod, titanium valve springs, light-weightreciprocating components

‘To exploit the benefits of drag reduction, the top gear must have a lower (numerical) ratio to account for the reduced aerodynamic horsepower requirement.

- 1 o 7 -


baseline technology against which benefits aremeasured.

From the knowledge of physics, it can be shownthat



Of course, no technology will be used in isola-

tion, and synergistic and non-additive constraintsmust be recognized: engineering analysis is usedto identify technologies that simultaneously con-tribute to reduction of the same source of energyloss and quantify the loss of total benefit whenboth technologies are used in the same vehicle;and the sum of market penetration of two non-ad-ditive technologies is not allowed to exceed 100

percent, since both technologies cannot be pres-ent in the same car.

The computational methodology uses a linearform of the exact engineering equation. Althoughthe method is an approximation to simplify calcu-lations, it yields results that have historically beenaccurate to 0.2 mpg. In projecting a maximumtechnology boundary case for the post-2000 time-

frame, it is believed that these approximationscould cause larger errors and a more rigorousengineering model is required. The current modelis described below.

ENGINEERING MODEL

The model follows the work of Sovran (1,2) whoproduced a detailed analysis of tractive energyrequirements on the EPA fuel economy testschedule (i.e., the city cycle and the highwaycycle). Each driving cycle specifies speed as afunction of time. The force required to move thevehicle over the driving cycle is easily derived

from Newton’s laws of motion:

F = M(dv/dt) + R + D

where F is the force required

M is the vehicle mass

dv/dt is the acceleration rate

R is the tire rolling resistance

D is the drag force

F = M(dv/dt) + gMCRV + CD ApV2

/2 (1)

where CRis the tire rolling resistance coefficient

CD is the drag coefficient

g and p are the gravitational acceleration andair density respectively

v is the vehicle speed

A is the vehicle cross-sectional area

Over the fuel economy test, V is specified as V(t),and the energy required E is the integral of

F dS = F V dt

where S is the distance traveled.

In the car, energy is provided only when F isgreater than zero, while energy during decelera-tion is simply lost to the brakes. Taking thesefactors into account, Sovran and Bohn (2) showedthat energy per unit distance

E/S = Q M CR + ß CDA + ðM (2)

where ð, ß, and ð are constants virtually inde-pendent of vehicle characteristics, but differ forcity and highway cycles. In essence, each termrepresents one component of the total force: thefirst term represents ER the energy to overcometire rolling resistance, the second represents EA

the energy to overcome aerodynamic drag, andthe third represents EK kinetic energy of acceler-ation. In the absence of acceleration (duringsteady speeds) EK is zero. Figure A-1 shows thedrag and the rolling resistance forces for atypicalcar at steady cruise, as well as the driveline lossdescribed below.

Sovran (1) also related tractive energy to fuel

consumption by adding the work required todrive accessories and the energy wasted by theengine during idle and braking. He defined theaverage engine brake specific fuel consumption




Substituting equation (6) into (3) we obtain Figure A-2-Proportion of Engine Friction Due toValve Train

100%



F C isfc/[n d(l-p-FR)] x [ER + EA + EK

+ n d E A C] + Gi [ ti + tb ] ( 7 )

The isfc is principally a function of combustionchamber design and compression ratio of theengine, and to a lesser degree, the air/fuel ratio.Since nearly all cars operate at stoichiometry, theair/fuel ratio is currently not a factor but could

become one if “lean-burn” concepts are utilized.Pumping losses are dependent principally on

the relative load of the engine over the cycle. Thelarger the engine for a given car weight, the lowerthe load factor and the higher the pumping lossdue to throttling. Pumping losses are also in-curred in the intake and exhaust manifolds andvalve orifice. Use of tuned intake and exhaust

manifolds and a greater valve area (e.g., by utiliz-ing four valves/cylinder) reduce pumping losses.Losses other than throttling loss are not unimpor-tant in the contribution to overall pumping loss.

