Wednesday, August 29, 2007
Fuel Economy "Sacrifices"
by Tom Bozzo
You might ask what you'd be willing to pay for the diesel's fuel savings. (See, for instance, the comments to this post, where commenter Mark R. suggests the Senate CAFE standards could be costly to consumers. GM's Robert Lutz suggests that the premium for a Tier 2 Bin 5 diesel could be in the $4,000-$4,500 range.) The current gas-powered 6-speed manual A4 3.2 FSI quattro gets about 22 MPG. For 12,000 miles/year of driving, the 3.0 TDI saves about 190 gallons of fuel annually. If the car lasts 10 years, the fuel savings are worth $4,800 in present value with a 4% discount rate and $3 fuel. I think the latter assumption is highly optimistic. Add just 4% annual fuel price increases, and the discounted savings increase to $5,700.
The savings are a bit less pronounced comparing FWD four-bangers (with the 1.8T gas engine turning in around 29 MPG with a manual), but are still in the range of $3,300-3,900 under the above assumptions.
So fuel savings from the vicinity of current U.S. car CAFE standards to that of the 35 MPG+ car standard passed by the Senate would pay for a lot of fuel-saving technology. Maybe diesels will give way to more advanced engines over the longer haul, or engineering hurdles with lithium-ion batteries will be surmounted to enable mass-producible plug-in hybrids sooner rather than later. But to suggest that you can't economically make 35 MPG with existing technology (let alone improvements between now and the Senate's unambitious 2020 implementation date) in a safe car with decent room and performance is just wrong.
[*] For real-world fuel economy. I've found the EU ratings, which tend to be more pessimistic than EPA city for the 'urban' loop and less than EPA highway for the extra-urban, to be pretty realistic overall.
It's easy being (relatively) green in the forthcoming Audi A4:
The [new] three-litre diesel... develops 176 kW (240 bhp) and has a peak torque of no less than 500 Nm all the way from 1500 to 3000 rpm... [The B8 A4] needs only 6.1 seconds to accelerate to 100 km/h from a standing start, and has a top speed of 250 km/h, yet its average fuel consumption is a more than modest 6.9 l/100 km. The 3.0 TDI always has quattro permanent all-wheel drive.That's basically the same peak power that Americans got in the sainted BMW E36 M3, and essentially the same acceleration. Fuel economy for that car, with rear-wheel drive and a manual transmission, is in the ballpark of 25 MPG (combined urban and extra-urban). To do a rough metric conversion for you, that's 34 MPG (U.S. gallons) for the AWD A4 TDI. It's not that dirty, either:
The 3.0 TDI already complies with forthcoming Euro 5 limits. A novel exhaust gas recirculation concept with increased cooling performance is used to reduce emissions of oxides of nitrogen.The U.S. "Tier 2 Bin 5" standards are much stricter than Euro 5 on NOx emissions, but some of this generation of diesels can (and will) be federalized. Meanwhile, if greater fuel economy is the aim, a probably-not-for-U.S.-consumption A4 2.0 TDI with 143 bhp
has... peak torque of 320 Nm between 1750 and 2500 rpm – figures that explain why the new Audi A4 can accelerate from 0 to 100 km/h in 9.4 seconds and reach a top speed of 215 km/h. When combined with the six-speed manual gearbox, the [FWD] 2.0 TDI is content with an average fuel consumption of 5.5 l/100 km, in which case the 65-litre fuel tank provides an action radius of more than 1,100 kilometres.That's 43 MPG — headed towards Prius territory [*] — with much-better-than-Prius performance.
You might ask what you'd be willing to pay for the diesel's fuel savings. (See, for instance, the comments to this post, where commenter Mark R. suggests the Senate CAFE standards could be costly to consumers. GM's Robert Lutz suggests that the premium for a Tier 2 Bin 5 diesel could be in the $4,000-$4,500 range.) The current gas-powered 6-speed manual A4 3.2 FSI quattro gets about 22 MPG. For 12,000 miles/year of driving, the 3.0 TDI saves about 190 gallons of fuel annually. If the car lasts 10 years, the fuel savings are worth $4,800 in present value with a 4% discount rate and $3 fuel. I think the latter assumption is highly optimistic. Add just 4% annual fuel price increases, and the discounted savings increase to $5,700.
The savings are a bit less pronounced comparing FWD four-bangers (with the 1.8T gas engine turning in around 29 MPG with a manual), but are still in the range of $3,300-3,900 under the above assumptions.
So fuel savings from the vicinity of current U.S. car CAFE standards to that of the 35 MPG+ car standard passed by the Senate would pay for a lot of fuel-saving technology. Maybe diesels will give way to more advanced engines over the longer haul, or engineering hurdles with lithium-ion batteries will be surmounted to enable mass-producible plug-in hybrids sooner rather than later. But to suggest that you can't economically make 35 MPG with existing technology (let alone improvements between now and the Senate's unambitious 2020 implementation date) in a safe car with decent room and performance is just wrong.
[*] For real-world fuel economy. I've found the EU ratings, which tend to be more pessimistic than EPA city for the 'urban' loop and less than EPA highway for the extra-urban, to be pretty realistic overall.
Labels: Trains Planes and Automobiles
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How did you arrive at the discount rate? After-tax value of a ladder of treasuries? I wonder about this all the time.
I used the time-honored method of pulling a figure out of someone else's butt and multiplying by two. In this case, Stephen Davis of Chicago and some co-authors used a 2% discount rate in calculations that purported to show that the containment strategy for Iraq was expensive relative to the war.
It's also close enough to a risk-free opportunity cost of funds as to not affect the conclusions I draw.
It's also close enough to a risk-free opportunity cost of funds as to not affect the conclusions I draw.
Thanks. Mine sounded better. Four is also a nice number and sounds grown-up.
It'd be a hoot to follow up on that Iraq cost-benefit analysis now.
It'd be a hoot to follow up on that Iraq cost-benefit analysis now.
Well, I wouldn't want to give you the false impression that numbers here were something they weren't.
As for the Davis et al. containment-vs-war cost comparison, there was an update last year that involved a remarkable amount of crow-eating for someone affiliated with Chicago and AEI. (Which is to say, you still had to read between the lines.) I don't know if they'll even bother with a third round, seeing as essentially the entire cost of the containment policy has been spent in Iraq just since the last update.
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As for the Davis et al. containment-vs-war cost comparison, there was an update last year that involved a remarkable amount of crow-eating for someone affiliated with Chicago and AEI. (Which is to say, you still had to read between the lines.) I don't know if they'll even bother with a third round, seeing as essentially the entire cost of the containment policy has been spent in Iraq just since the last update.
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