Comparing fuel economy cost estimates for 2020–2025

The Boston Consulting Group (BCG) recently issued a report (Powering Autos to 2020) on costs for improving the efficiency of conventional vehicles. BCG states that the report is based on information compiled from interviews with industry experts and BCG’s consumer research.

The graph below (click to enlarge) compares the cost of fuel consumption and CO₂ reductions from the Boston Consulting Group report against the results from two other reports: the 2010 US EPA and US DOT Technical Assessment Report, and the 2011 Center for Automotive Research (CAR) report [pdf]. The data points represented on the graphic are for technology packages (e.g., engine improvements, lightweight materials, advanced transmissions), not for individual technologies, so the synergies between technologies have been accounted for. As BCG only estimated costs for conventional technologies, the estimates from EPA/DOT and CAR have been restricted to conventional vehicles and hybrids.

The BCG estimates are largely consistent with those from EPA/DOT; somewhat higher for modest technology increases, but a little lower for larger increases. The CAR estimates are over three times higher, even though they are for 2025 instead of 2020 and one would expect technology-driven costs to continue to decline in those five years.

It’s important to note that in its full report, CAR’s estimated cost for 2025 passenger vehicles was inflated significantly beyond the technology comparison in the figure because CAR ignored air conditioning credits that would reduce the amount of technology required by about 20 percent and arbitrarily restricted the proportion of hybrids, forcing large numbers of high-cost plug-in hybrids and battery electric vehicles into the fleet. CAR’s estimated cost in 2025 for plug-in hyrbids is over $12,000 per vehicle.

The ICCT critiqued CAR’s initial and revised analyses; full details here.