Engine mechanical friction is associated withthe valve train losses, piston and connecting rodfriction, as well as the crankshaft friction. At low

rpm, valve train friction is quite a large percent-age of total friction, but decreases at higher rpm,while piston and connecting rod friction in-creases rapidly with increasing rpm. Total enginefriction increases nonlinearly with engine rpm.

Idle fuel consumption is also affected bychanges in engine parameters. At idle, all fuelenergy goes into driving the accessories and over-

coming pumping and friction loss, since there isno output energy requirement. Hence, decreasesin pumping loss or mechanical friction result in amuch larger percentage reduction in fuel con-sumption at idle than at load.

Mitsubishi provided data on general compo-nents of engine friction (figure A-2). The pump-

ing loss shown here is due to internal airflow andnot due to throttling. At closed throttle, idlepumping loss is approximately equal to frictionalloss.

SOURCE. Energy & Environmental Analysis, Inc., 1991

Equation (7) also shows the general structureof the calculation procedure. A simple differenti-ation of (7) yields:

dFC . d(isfc) P dP F r

FC isfc + I-P-F rx P + l-P-F r

d Fr +E A

x F r E A + ER + Ek + nd E AC E A

d EAx~ + . . . + . . . (8)L A

where each derivative is expressed as a percent-age change. Thus, a one-percent change in isfctranslates into a one-percent change in fuel econ-omy, but a one-percent change in pumping lossmust be weighted by the fraction that pumpingloss is of total output energy. Similarly, aerody-namic tractive energy change must be weightedby the fraction that aerodynamic energy loss is of total tractive energy.

Two observations are required at this point.First, equation (8) assumes the vehicle can bereoptimized for any change, so that engine vari-ables are not affected by tractive energy require-

100 %

~ ~ ~

Pumping loss

100 %

Pistoncon rod,

v

!Crankshaft

Ancillaryequipment

7 / / / / //I Valve train

1 , 0 0 0 3,000 5,000 4

Engine speed (rpm)

Appendix A-EEA> Methodology to Calculate Fuel Economy Benefits of the Use of Multiple T&chnologies .111

ments. Sovran points out this is not always possi-ble. For example, aerodynamic losses are near

tion (7). Equation (8) is useful if the change infactors is small, but not applicable for large



p yzero at low speed but high at high speed. Hence,

an engine cannot be simply downsized as aerody-namic loss is reduced, since the smaller enginewill not have enough power at low speed. A highergear must be added along with engine downsizingto achieve a correct compromise. In theory, it ispossible to reoptimize the entire drivetrain, but inpractice compromises cause significant losses infuel economy from the attainable maximum. In

the long run, as for 201O, some factors can indeedbe optimized to yield the full predicted value,while other factors cannot. For example, it ap-pears that predicted fuel savings related to fric-tion-loss reduction are unlikely to be obtained asthe engine cannot be downsized to the pointwhere low-speed torque is compromised. On theother hand, rolling resistance decreases may pro-

vide the predicted fuel savings, as their effect isfelt uniformly throughout the speed range.

CALCULATION PROCEDURE

Methods to increase fuel economy (reduce fuelconsumption) must rely on reduction of energycontributed by each of the terms shown in equa-

pp gchanges. Focusing on the terms in equation (7), it

is easily seen that fuel consumption is decreasedby:

q decreasing friction and pumping loss;

. decreasing weight;

. decreasing drag;

q decreasing rolling resistance;

. decreasing accessory power consumption;or

. decreasing idle fuel consumption.

Of course, a given technology can act on morethan one of these factors simultaneously. TableA-2 shows the relationships between individualtechnologies and the terms listed in equation (7).

Drivetrain efficiency, nd, is not the major factorin the benefits associated with multispeed trans-missions; rather, the reduction in pumping andfrictional losses are the biggest factor. It shouldalso be noted that all engine improvements affectidle fuel consumption, so that idle consumptioncan be assumed to follow the same trends as bsfc,allowing equation (8) to be rewritten as

Table A-2–Technology/Energy Use Relationship

isfc P F1 EA ER EK E AC G, nd

Weight reduction ! !Drag reduction !Four-speed automatic ! ! !TCLU !Electronic trans control ! !Accessory improvements

Tire improvement

5W-30 oil !Overhead cam ! ! !Roller cam followers !Low-friction piston/rings !Fuel injection ! !Four-valves/cylinder ! !Intake valve control ! !Five-speed automatic ! !Electric power steering !


