The Center for Automotive Research (CAR) contends that as fuel efficiency rises to very high levels, the benefit to the customer shrinks. At $5 per gallon, for example, a 15,000-mile-a-year driver can save $3,750 on gasoline annually by jumping from 10mpg to 20mpg. But by going from 40mpg to 50mpg, the savings drop to only $375 annually, the curve shows. As consumers reach those limits, CAR says they are likely to keep their current vehicles longer, a phenomenon it refers to as the "Cuban-ization" of the American auto market. (Source: Center for Automotive Research)
That makes sense, Chuck. But with the limited sales of hybrids and EVs, most of the CAFE gains will come from traditional engines. Wouldn't most of the gains on those engines involve upfront innovation rather than the incremental costs of parts? Or, is there something intrinsically more expensive about the parts that would be needed for a high-efficiency vehicle?
You raise a lot of good points, Beth, particularly with regard to the added cost of entertainment centers. The big problem, though, is achieving that last 10 mpg. That's where most of the cost lies. It's worth it to take a hard look at the accompanying graph. It seems counter-intuitive at first, but a consumer saves ten times more in fuel costs by going from 10 to 20 mpg, than by going from 40 to 50 mpg. Going from 40 to 50 pg, a 15,000-mile-a-year driver paying $5 a gallon saves only $375 annually. The point is, we reach a mathematical limit as we go farther out on the curve. Unfortunately, most of the additional vehicle cost is in that last 10 mpg, the experts say.
Most of the upfront costs -- such as product development, engineering, tools and production equipment -- will diminish, Rob. Parts and labor will remain, however. It's particularly problematic in big ticket items, such as the dual powertrains in hybrid vehicles. Two powertrains will always cost more than one.
Nice to hear the voices of both consumer advocates and engineers, Chuck. As for the costs to gain fuel efficiency, are some of the costs one-time costs for innovation and altered design? I would think that many of the improvements would not continue to add cost with each individual car after a certain pay-back period.
I think I have to side with the consumer advocates on this one. Granted, it will take some extra engineering and innovation muscle, but much of this technology should have been (and has been) in the works for years given that it is no surprise that the mandate was coming. As for the added cost, what about the addition of bluetooth, entertainment centers, GPS, automated driving systems--all of those highly complex embedded systems and electronics jack up the cost of the vehicle and consumers buck up and pay extra for the technology. I just see this as a standard that pushes progresss. What's so bad about that?
Tesla Motors plans to roll out a “compelling, affordable electric car” that will sell for about half the price of its high-profile Model S by the end of 2016, company chairman Elon Musk said last week.
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