Which is claiming that the near-doubling of corporate average fuel economy to an average of will "cost automakers only $157 billion." while saving consumers about ten times that amount. Let's do the math on that one. We'll start with the premiss; that automakers will pay the cost, while consumers will reap the benefits-- as if automakers do not pass the costs of government mandates on to the consumer as a matter of survival. The NHTSA isn't starting off well in the credibility department, to put it mildly.
Going further, the most fuel efficient car in mass production today is the Toyota Prius, which tops out (as really a four seater) at about 51mpg. So we can safely assume that for automakers to achieve the federal mandate, their technology will need to exceed that of the Prius--which costs over $6000 more per vehicle than the comparable Corolla. No, contrary to some opinions, it's not equivalent to a Camry, which is why Toyota makes a hybrid Camry, too.
We might assume that we could get some cost reductions as these go into higher volumes, but reality is that we've been making these batteries and motors for a while now--the latter really for a century--and hence it's unlikely that we're going to get huge decreases in the cost.
So let's assume that in each year, an additional 10% market share will need to go to hybrid or comparable vehicles--with the last two years' cost indicating that all vehicles will need to go beyond current hybrid technology. What is our cost?
Approximately 100 million hybrid vehicles, or the vehicles purchased over about eight years, will need to be sold with an average additional cost of somewhere around $5000/vehicle. In short, the actual cost for implementing this is about three to five times what the government says it will be--no surprise there.
Now, given that we're keeping our vehicles for an average of ten years or more, what will the consumer actually save on gas? It's hard to tell, not knowing what gasoline prices will be, but let's try a model. First of all, the previous standard was to be about 35mpg by 2025, which is an improvement of about 2% per year. So we will see how much an additional 2% per year improvement--average of 3.5% for light trucks and 5% for cars minus 2% planned improvement--will save.
Answer: about three hundred billion dollars over the next twelve years, or about half of what the program will cost. So when you see government efficiency mandates and the numbers they use to justify them, distrust, then verify, then distrust some more, as Mitch notes at Shot in the Dark.
Hold me back... - One seminar I have to miss at the PCA General Assembly this year is that you-scratch-my-back-and-I'll-scratch-yours tag team of Lig Duncan and Tim Keller...
23 minutes ago