1. Policies for the U.S. Light Duty Vehicle Sector: Technical and Policy Considerations Sanya Carley Associate Professor School of Public and Environmental Affairs Indiana University Collaborators: Denvil Duncan, John D. Graham, Saba Siddiki, Nikos Zirogiannis This work is funded by a grant from the Alliance of Automobile Manufacturers

3. Light duty vehicle standards 2017-2025
National Highway Traffic Safety Administration: 54.5 miles per gallon (MPG)
Environmental Protection Agency: 163 g/mi CO2
Agencies’ mid-term regulatory reviews regarding implementation period
Source of image:

4. Fuel Economy Targets for 2017-2025
CARS
LIGHT TRUCKS
Source: NRC (2015) 

5. CAFE MPG Target Curves for Passenger Cars
Nearly 50% Increase – 2016 to 2025
Source: Wally Wade (2016)

7. Fuel Economy Standards Across the World

8. Fuel Economy Standards for Light-Duty Vehicles, Selected Countries

10. A 2016 Perspective

11. Zero Emissions Vehicle (ZEV) States
These 10 states account for approximately 30% of national vehicle sales market
Source of image:

12. Electric Vehicle Sales
(To meet a 15.4% requirement in 30% of U.S. Auto Market)
114,000
785,400

13. Multipliers and GHG Credit
Each battery electric vehicle (BEV) and fuel cell vehicle (FCV) counts as 2 vehicles between

14. Multipliers and GHG Credit
0 CO2 e
0 CO2 e
BEVs and FCVs counted as emitting zero grams CO2 equivalent per mile between

15. Multipliers and GHG Credit
0 g/mi +
0 g/mi
0 CO2 e
368 g/mi
368 g/mi
0 CO2 e
368 g/mi
368 g/mi
Average: 245 g/mi

16. Multipliers and GHG Credit
0 g/mi +
0 g/mi
0 CO2 e
736 g/mi
0 CO2 e
736 g/mi
Average: 368 g/mi

17. Benefits and Challenges to Manufacturers
Some auto manufacturers can accumulate and sell credits in both the ZEV and the CAFE program In electric vehicle is, on average, >$10,000 more to produce (NRC, 2015) ZEV sales: currently allowed a travel provision : regional compliance pools 2022 onward: must be sold within ZEV states

18. Could ZEV Have Implications for the Geographic Distribution of U. S
Could ZEV Have Implications for the Geographic Distribution of U.S. Manufacturing?
Source of image: Center for Automotive Research

19. 2015 Global Lithium-Ion Battery Sales, by MWh
Source of data:

20. Percentage of US Electric Vehicle U.S. Sales, 2010 - Sept 2016

21. Top EV Manufacturers and Production Location
Percentage of U.S. EV Sales, Sept 2016
Top EV Manufacturers and Production Location
Model
Total US Sales
% US Market
Assembly Location
Battery Manufacturer
Chevy Volt
104,750
20.3%
Michigan (Detroit)
LG Chem
(Korea)
Nissan Leaf
98,810
19.1%
Tennessee (Smyrna)
AESC
Tesla
96,860
18.8%
California (Freemont)
Panasonic (Japan)
Ford electric Vehicles
76,601
17%
Mexico
LG Chem, Panasonic, Samsung (Korea)
Source of data: insideEVs.com/scorecard

22. Source: NHTSA RIA (2012), Table 13, p. 49

23. Unexpected Changes in Global Oil Market, 2012-2015
Slowdown in global demand for oil (especially China)
“Shale revolution” of oil and gas production in North America
Saudi Arabia decides against any production cutbacks

24. Trends in World Oil Price
Source of image: Energy Information Administration,

25. Fuel Prices
Source: EIA. (2012). Annual energy outlook 2012 with projections to 2035.; EIA. (2015). Annual energy outlook 2015 with projections to 2040.

