Trends and drivers of the performance : fuel economy tradeoff in new automobiles

Abstract

Cars sold in the United States have steadily become more fuel-efficient since the 1970s, and assessments of emerging technologies demonstrate a significant potential for continued evolutionary improvements. However, historic efficiency improvements have not always translated into reduced rates of fuel consumption. Instead, most of the technological progress of the past 20 years has been dedicated to offsetting increased acceleration performance, while fuel consumption has languished. This work addresses the questions of (1) why new technology is dedicated to performance rather than fuel consumption, and (2) what policy structures and stringencies can most effectively encourage new technology to be dedicated to reducing fuel consumption. A technology allocation model was developed which couples projections of fuel consumption and performance tradeoffs to consumers' willingness to pay for these attributes, in order to maximize the combined value of these attributes to consumers. The model was calibrated using stated willingness to pay, car price data, and historic trends in performance and fuel consumption. The model was used to investigate the effects of various policies on the balance between performance and fuel consumption. Particular attention was paid to the Emphasis on Reducing Fuel Consumption (ERFC), which quantifies the amount of technology dedicated to improving fuel consumption rather than other attributes. Under baseline conditions of constant gasoline price and no policy intervention, the majority of new technology continues to flow to increasing performance. The performance-fuel consumption balance is sensitive to policy signals. Fuel taxes, incentives (e.g. feebates), and fuel economy standards are all shown to be effective for increasing ERFC, although they have different implications for consumers' costs and automakers' profitability. Policies that merely increase the rate of technology deployment are found to be less effective for increasing emphasis on reducing fuel consumption.