FC = isfc x [ER + EA + EKat 10 and 9 respectively. This is equivalent to theapproach in equation(9) where the term [EAC +



+ n d ( EA C + EI) ] / { n d [ 1 - P - F R ] } ( 9 )

where El is an “equivalent” energy at idle to drivethe accessories and torque converter. E

1is simply

a mathematical artifact to make the analysis sim-pler for forecasting.

The relationship between fuel consumptionand vehicle variables can be derived from equa-tion (7) in exact terms if the coefficients are eval-

uated for the urban and highway driving cycles. Infact, Sovran utilized a detailed evaluation of these

cycles to derive the sensitivity of fuel consump-tion to vehicle weight, aerodynamic drag, and tirerolling resistance coefficient. The general charac-teristics of the two cycles are shown in table A-3.One striking factor is that nearly 41 percent of urban time is spent in deceleration or at idle. In

comparison, less than 10 percent of the time onthe highway cycle is spent in braking or at idle.This difference, coupled with the different speedsand average acceleration rates in each cycle, leadsto substantially different sensitivities between thetwo cycles.

In order to evaluate sensitivity of fuel con-sumption to changes in vehicle parameters, infor-

mation is required on fuel consumption at idleand braking as well as fuel consumed by drivingaccessory loads. Sovran utilized data on 1979-80GM cars and found that idle and braking fuelconsumption was proportional to engine size. Asan approximation, he assumed idle plus brakingconsumption to be a constant percentage of totalfuel consumed and estimated this percentage at

16 for the urban and 2 for the highway cycle. Heutilized a similar assumption for the accessoryfuel consumption percentage, holding it constant

Table A-3–Fuel Economy Cycle Characteristics

u r b a n Highway

Average speed (km/h) . . . . . . . . . . . . . . 38.4 77.60Maximum speed (km/)h . . . . . . . . . . . . 91.5 96.80

Distance (km) . . . . . . . . . . . . . . . . . . . . . 12.0 16.50Time at idle (s) . . . . . . . . . . . . . . . . . . . . 249.0 3.00Time of braking (s) . . . . . . . . . . . . . . . . 311.0 57.00Total time for cycle (s) . .............1,373.0 765.00Percent of time at idle and braking . . . . 40.8 7.84

E1] bsfc is replaced by a constant percentage of

FC. Utilizing these assumptions, he derived sen-sitivity coefficients that were dependent on thedrag-to-mass ratio and the rolling resistance co-efficient. Using typical values for the average1988 car, with a mass of 1400 kg (3,1OO lb), C

Dof

0.37, frontal area of 1.9 m2, and CR of 0.01, thefuel consumption sensitivity coefficients are asfollows:

ð (for CD) = 0.28

ß (for Weight) = 0.54

ð (for CR) = 0.24

The weight reduction sensitivity coefficient abovedoes not incorporate the effect of engine downsiz-ing, which reduces idle/braking fuel consumption

proportionally. The coefficients assume that theengine and drivetrain are adjusted to provideconstant bsfc (a factor which may not be realizedin practice) but do not account for engine down-sizing. Second, the constants are dependent to acertain extent on the assumptions for the fractionof fuel consumed at idle plus braking, and byaccessory power demands (the smaller these frac-

tions, the larger the sensitivity coefficients).Table A-4 provides a summary of the values of

sensitivity coefficients attained in actual practiceas opposed to estimates derived purely fromequation (8). In the application of these coeffi-cients, it should be recognized that they can be

Table A-4-Estimated Fuel Consumption Sensitivity

Coefficients (Percent reduction in fuel consumption perpercent reduction in independent variable)

FuelConsumption Fuel E conomy

Variable Sensitivity Sensitivity

Weight reduction . . . . . . . . 0.621 (0.54) 0.66Drag reduction (CD) . . . . . 0.22 0.23CR reduction . . . . . . . . . . . 0.23 0.24Thermal efficiency . . . . . . . 1.00 1.00Pumping loss . . . . . . . . . . . 0.23 0.24Friction loss . . . . . . . . . . . . 0.23 0.24Drivetrain efficiency . . . . . . 0.78 0.81Accessory power . . . . . . . . 0.10 0.11

10.62 Includes proportional reduction of displacement, 0.54 assumes constant dis-

placement.

