The California greenhouse gas initiative and its implications to the automotive industry

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CAR undertook this investigation to better understand the costs and challenges of a local (state) regulation necessitating the implementation of alternative or advanced powertrain technology. CAR will attempt to add insight into the challenges that local regulations present to the automotive industry, and to contribute further to the discussion of how advanced powertrain technology may be used to meet such regulation. Any local law that (directly or indirectly) affects light duty motor vehicle fuel economy creates what in effect is a specialty market for powertrain technology. As such these small markets present significant challenges for automotive manufacturers. First, a small ... continued below

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Smith, B. C.; Miller, R. T. & Research, Center for Automotive May 31, 2006.

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Description

CAR undertook this investigation to better understand the costs and challenges of a local (state) regulation necessitating the implementation of alternative or advanced powertrain technology. CAR will attempt to add insight into the challenges that local regulations present to the automotive industry, and to contribute further to the discussion of how advanced powertrain technology may be used to meet such regulation. Any local law that (directly or indirectly) affects light duty motor vehicle fuel economy creates what in effect is a specialty market for powertrain technology. As such these small markets present significant challenges for automotive manufacturers. First, a small market with unique standards presents significant challenges to an industry that has sustained growth by relying on large volumes to achieve scale economies and deliver products at a cost acceptable to the consumer. Further, the challenges of the additional technology make it likely that any powertrain capable of meeting the stringent emissions standards will include costly additional components, and thus will be more costly to manufacture. It is likely that manufacturers would consider the following actions as steps to deliver products to meet the pending California regulatory requirements anticipated as a result of prior California legislation: (1) Substituting more fuel efficient vehicles: Bring in more efficient vehicles from global operations, while likely dropping existing domestic products. (2) Substituting powertrains: Add existing downsized engines (i.e. turbocharged versions, etc.) into California market-bound vehicles. (3) Powertrain enhancements: Add technology to current engine and transmission offerings to improve efficiency and reduce emissions. (4) Incorporating alternative powertrains into existing vehicle platforms: Develop a hybrid or other type of powertrain for an existing vehicle. (5) New powertrains and new platforms: Develop vehicles specifically intended to incorporate new powertrain technologies, materials and/or design (e.g. the General Motors EV1 or the Toyota Prius). These five actions represent the gamut from the least complicated solution to the most complex. They also generally represent the least expensive response to the most expensive. It is possible that the least expensive responses may be least likely to meet market demands while achieving required GHG emission limits. At the same time, the most expensive option may produce a vehicle that satisfies the GHG reduction requirements and meets some consumer requirements, but is far too costly to manufacture and sell profitably. The response of a manufacturer would certainly have to take market size, consumer acceptance, technology implication and cost, as well as internal capacities and constraints, into consideration. It is important to understand that individual companies may respond differently in the short term. However, it is probable that there would be a more consistent industry-wide response in the longer term. Options 1 and 2 present the simplest responses. A company may reach into its global portfolio to deliver vehicles that are more fuel-efficient. These vehicles are usually much smaller and significantly less powerful than current U.S. offerings. Industry respondents indicated that such a strategy may be possible but would likely be met with less than positive reaction from the buying public. A general estimate for the cost to homologize a vehicle--that is, to prepare an existing vehicle for entry into the United States provided all business conditions were met (reasonable product, capacity availability, etc.), would be approximately $50 million. Assuming an estimated cost for homologation to meet U.S. standards of $50 million and a 20,000 vehicle per year sales volume in California, the company would then incur a $2,500 per-vehicle cost to bring them into the market. A manufacturer may also choose to incorporate a more efficient powertrain into a vehicle already sold in the market. The costs associated with such a strategy would include reengineering the vehicle engine compartment to accept the new powertrain, and developing, engineering and manufacturing those parts unique to the vehicle. Costs would also be incurred to achieve emission certification. Total costs per vehicle, if sold only in California would be similar to nationally averaged costs per vehicle when bringing a new vehicle into the national market. While companies may consider the importation of a more fuel-efficient vehicle from their current global portfolio, or the addition of a powertrain from another market, it is likely that these would be seen as stop-gap responses to the legislation. Many of the candidate vehicles and powertrains would likely not meet California consumer expectations, and may not provide enough fuel savings to achieve more severe emission regulations, thus offering only a step toward any solution.

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  • Report No.: ANL-06/05
  • Grant Number: none
  • DOI: 10.2172/947069 | External Link
  • Office of Scientific & Technical Information Report Number: 947069
  • Archival Resource Key: ark:/67531/metadc901701

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  • May 31, 2006

Added to The UNT Digital Library

  • Sept. 27, 2016, 1:39 a.m.

Description Last Updated

  • Nov. 22, 2016, 9:53 p.m.

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Smith, B. C.; Miller, R. T. & Research, Center for Automotive. The California greenhouse gas initiative and its implications to the automotive industry, report, May 31, 2006; United States. (digital.library.unt.edu/ark:/67531/metadc901701/: accessed July 15, 2018), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.