26. Payback Period Analysis for a consumer investing a
$2,000 premium in a fuel efficient vehicle

27. Payback Period Analysis for a consumer investing a
$5,000 premium in a fuel efficient vehicle

28. Payback Period Analysis for a consumer investing a
$10,000 premium in a fuel efficient vehicle (PEV)

29. Consumer Preferences Consumer preferences for vehicles are changing
Demand is greater for light trucks than for cars
Decline in sales of hybrids, diesels, and electric vehicles
Resale values changing
Market Share of Passenger Cars vs. Light Trucks
Source of data: Ward’s Auto. (2016, January 22). U.S. vehicle sales by vehicle type and source,

31. Direct Manufacturing Cost and Total Cost for CAFE compliance of a Midsize Car based on NHTSA estimates
Source: NRC (2015)

32. Direct Manufacturing Cost and Total Cost for CAFE compliance of a Midsize Car based on NRC estimates
Source: NRC (2015)

33. Conclusions
Must consider important implications about the interactions between the ZEV and CAFE programs
Many important changes have occurred since the 2012 rules were finalized, such as gas prices
Necessary to revise our expectations about how these programs will perform

34. Appendix

35. Bibliography
Bureau of Economic Analysis. (2016). Interactive access to industry economic accounts data: GDP by industry [Data file]. Retrieved from:
California Air Resources Board. (2011b). Staff report: Initial statement of reasons. Advanced Clean Cars Proposed amendments to the California Zero Emission Vehicle Program regulations. Retrieved from
Center for Automotive Research (2011). The U.S. automotive market and industry in Retrieved from
Center for Automotive Research. (2015). Contribution of the automotive industry to the economies of all fifty states and the United States. Retrieved from
Department of Transportation. (2012). Corporate average fuel economy standards for MY 2017-MY 2025 passenger cars and light trucks. Final Regulatory Impact Analysis. Retrieved from
Energy Information Administration. (2016). Short term energy outlook. Retrieved from
Environmental Protection Agency/ Department of Transportation. (2012) and later model year light-duty vehicle greenhouse gas emission standards and CAFE Standards; Final rule. Federal Register. Retrieved from
Hill, K., Menk, D. M., Cregger, J. (2015). Assessment of tax revenue generated by the automotive sector for the year Center for Automotive Research. Ann Arbor, Michigan.
National Research Council. (2015a). Cost, effectiveness, and deployment of fuel economy technologies for light duty vehicles. Washington, DC: The National Academies Press.
Wagner, D., Nusinovich, P., & Plaza-Jennings, E. (2012). The effect of proposed MY corporate average fuel economy (CAFE) standards on the new vehicle market population. National Automobile Dealers Association. Retrieved from

36. Revival of the U.S. Auto Sector*
*estimated
Source: Statista U.S. Light Truck Sales and U.S. Car Sales

37. Importance of the Automobile Sector
Industry sectors
Percent of US Gross Output for 2014
Manufacturing
20%
Finance, insurance, real estate, rental and leasing
17%
Government
11%
Wholesale trade 5%
Retail trade
Construction 4%
Motor vehicle manufacturing 2%
Source: BEA 2016

38. Recent NRC Cost Estimates for Greener Automotive Technology
Selected Technologies*
Incremental Cost to the Consumer**
(2007 dollars)
Cars
Light Trucks
Clean diesel engine
$3,600
$4,500
Conventional hybrid engine
$5,500
Plug-in hybrid EV
$7,800
$10,500
Plug-in battery EV
$16,000
$24,000
*based on 2035 estimates of technology
**relative to a baseline 2005 standard gasoline vehicle
Source: NRC, Assessment of Fuel Economy Technologies for Light-Duty Vehicles, Table H.4

39. Source: NRC (2015)

40. Impact of Gas Prices on Consumer Payback
Suppose you are deciding between a 30 mpg gasoline car and a plug-in electric vehicle with a $12,000 premium:
If gasoline = $2.50/gal:
If gasoline = $4.25/gal:
Holding car for 10y, driving 12,000 mi/y, using discount rate of 5%, and assuming free electricity
You would save money by purchasing the EV under the high gas scenario but lose money under the low gas scenario