Appendix A-EEA’s Methodology to Calculate Fuel Economy Benefits of the Use of Multiple Technologies q 113

used only for modest variations for any variablesinvolved.

Wh l d ti f i bl

ance, type of fuel system, etc. as well as the actualEPA composite fuel economy rating for 1988. If the analysis is at a market class level, these char-



When large reductions of any variable are

likely to occur, the preferred form of analysis is touse equation (’7) with a “slippage” factor to ac-count for benefits that cannot be attained inactual practice for some variables of concern.

The methodology used to calculate the fueleconomy benefit due to the application of any setof technologies to the automobile is as follows.First, the technology set is examined to identify

which energy-use factors are affected and areasof overlap are examined for synergy. Second, thenet reduction in each specific energy-use area isestimated and the benefits to fuel consumptioncalculated with equation (8). In general, synergiesoccur primarily in pumping loss reduction, withsmaller synergies in the area of friction reduction.

FORECASTING METHODOLOGY

The theoretical concepts behind the forecasthave been explained through the engineeringequations. The exact method of forecasting fueleconomy involves the following sequence of steps:

defining a baseline;

identifying available technology;

adopting technology at the proper level of market penetration; and

calculating fuel economy after adoption of technology.

The analysis can be performed at the model-spe-

cific level (such as Ford Escort or Chevrolet Ca-price) or at a more aggregate market class level,where vehicles within a market class are verysimilar in size, performance, and option levels.

All the analyses begin by defining a baseline of vehicle technology and fuel economy derivedfrom actual data. For example, the choice of the1988 Ford Escort as the baseline requires identifi-

cation of all vehicle characteristics such asweight, drag coefficient, engine size and power,types of transmissions, acceleration perform-

y ,acteristics are averaged across all models in thegiven year, and discrete technologies such asfourspeed automatic transmissions are describedby their market share within the class.

Once baseline technologies are detailed, avail-able technologies are identified along with thepotential availability dates. In the short term,most technologies available for improvement are

dictated by the product plan for a particularmodel, and these are tracked through articles inthe trade press. For the longer term, EEA selectsavailable technologies based on both productlifecycle of the model as well as technology readi-ness. Continuing with the Ford Escort as theexample, its product lifecycle is eight to nine yearsand a new design was introduced in 1990. Thisimplies that major changes can be made when the

next model is introduced in 1998-99.

Technology readiness is based on EEA’s deter-mination of when a technology is likely to bebroadly adopted in the marketplace. For exam-ple, we expected that four-valve-per-cylindertechnology could be broadly adopted by domesticmanufacturers in the 1991-98 timeframe, whereasfive- valve-per-cylinder technology is unlikely toenter the mainstream until 2001. Such determina-tions are based on interviews with auto manufac-turers and involves some subjective judgment. Itis recognized that technology availability does notguarantee its introduction in the marketplace;this depends on the costs of a technology and itsbenefits. A simple model of technology adoptionby the manufacturers is one where technology is

adopted in a carline if the value of fuel saved overa specific period exceeds its first cost to the con-sumer. Analysis of historical data suggests aperiod of four years (typical of new-car owner-ship) for payback provides a good approximation

of past manufacturer behavior, and we have uti-lized this to represent scenarios of business asusual or “product plan” scenarios. Other scenar-

ios can be easily constructed to evaluate technol-ogy adoption based on fuel savings over a vehiclelifetime (10 or 12 years), or in total disregard of


any cost-effectiveness criteria where all availabletechnologies are adopted to the maximum extentpossible. Table A-5 presents the estimated costs

performance engines or engines using other fuelssuch as diesel engines. Evaluation of their marketpenetration is either developed by specific sce-



of the existing fuel economy technologies in-cluded in the forecasts.

Technology adoption is usually associated witha level of market penetration. For most technolo-gies, it is an “all-or-nothing” decision at the car-line level, since, for example, a given car will eitherhave anew lowdrag body or it will not. Technologynon-additivity must be accounted for so two tech-nologies (such as manual and automatic trans-missions) that cannot be present in the same carare not assumed to each have 100-percent” marketpenetration. However, there are some technolo-gies offered as options in a given model, where theconsumer has a choice. Typically, these involve

Table A-5–EEA’s Estimates of Incremental RetailPrice of Fuel Economy Technology (1988$)

Front Wheel Drive . . . . . . . . . . . . . . . . . . . . . 240Drag Reduction to CD = 0.33 . . . . . . . . . 32

to CD = 0.30 . . . . . . . . . 484-Speed Automatic Transmission . . . . . . . . 225Torque Converter Lock-up . . . . . . . . . . . . . . . 50Electronic Transmission Control . . . . . . . . . . 24Accessory Improvements. . . . . . . . . . . . . . . . 12OHC Engine: 4-cylinder . . . . . . . . . . . 110

6-cylinder ., . . . . . . . . . 1808-cylinder . . . . . . . . . . . 200

4-valve heads: 4-cylinder . . . . . . . . . . . 140

6-cylinder . . . . . . . . . . . 1808-cylinder . . . . . . . . . . . 225

Roller cams . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 per cylinderFriction reduction 1: 4-cylinder . . . . . . . . . . . . 30

&cylinder . . . . . . . . . . . . 408-cylinder . . . . . . . . . . . . 50

“Advanced Pushrod” . . . . . . . . . . . . . . . . . . . 40 (6-sylinder)Throttle Body Fuel Injection

(over carburetor) . . . . . . . . . . . . . . . . . . . . . 42 (one injector)

70 (two injector)Multipoint Fuel Injection

(over throttle body)

4-cylinder . . . . . . . . . . . . 488-cylinder . . . . . . . . . . . . 848-cylinder . . . . . . . . . . . . 80

Tire Improvements . . . . . . . . . . . . . . . . . . . . . 12 (4 tires)Oil (5W-30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25-speed Automatic (over 4-speed) . . . . . . . 100Continuously Variable Transmission

(over 4-speed auto) . . . . . . . . . . . . . . . . . 100Advanced Friction Reduction . . same as Friction

Reduction ITire Improvements (1995-2001) . . . . . . . . . . 18Intake Valve Control

4-cylinder . . . . . . . . . . . 1408-cylinder . . . . . . . . . . . 200

SOURCE: Energy & Environmental Analysls, Inc., 1991

nario assumptions, or else determined by trendanalysis or results from consumer surveys if theobject is to forecast fuel economy.

The calculation of fuel economy after technolo-gy adoption is relatively simple using the “linear-ized” method detailed earlier, but specific adjust-ments are made for synergistic effects betweentwo technologies. The synergies are recognizedthrough engineering analysis, as the operation of

each technology is well understood and thesource of its benefits is known (in terms of reduc-tion of specific losses identified in the engineeringequations). In brief, the model is

F C = F CO [ 1 + È È sij m lm j l ]

where FCO is the baseline fuel economy

ml is the market penetration of the i th

technology

Xi

is the percent fuel economy benefit of the ith technology

S ij is the synergistic effect betweentechnology i and j on fuel economy

DATA SOURCES

The model of fuel economy shown above re-quires detailed estimates of the fuel economyeffect of each technology, as well as estimation of non-additive and synergistic effects of each tech-nology with other technologies. One factor aidingin the recognition of technology-specific fueleconomy effects is the criteria utilized to selectavailable technologies for 2001, which requirethat every technology be sold commercially in1991 in at least one mass-produced car model.This, of course, makes it possible to scrutinizeavailable models and their fuel economy to dis-cern the effects of specific technologies.

In general, detailed estimates of technologycharacteristics are based on the following sourcesof information: