Interim Joint Technical Assessment Report:

Light-Duty Vehicle Greenhouse Gas Emission 

Standards and Corporate Average Fuel Economy Standards

for Model Years 2017-2025

Office of Transportation and Air Quality

U.S. Environmental Protection Agency

Office of International Policy, Fuel Economy, and Consumer Programs

National Highway Traffic Safety Administration

U.S. Department of Transportation

California Air Resources Board

California Environmental Protection Agency

September 2010
2017-2025 Technical Assessment

ii

Table of Contents

Executive Summary.................................................................................................... v

1 Introduction .................................................................................................... 1-1

1.1 Purpose of this Report........................................................................................................ 1-1

1.2 National Program for Model Years 2012 - 2016................................................................ 1-2

1.3 Standards for 2017 and Beyond ......................................................................................... 1-4

1.4 Future Technical Work and Analysis for the Joint Federal Rulemaking........................... 1-5

Chapter 1 References................................................................................................................... 1-7

2 Technical Input from Stakeholders.............................................................. 2-1

2.1 Overview of Stakeholder Outreach Process....................................................................... 2-1

2.2 Input from Various Stakeholder Groups............................................................................ 2-1

2.2.1 Automobile Original Equipment Manufacturers..................................................... 2-1

2.2.2 Automotive Suppliers .............................................................................................. 2-8

2.2.3 Non-Governmental Environmental Organizations.................................................. 2-9

2.2.4 State and Local Government Organizations.......................................................... 2-10

2.2.5 Infrastructure Providers ......................................................................................... 2-11

2.2.6 Labor Unions ......................................................................................................... 2-11

Chapter 2 References................................................................................................................. 2-13

3 Technology, Cost, Effectiveness and Lead-time Assessment...................... 3-1

3.1 What technologies did the Agencies Consider? ................................................................. 3-1

3.2 How did the Agencies Determine the Costs and Effectiveness of Each of These 

Technologies? .............................................................................................................................. 3-1

3.2.1 How are Cost and Effectiveness Estimates Different from the 2012-2016 Rule?... 3-1

3.2.2 Costs from Tear-down Studies................................................................................. 3-2

3.2.3 Costs of HEV, PHEV, EV, and FCEV .................................................................... 3-4

3.2.4 Mass Reduction Impacts and Costs ......................................................................... 3-7

3.2.5 Indirect Cost Multipliers........................................................................................ 3-11

3.2.6 Cost Adjustment to 2008 Dollars........................................................................... 3-12

3.2.7 Costs Effects due to Learning................................................................................ 3-13

3.2.8 Cooled EGR Cost and Effectiveness ..................................................................... 3-13

3.2.9 HEV Effectiveness................................................................................................. 3-14

3.2.10 Ongoing Vehicle Simulation to Update Effectiveness .......................................... 3-14

3.3 Vehicle Manufacturer Lead Time .................................................................................... 3-15

3.4 Other Technologies Assessed........................................................................................... 3-19

3.4.1 Types of engine technologies that improve fuel economy and reduce CO2 emissions 

include the following: ........................................................................................................... 3-19

3.4.2 Types of transmission technologies considered include:....................................... 3-22

3.4.3 Types of vehicle technologies considered include: ............................................... 3-23

3.5 Technology Packages in OMEGA ................................................................................... 3-27

Chapter 3 References................................................................................................................. 3-29
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iii

4 Infrastructure Assessment............................................................................. 4-1

4.1 Overview ............................................................................................................................ 4-1

4.2 Electric Vehicle Infrastructure ........................................................................................... 4-2

4.2.1 DOE Charging Infrastructure Projects Underway ................................................... 4-2

4.2.2 Home Charging Adequacy....................................................................................... 4-6

4.2.3 Charging System Cost.............................................................................................. 4-9

4.2.4 Battery End-of-Life Value Assessment and Secondary Use Applications............ 4-12

4.2.5 Potential Impacts on the Electric Utility and Distribution Infrastructure .............. 4-12

4.2.6 Voluntary Standards to Support PHEV & EV Infrastructure ................................ 4-14

4.3 Hydrogen Infrastructure Overview .................................................................................. 4-17

4.3.1 Status Today........................................................................................................... 4-17

4.3.2 Prospects for Cost and Technology Improvement................................................. 4-21

4.3.3 Infrastructure Rollout Strategy .............................................................................. 4-21

4.3.4 Policies and Partnerships ....................................................................................... 4-22

4.4 Conclusions...................................................................................................................... 4-24

Chapter 4 References................................................................................................................. 4-25

5 Incentives and Flexibilities ............................................................................ 5-1

5.1 Overview of Existing Incentives and Flexibilities in the MYs 2012-2016 Program......... 5-1

5.2 Potential Credit Programs, Incentives, and Other Flexibilities for 2017 and Later........... 5-4

5.3 Input on Non-regulatory Incentives from Stakeholders..................................................... 5-7

Chapter 5 References................................................................................................................. 5-10

6 Analysis of Scenario Costs and Impacts....................................................... 6-1

6.1 Context ............................................................................................................................... 6-1

6.2 Analytic Approach ............................................................................................................. 6-1

6.3 Development of Technology Pathways.............................................................................. 6-6

6.3.1 Model Years Considered.......................................................................................... 6-6

6.3.2 Scenario Stringencies Assessed ............................................................................... 6-7

6.3.3 Technology Pathways Considered........................................................................... 6-8

6.4 Other Key Inputs to the Analysis..................................................................................... 6-11

6.5 Results of Analysis........................................................................................................... 6-13

6.6 PHEV and EV Battery Cost Sensitivity Assessment ....................................................... 6-27

Chapter 6 References................................................................................................................. 6-29

7 Other Key Factors.......................................................................................... 7-1

7.1 Potential Impacts on the Economy and Employment ........................................................ 7-1

7.1.1 Impacts on Auto Manufacturers, Suppliers, and Auto Industry Employment......... 7-1

7.1.2 Impacts on Vehicle Sales......................................................................................... 7-2

7.1.3 Impacts on the U.S. Economy....................................Error! Bookmark not defined.

7.1.4 Summary.................................................................................................................. 7-2

7.2 Upstream GHG Emissions................................................................................................. 7-3

Chapter 7 References................................................................................................................... 7-4

Appendix A: The Baseline and Reference Vehicle Fleet................................ A-1
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Appendix B: Package Cost and Effectiveness...........................................................B-1

Appendix C: Reserved........................................................................C-1

Appendix D: Air Conditioning..................................................................................D-1

Appendix E: Key Inputs to the Analysis...................................................E-1

Appendix F: EPA Documentation of OMEGA model Analysis........................F-1

Appendix G: Infrastructure..................................................................G-1
2017-2025 Technical Assessment

v

Executive Summary

The Environmental Protection Agency (EPA) and the National Highway Traffic Safety 

Administration (NHTSA, a modal administration within the Department of Transportation) (―the 

agencies‖) are collaborating with the California Air Resources Board (CARB) to build on the 

success of the first phase of the National Program to regulate fuel economy and greenhouse gas 

(GHG) emissions from U.S. light-duty vehicles. The strong and coordinated first phase of 

standards for model years (MY) 2012-2016 was completed in April 2010, ensuring that all 

manufacturers can build a single fleet of U.S. vehicles to meet the new harmonized standards.

On May 21, 2010, the President called on the agencies to take additional coordinated 

steps to bring about a new generation of clean vehicles.1 Among other things, the agencies were 

tasked with researching and then developing standards for MY 2017 through 2025 that would be 

appropriate and consistent with EPA‘s and NHTSA‘s respective statutory authorities, in order to 

continue to guide the automotive sector along the road to reducing its fuel consumption and 

GHG emissions, thereby ensuring the corresponding energy security and environmental benefits. 

During the public comment period for the MY 2012-2016 proposed rulemaking, many 

stakeholders encouraged EPA and NHTSA to begin working toward standards for MY 2017 and 

beyond that would maintain a single nationwide program. Several major automobile

manufacturers and CARB sent letters to EPA and NHTSA in support of a 2017 to 2025 MY 

rulemaking initiative outlined in the President‘s May 21st announcement.

In his May 2010 memorandum, the President recognized that, by acting expeditiously, 

our country could take a leadership role in addressing these global challenges. He stated that,

―America has the opportunity to lead the world in the development of a new generation of clean 

cars and trucks through innovative technologies and manufacturing that will spur economic 

growth and create high-quality domestic jobs, enhance our energy security, and improve our 

environment.‖ The effort described in the Presidential Memorandum represents a continuation 

of the National Program to control GHGs and reduce oil consumption from the transportation 

sector. As directed by the President, NHTSA and EPA, in close coordination with CARB are 

working together under a carefully coordinated set of steps to further control GHG emissions and 

reduce oil consumption from the transportation sector.

In response to the President‘s request and to craft a clear regulatory path for the 

automobile industry, the agencies have collaborated with CARB to prepare this joint Technical 

Assessment Report to inform the rulemaking process and provide an initial technical assessment 

for that work. In accordance with the Presidential Memorandum, the agencies are also issuing a 

joint Notice of Intent to Issue a Proposed Rulemaking (NOI). The NOI announces plans for 

initiating a joint rulemaking which will be designed to improve the fuel efficiency and reduce the 

 

1

Presidential Memorandum: ―Improving Energy Security, American Competitiveness and Job Creation, and 

Environmental Protection Through a Transformation of Our Nation‘s Fleet of Cars And Trucks,‖ Issued May 21, 

2010, published at 75 Fed. Reg. 29399 (May 26, 2010), also available at http://www.whitehouse.gov/the-pressoffice/presidential-memorandum-regarding-fuel-efficiency-standards.
2017-2025 Technical Assessment

vi

GHG emissions of passenger cars and light-duty trucks built in MYs 2017-2025. The joint 

federal rulemaking will undergo a full notice-and-comment process, consistent with law and 

Administration policies on openness, transparency, and sound science.

EPA, NHTSA, and CARB are issuing this joint Technical Assessment Report in response 

to Section 2(a) of the Presidential Memorandum. Section 2(a) of the Presidential Memorandum 

requests that EPA and NHTSA ―Work with the State of California to develop by September 1, 

2010, a technical assessment to inform the rulemaking process, reflecting input from an array of 

stakeholders on relevant factors, including viable technologies, costs, benefits, lead time to 

develop and deploy new and emerging technologies, incentives and other flexibilities to 

encourage development and deployment of new and emerging technologies, impacts on jobs and 

the automotive manufacturing base in the United States, and infrastructure for advanced vehicle 

technologies.‖ This report provides an overview of key stakeholder input and addresses the 

topics noted in the memorandum, and presents the agencies‘ initial assessment of a range of 

stringencies of future standards. Chapter 1 of this report provides a further introduction and 

overview of the light-duty vehicle related sections of the May 21, 2010 Presidential 

Memorandum, and also of the final rule establishing CAFE and GHG standards for MYs 2012-

2016 light-duty vehicles.

During June through August 2010, EPA, NHTSA, and CARB held numerous meetings 

with a wide variety of stakeholders to gather input to consider in developing this Technical 

Assessment Report, and to ensure that the agencies had available to them the most recent 

technical information. These stakeholders included the automobile original equipment 

manufacturers (OEMs), automotive suppliers, non-governmental organizations, states and state 

organizations, infrastructure providers, and labor unions. The agencies sought these 

stakeholders‘ technical input and perspectives, consistent with the President‘s request, on the key 

issues that should be considered in assessing a national program to reduce greenhouse gas 

emissions and improve fuel economy for light-duty vehicles in model years 2017-2025. 

The agencies requested the OEMs‘ input regarding several key areas including 

technology development, key regulatory design elements, infrastructure issues, perspective on 

the impacts on the U.S. manufacturing base and jobs, and potential regulatory incentives and 

flexibilities. The OEMs presented detailed and confidential technical information to the agencies 

addressing these topics. A common theme across the auto firms is they are all heavily investing 

in advanced technologies including hybrids, plug-in hybrid electric vehicles, electric vehicles,

including fuel cell vehicles, next generation internal combustion engines, and mass reduction 

technologies, and companies expect to increase their offerings and sales of these technologies 

significantly in the future. The companies generally stated, however, that the degree to which 

these advanced technologies will penetrate the U.S. market in the 2017-2025 time frame depends 

upon a number of challenges and factors, as discussed in Chapter 2 of this report. EPA, NHTSA 

and CARB also met with a cross section of automotive suppliers to seek their input on the 

advanced technologies they are developing which could be implemented in the 2017-2025 timeframe. The agencies further received input from infrastructure providers. Many of the 

automakers and automotive suppliers provided input on the need for vehicle charging locations 

needed for the electrical charging of EVs and PHEVs to support their introduction into the 
2017-2025 Technical Assessment

vii

market. Chapter 2 aggregates and summarizes information gathered from the OEM, automotive 

supplier, and infrastructure provider meetings and describes how the agencies used the 

information to inform this report. 

The agencies also received input from numerous non-governmental organizations, 

including environmental organizations; representatives from the National Association for Clean 

Air Agencies (NACAA), the Northeast States for Coordinated Air Use Management 

(NESCAUM), and approximately 10 individual state and local governments; and the United 

Auto Workers (the UAW). All of these stakeholders strongly supported the President‘s call for 

continuing the National Program approach and setting new fuel economy and greenhouse gas 

standards for light-duty vehicles for the 2017-2025 model years. Chapter 2 also provides an 

overview of issues that were raised during discussions with the states, non-governmental 

organizations, and the UAW.

As discussed in Chapter 3, the agencies have conducted an initial technology cost, 

effectiveness and lead-time assessment for MYs 2017-2025. The agencies assessed the cost, 

effectiveness, and availability of over 30 vehicle technologies that manufacturers could use to 

improve the fuel economy and reduce CO2 emissions of their vehicles during MYs 2017-2025. 

The chapter describes technologies that are readily available today, but also other technologies 

that are not currently in production but are beyond the research phase and under development, 

and which are expected to be in production in the 2017-2025 timeframe. The technologies 

considered in this report fall into five broad categories: engine technologies, transmission 

technologies, vehicle technologies, electrification/accessory technologies, electric drive 

technologies including hybrid technologies and mass reduction. 

Consistent with stakeholder input obtained over the summer, Chapter 3 identifies how 

electric drive vehicles can be an important part of the vehicle mix that will likely be used to meet 

increasingly stringent fuel economy and GHG emission standards. Electric drive vehicles 

including hybrid electric vehicles (HEV), battery electric vehicles (EVs), plug-in hybrid electric 

vehicles (PHEVs) and hydrogen fuel cell vehicles (FCVs), can dramatically reduce petroleum 

consumption and GHG emissions compared to conventional technologies. Additionally, given 

their use of fuels that can eventually be derived from entirely renewable and zero carbon 

resources, the agencies note that these technologies have significant potential to transform the 

vehicles of the future to a low carbon fleet.

Stakeholders, particularly the OEMs, emphasized to the agencies that the future rate of 

penetration of these technologies into the vehicle fleet is not only related to future GHG and 

CAFE standards, but also to future gasoline fuel prices, future reductions in HEV/PHEV/EV 

battery costs, the overall performance and consumer demand for the advanced technologies, 

access to electric vehicle recharging locations and, for fuel cell vehicles the development of a 

hydrogen refueling infrastructure. In the case of EVs and PHEVs, electric charging locations are

needed in the form of charging systems, most often at home, but potentially also at the workplace

and other locations such as stand-alone facilities and public parking locations in order to 

facilitate significant, wide-spread penetration of these vehicle technologies. In the case of FCVs, 

hydrogen fueling stations are needed to support commercialization. Chapter 4 provides a 
2017-2025 Technical Assessment

viii

description and assessment of current activities and technologies, discussion of costs, and 

prospects for technology improvement, as well as a summary of needs for successful 

infrastructure deployment to support electric drive vehicle commercialization. The agencies 

worked closely with the Department of Energy (DOE) in our assessment of electric vehicle 

charging requirements and issues and DOE was a contributor to this Chapter, in addition to other 

technical aspects of this report.

The final rule for MYs 2012-2016 provides for several flexibilities, including averaging, 

banking and trading provisions for credit carry-forward and carry-back, various additional credits 

opportunities, and advanced technology incentives. The MYs 2012-2016 program also includes 

additional leadtime flexibilities under the CAA for smaller volume manufacturers. Several 

stakeholders provided input on the need to continue many of these flexibilities for the MYs 

2017-2025 program. Chapter 5 provides an overview of these flexibilities as they exist in the 

MYs 2012-2016 rule as well as the stakeholder input the agencies have received regarding their 

potential applicability in the MYs 2017-2025 program. Also, Chapter 5 provides an overview of 

non-regulatory approaches that can promote the commercialization of low-GHG light-duty 

vehicle technologies.

Chapter 6 presents an analysis of future levels of control of GHG emissions conducted 

for this Technical Assessment Report.2 Four scenarios of future stringency are analyzed for 

MYs 2020 and 2025, starting with a 250 gram/mile estimated fleet-wide level in MY 2016 and 

lowering CO2 scenario targets at the rates of 3% per year, 4% per year, 5% per year, and 6% per 

year, respectively. For each of those rates of increase in stringency, the agencies considered the 

effects of the industry following four potential ―technology pathways,‖ ―A,‖ ―B,‖ ―C,‖ and ―D.‖ 

The agencies developed these different technology pathways in order to capture both the current 

levels of uncertainty regarding the potential rate of penetration of various advanced technologies 

and to illustrate more than one approach that the auto industry could take in responding to future 

targets. This approach was also informed by our meetings with the auto companies, whom are 

pursuing a range of different technology paths for the future, with different companies placing 

relative emphasis on different technologies. The agencies present the results of this assessment 

in terms of six broad metrics: per-vehicle cost increase, net lifetime vehicle owner savings, 

payback period to the consumer, net reduction in GHG emissions, net reduction in fuel 

consumption, and vehicle technology penetration mix, as shown in the tables below. Chapter 6 

presents the results of this initial analysis for projected costs, emissions reductions, and lifetime 

fuel savings, and also provides the technology projections that were used in the analyses.

Chapter 6 also discusses the fact that this preliminary assessment does not include consideration 

of all statutory requirements and other factors that will be assessed in the upcoming Federal

rulemaking. Consideration of these factors is expected to affect cost assessments and may affect 

the proposed standards.‖

 

2 These GHG emissions levels can be translated to mpg-equivalent levels through simple math, but we note that they 

would not necessarily translate directly into equivalent CAFE standards due to their inclusion of credits for A/C 

improvements, which is permissible for CAA standards but not for CAFE standards.
2017-2025 Technical Assessment

ix

The following summary tables show the fundamental quantitative conclusions from this 

initial assessment. As shown Table ES-1, automotive technologies are available, or can be 

expected to be available, to support a reduction in greenhouse gas emissions, and commensurate 

increase in fuel economy, of up to 6 percent per year in the 2017-2025 timeframe. Greater 

reductions come at greater incremental vehicle costs. The per vehicle cost increase ranges from 

slightly under $1,000 per new vehicle for a 3 percent annual GHG reduction, increasing to as 

much as $3,500 per new vehicle to achieve a 6 percent annual GHG reduction. Consumer 

savings would increase with the lower GHG emissions and higher fuel economy. For the 

different scenarios analyzed, the net lifetime savings to the consumer due to increased vehicle 

efficiency range from $4,900 to $7,400. The initial vehicle purchaser will find the higher vehicle 

price recovered in 4 years or less for every scenario analyzed.

Table ES-1: Projections for MY 2025 Per-Vehicle Costs, Vehicle Owner Payback, 

and Net Owner Lifetime Savings 1, 2

Scenario New Fleet 

g/mile CO2 

Target 

(MPGe)2

Tech

Path

Per-Vehicle 

Cost 

Increase ($)

Payback 

Period 

(years)

Net Lifetime 

Owner 

Savings ($)

3%/year 190 (47) A $930 1.6 $5,000 

B $850 1.5 $5,100 

C $770 1.4 $5,200 

D $1,050 1.9 $4,900

4%/year 173 (51) A $1,700 2.5 $5,900 

B $1,500 2.2 $6,000 

C $1,400 1.9 $6,200 

D $1,900 2.9 $5,300

5%/year 158 (56) A $2,500 3.1 $6,500 

B $2,300 2.8 $6,700 

C $2,100 2.5 $7,000 

D $2,600 3.6 $5,500

6%/year 143 (62) A $3,500 4.1 $6,200 

B $3,200 3.7 $6,600 

C $2,800 3.1 $7,400 

D $3,400 4.2 $5,700

1. Per-vehicle costs represent the increase in costs to consumers from the MY 2016 standards. Payback period and 

lifetime owner savings use a 3% discount rate and AEO 2010 reference case energy prices. The gasoline price used 

for this estimate is $3.49/gallon in 2025 and increases over time to a maximum of $4.34/gallon in 2050.

2. The targets evaluated were CO2 targets which could be meet through reductions in CO2 as well as through air 

conditioning system hydroflurocarbon reductions converted to a CO2 equivalent value. MPGe is the equivalent 

MPG value if all of the CO2 reductions came from fuel economy improvement technologies. Real-world CO2 is 

typically 25 percent higher and real-world fuel economy is typically 20 percent lower. Thus, the 3% to 6% range 

evaluated in this assessment would span a range of real world fuel economy values of approximately 37 to 50 mpg, 

which correspond to the regulatory test procedure values of 47 and 62 mpg, respectively.
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x

As shown in Table ES-2, the increased vehicle efficiency would result in substantial 

societal benefits in terms of the GHG emission reductions and the petroleum use reductions. In 

the analyzed scenarios for 2025 model year vehicles, lifetime GHG emissions would be reduced 

from 340 million metric tons (3 percent annual improvement scenario) to as much as 590 million 

metric tons for a 6 percent annual improvement scenario. For the same range of scenarios, 

lifetime fuel consumption for this single model year of vehicles would be reduced by 0.7 to 1.3 

billion barrels.

Table ES-2: Estimated CO2e and Fuel Reductions for the Lifetime of MY 2025 

Vehicles1,2

Scenario Lifetime CO2e Reduction 

(million metric tons, MMT)

Lifetime Fuel Reduction 

(Billion Barrels)

3%/year 340 0.7

4%/year 410-440 0.9

5%/year 440-530 1.1

6%/year 470-590 1.3

1. Fuel reductions are the same for each of the four technology pathways, but CO2e reductions vary as a function of 

the penetration of EVs and PHEVs in each of the four technology pathways evaluated (due to an increase in 

upstream emissions). 

2. For reference, the National Program in MY 2016 is projected to reduce 0.6 billion barrels of fuel and 325 MMT 

CO2e over the lifetime of MY2016 vehicles.

Table ES-3 illustrates the levels of technology required to achieve the different GHG and 

fuel economy levels that were analyzed by the agencies. The types of vehicle technologies sold 

in 2025 to meet more stringent emission and fuel economy standards depends on the stringency 

of the adopted standards, the success in fully commercializing at a reasonable cost emerging 

advanced technologies, and consumer acceptance. The analysis for this report illustrates a wide 

range of possible outcomes, and these will likely vary by vehicle manufacturer. The potential 

fleet penetrations for gasoline and diesel vehicles, hybrids, plug-in electric vehicles, or electric 

vehicles also may vary greatly depending on the agencies‘ assumptions about what technology 

pathways industry choose.

As shown in Table ES-3, at the 3 or 4 percent annual improvement scenarios, advanced 

gasoline and diesel powered vehicles that do not use electric drivetrains may be the most 

common vehicle types available in 2025. In the 3 percent to 4 percent annual improvement 

range, all pathways use advanced, lightweight materials and improved engine and transmission 

technologies. Table ES-3 also shows that hybrid vehicle penetration under the 3 and 4 percent 

annual improvement scenarios vary widely due to the assumptions made for each technology 

pathway, ranging from roughly 3 to 40 percent of the market in 2025. 

Under the 5 or 6 percent annual improvement scenarios hybrids could make up from 40 

percent to 68 percent of the market. In Path D, where a manufacturer makes no improvement in 

gasoline and diesel vehicle technologies beyond MY 2016, electric vehicles begin to penetrate 
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xi

the market at the 4 percent annual improvement rate and may have as high as a 16 percent 

market penetration under the 6 percent annual improvement scenario.

Table ES-3: Technology Penetration Estimates for MY 2025 Vehicle Fleet

Scenario

Technology 

Path

New Vehicle Fleet Technology Penetration

Mass 

Reduction1

Gasoline & 

diesel vehicles HEVs PHEVs2EVs

3%/year Path A 15% 89% 11% 0% 0%

Path B 18% 97% 3% 0% 0%

Path C 18% 97% 3% 0% 0%

Path D 15% 75% 25% 0% 0%

4%/year Path A 15% 65% 34% 0% 0%

Path B 20% 82% 18% 0% 0%

Path C 25% 97% 3% 0% 0%

Path D 15% 55% 41% 0% 4%

5%/year Path A 15% 35% 65% 0% 1%

Path B 20% 56% 43% 0% 1%

Path C 25% 74% 25% 0% 0%

Path D 15% 41% 49% 0% 10%

6%/year Path A 14% 23% 68% 2% 7%

Path B 19% 48% 43% 2% 7%

Path C 26% 53% 44% 0% 4%

Path D 14% 29% 55% 2% 14%

1. Mass reduction is the overall net reduction of the 2025 fleet relative to MY 2008 vehicles.

2. This assessment considered both PHEVs and EVs. These results show a higher relative penetration of EVs 

compared to PHEVs. The agencies do believe PHEVs may be used more broadly by auto firms than 

indicated in this technical assessment.

Chapter 7 discusses other key factors for the MYs 2017-2025 light-duty vehicle 

rulemaking that the agencies are considering, including the potential impact on the employment 

and vehicle sales and upstream GHG emissions.

In conclusion, the three agencies have received important input from a range of 

stakeholders to inform the extension of the National Program to MYs 2017-2025. Auto 

manufacturers, states, environmental groups and the United Auto Workers have expressed 

support for a continuation of the National Program. All auto firms are heavily invested in 

developing advanced technologies which can reduce fuel consumption and GHGs significantly 

beyond the MYs 2012-2016 standards. Manufacturers are developing many technologies that 

would enable them to eventually achieve appreciable improvements in fuel economy levels, 

including advanced gasoline engines, hybrid electric vehicles, EVs, and PHEVs. The three 

agencies have performed an initial assessment of potential future standards (annual reductions in 

the range of 3 to 6% per year, or 47 to 62 mpg in 2025 if the industry achieved all of the 
2017-2025 Technical Assessment

xii

increases through fuel economy improvements), which demonstrates that advanced technologies 

can be used to achieve substantial reductions in fuel consumption and GHGs. The agencies 

analyzed four technology pathway scenarios that the industry could pursue to achieve more 

stringent targets, recognizing there are a wide range of pathways individual manufacturers could 

pursue. One pathway scenario relied upon significant mass reduction and advanced next 

generation gasoline vehicles, the second focused on hybridization and electrification of the fleet 

(HEVs, PHEVs, EVs), and the third was a blend of the first two. The fourth pathway 

emphasizes an EV and PHEV focused approach, with a lesser degree of emphasis on advanced 

gasoline, HEV, and mass reduction approaches. Based on this analysis and the assumptions 

employed, the agencies found that the per-vehicle cost increases for a 2025 vehicle ranged from 

$770 to $3,500 across the range of stringency targets and technology pathways. The fuel savings 

achieved by MY 2025 vehicles meeting these more stringent targets would result in a net lifetime 

savings of between $4,900 and $7400. The GHG reductions ranged from 340 to 590 million 

metric tons and fuel reduction ranged from 0.7 to 1.3 billion barrels over the lifetime of MY 

2025 vehicles. We emphasize that this Technical Assessment Report reaches no specific 

conclusions regarding the levels of stringency to propose for MYs 2017-2025. The report is an 

important step in a continuation of the National Program, but significant work remains to be 

done to support a future federal rulemaking.
2017-2025 Technical Assessment

1-1

1 Introduction

1.1 Purpose of this Report

The Environmental Protection Agency (EPA) and the National Highway Traffic 

Safety Administration (NHTSA, a modal administration within the Department of 

Transportation) (―the agencies‖) are collaborating with the California Air Resources Board 

(CARB) to build on the success of the first phase of the National Program to regulate fuel 

economy and greenhouse gas (GHG) emissions from U.S. light-duty vehicles. The strong and 

coordinated first phase of standards for model years (MY) 2012-2016 was completed in April 

2010, ensuring that all manufacturers can build a single fleet of U.S. vehicles to meet the new 

harmonized standards. 

On May 21, 2010, following the completion of the first phase of the National Program, 

the President called on the agencies to take additional coordinated steps to bring about a new 

generation of clean vehicles.1 Among other things, the agencies were tasked with researching 

and then developing standards for MY 2017 through 2025 that would be appropriate and 

consistent with EPA‘s and NHTSA‘s respective statutory authorities, in order to continue to 

guide the automotive sector along the road to reducing its fuel consumption and GHG 

emissions, and to ensure the corresponding energy security and environmental benefits. 

Following the President‘s announcement, several major automobile manufacturers and CARB

sent letters to EPA and NHTSA in support of a 2017 to 2025 rulemaking initiative as outlined 

in the President‘s Memorandum. In addition to the President‘s directive, many stakeholders 

in their comments during the MYs 2012-2016 rulemaking encouraged EPA and NHTSA to 

maintain a single nationwide program, and to extend the National Program beyond the first 

phase by beginning to work toward standards for MY 2017 as soon as practicable. 

The President called on the agencies to begin the next phase of the National Program 

in response to the urgent and closely intertwined challenges faced by our nation of 

dependence on oil, energy security, and global climate change. Reducing total petroleum use 

by U.S. light-duty vehicles decreases our economy‘s vulnerability to oil price shocks. 

Reducing dependence on oil imports from regions with uncertain conditions enhances our 

energy security. The need to reduce energy consumption is more crucial today than it was 

when the Energy Policy and Conservation Act was enacted in the mid-1970s. Net petroleum 

imports now account for approximately 57 percent of U.S. domestic petroleum consumption,2

and the share of U.S. oil consumption for transportation is approximately 72 percent.3 

Moreover, world crude oil production continues to be highly concentrated, exacerbating the 

risks of supply disruptions and their negative effects on both the U.S. and global economies.

Light-duty vehicles also account for about 41 percent of all U.S. oil consumption,

B making 

them the largest single oil-consuming transportation segment in the U.S. Light-duty vehicles 

emit four GHGs—carbon dioxide (CO2), methane (CH4), nitrous oxide (NOX), and 

hydrofluorocarbons (HFCs) – and are responsible for nearly 60 percent of all mobile source 

GHGs and over 70 percent of Section 202(a) mobile source GHGs. In 2007, CO2 emissions 

represented about 94 percent of total GHG emissions from light-duty vehicles (including 

HFCs), and the CO2 emissions measured by EPA fuel economy compliance tests represented

about 90 percent of all light-duty vehicle GHG emissions.4,5
Chapter 1 

1-2

In his May 2010 memorandum, the President recognized that by acting expeditiously, 

our country could take a leadership role in addressing these global challenges, stating that 

―America has the opportunity to lead the world in the development of a new generation of 

clean cars and trucks through innovative technologies and manufacturing that will spur 

economic growth and create high-quality domestic jobs, enhance our energy security, and 

improve our environment.‖ NHTSA and EPA, in close coordination with CARB, have started 

the process, through this report, to evaluate the potential for cleaner and more efficient 

vehicles that would transform our nation‘s fleet of cars and trucks in the future. Our work 

would extend the National Program and would entail a carefully coordinated set of steps to 

further control GHG emissions and reduce oil consumption from the transportation sector.

To answer the President‘s call and to craft a clear regulatory path for the automobile 

industry, the agencies have collaborated with CARB to prepare this Technical Assessment 

Report to inform EPA‘s and NHTSA‘s upcoming rulemaking process and provide an initial 

technical assessment for that work. Section 2 of the President‘s Memorandum states that this 

Technical Assessment Report should reflect stakeholder input on relevant factors including: 

―viable technologies, costs, benefits, lead time to develop and deploy new and emerging 

technologies, incentives and other flexibilities to encourage development and deployment of 

new and emerging technologies, impacts on jobs and the automotive manufacturing base in 

the United States, and infrastructure for advanced vehicle technologies.‖ This report 

provides an overview of key stakeholder input received to date, and addresses the applicable 

topics noted in the May 2010 Presidential Memorandum.

Section 2 of the President‘s Memorandum also states that EPA and NHTSA should 

issue a joint Notice of Intent to Issue a Proposed Rulemaking (NOI) following the Technical 

Assessment Report announcing plans to promulgate a next phase of standards for this sector, 

including plans for ―gathering any additional information needed to support regulatory 

action.‖ The NOI is also to include ―potential standards that could be practicably 

implemented nationally for the 2017-2025 model years and a schedule for setting those 

standards as expeditiously as possible, consistent with providing sufficient lead time to 

vehicle manufacturers.‖6 The joint federal rulemaking initiated with the NOI will be designed 

to improve the fuel economy and reduce the GHG emissions of passenger cars and light 

trucks built in MYs 2017-2025, and will follow the full notice-and-comment process, 

consistent with law and Administration policies on openness, transparency, and sound 

science.

1.2 National Program for Model Years 2012 - 2016 

The National Program came about, in part, because of a historic agreement between 

diverse interests to set in motion a national fuel efficiency policy announced by the President 

on May 19, 2009.7 Several automakers and their trade associations also announced their 

support for the National Program at that time. In collaborating between the public and private 

sector, the United States has already shown leadership through enactment of the first-ever 

harmonized GHG emissions and fuel economy standards for light-duty vehicles.

On April 1, 2010, NHTSA and EPA issued joint final rules establishing standards for 

GHG emissions and fuel economy for passenger cars, light-duty-trucks, and medium-duty 
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passenger vehicles (―light-duty vehicles‖), which we referred to collectively as the National 

Program.8The agencies found that this first phase of the National Program will achieve 

substantial reductions of GHG emissions and improvements in fuel economy from the lightduty vehicle part of the transportation sector, based on technology that is already being 

commercially applied in most cases and that can be incorporated at a reasonable cost. 

EPA and NHTSA established two separate sets of standards, each under its respective 

statutory authority. EPA set national CO2 emissions standards for light-duty vehicles under 

section 202 (a) of the Clean Air Act. These standards will require the fleet of vehicles to meet 

an estimated combined average emissions level of 250 grams/mile of CO2 in model year 

(MY) 2016, which the agencies explained is equivalent to a fuel economy level of 35.5 miles 

per gallon if all the reductions were achieved through improvements in fuel economy, 

although the CO2 standards also gave credit for air conditioning improvements that reduced 

GHGs other than carbon dioxide. NHTSA, in turn, set CAFE standards for passenger cars 

and light trucks under EPCA, as amended by EISA.9These standards will require 

manufacturers of those vehicles to meet an estimated combined average fuel economy level of 

34.1 mpg in model year 2016, which is the maximum feasible amount of improvement that 

the agencies estimated could be required using fuel economy-improving technology alone, 

without regard to the A/C credits permitted by EPA under the CAA. The standards for both 

agencies begin with the 2012 model year, with standards increasing in stringency through 

model year 2016. They represent a harmonized approach that will allow industry to build a 

single national fleet that will satisfy both the GHG requirements under the CAA and CAFE 

requirements under EPCA/EISA. 

The MY 2012-2016 standards are together expected to result in approximately 960

million metric tons of total carbon dioxide equivalent emissions reductions and approximately 

1.8 billion barrels of oil savings over the lifetime of vehicles sold in 2012 through 2016. In 

total, the combined EPA and NHTSA 2012-2016 standards will reduce GHG emissions from 

the U.S. light-duty fleet approximately 21 percent by 2030 over the level that would occur in 

the absence of the National Program. These actions also will provide important energy 

security benefits, as light-duty vehicles are about 95 percent dependent on oil-based fuels and 

much of the petroleum consumed by the U.S. is imported.

The National Program for MYs 2012–2016 was developed in close coordination with 

many key stakeholders including California and several other states. In 2004, CARB

approved standards for new light-duty vehicles, which regulate the emission of not only CO2, 

but also other GHGs. Since then, thirteen states and the District of Columbia, comprising 

approximately 40 percent of the light-duty vehicle market, have adopted California‘s 

standards. On June 30, 2009, EPA granted California‘s request for a waiver of preemption 

under the CAA.10 The granting of the waiver permits California and the other states to 

proceed with implementing the California emission standards. These standards apply to 

model years 2009 through 2016.

To promote the National Program for MYs 2012-2016, in May 2009, California 

agreed to accept compliance with the national standards as meeting its requirements. This 

action allows the single national fleet produced by automakers to meet the two Federal 

requirements and to meet California requirements as well. 
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The MYs 2012-2016 standards adopted by NHTSA and EPA for passenger cars and 

light trucks are attribute-based standards, specifically based on vehicle footprint. Each 

manufacturer will have a GHG and a CAFE standard unique to its each of its fleets, 

depending on the footprints of the vehicle models and the volumes produced by that 

manufacturer. A manufacturer will have separate footprint-based standards for cars and light

trucks. With the footprint-based standard approach, EPA and NHTSA believe there should be 

no significant effect on the relative distribution of different vehicle sizes in the fleet, which 

should mean that consumers will still be able to purchase the size of vehicle that meets their 

needs. 

As described in the final rule, EPA and NHTSA expect that automobile manufacturers 

will meet the MYs 2012-2016 CAFE and GHG standards by utilizing currently-available

technologies. Although many of these technologies are available today, the emissions 

reductions and fuel economy improvements will involve more widespread use of these 

technologies across the light-duty vehicle fleet. These include improvements to engines, 

transmissions, and tires, increased use of start-stop technology, improvements in air 

conditioning systems, increased use of hybrid and other advanced technologies, and the initial 

commercialization of electric vehicles and plug-in hybrids. NHTSA‘s and EPA‘s assessment 

of likely vehicle technologies that manufacturers will employ to meet the MYs 2012-2016 

standards is discussed in the final rule and in the Joint TSD for the final rule. 

The MYs 2012-2016 standards also provide a number of compliance flexibilities to 

manufacturers. While the flexibilities vary in their compliance applicability based on whether 

the manufacturer is meeting the CAFE standard or the GHG standard, both standards also 

allow some of the same flexibilities. These flexibilities are discussed further in Chapter 5 

below.

1.3 Standards for 2017 and Beyond

In response to the President‘s call to continue and expand a strong, coordinated 

National Program, and in order to achieve critical additional reductions in oil consumption

and GHG emissions from light-duty vehicles, a number of stakeholders stepped up to offer 

their support and commitment to fulfilling the President‘s vision. After release of the 

President‘s May 2010 Memorandum, CARB issued a letter supporting the rulemaking process 

to establish MY 2017-2025 standards.11 In its letter, CARB committed to work in partnership 

with EPA and NHTSA to: (1) evaluate technologies; (2) engage with manufacturers and other 

stakeholders to fully explore the capability of technologies; (3) evaluate possible approaches 

to increase in the marketplace the use of advanced technologies; and (4) identify potential 

GHG emissions standards with the expectation that the annual rate of improvement would be 

in the 3 to 6 percent range.

Several manufacturers also sent letters of support for the 2017-2025 rulemaking 

initiative following the President‘s announcement, committing to engaging in a process to 

continue a single national program beyond 2016.12 The letters generally stated the 

manufacturers‘ agreement with a set of guiding principles, developed by the agencies, for the 

rulemaking process. These guiding principles include: (1) that EPA and NHTSA will work to 

develop strong, coordinated national GHG emissions and CAFE standards for light-duty 
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vehicles manufactured in MY 2017-2025 that enable manufacturers to build a single lightduty national fleet that satisfies all federal and state requirements; (2) that EPA and NHTSA 

will seek input from an array of stakeholders including automobile manufacturers, 

infrastructure providers, labor unions, and environmental organizations, and the agencies will 

work with the State of California and other states in this process; (3) that the agencies and 

CARB will develop a technical assessment to inform the rulemaking process; (4) that a midterm technology review would be appropriate; and, (5) that the future regulatory program 

should enable consumers to still have a full range of vehicle choices. 

The guiding principles also included a description of the process for developing this 

Technical Assessment, including: (1) meeting with stakeholders individually to gather 

currently available information on viable technologies, costs, benefits, lead times, incentives 

and other flexibilities and to evaluate other relevant factors, such as infrastructure; (2) 

evaluating emerging technologies to further reduce GHG emissions and improve fuel 

economy; (3) identifying the capabilities to commercialize new and existing GHG and fuel 

economy technologies, including potential costs and market barriers associated with such 

technologies; and, (4) evaluating possible approaches to help establish in the marketplace an 

increase in the use of advanced technologies, including, but not limited to, plug-in hybrid, 

battery electric and fuel cell vehicles.

1.4 Future Technical Work and Analysis for the Joint Federal Rulemaking

This report represents EPA, NHTSA, and CARB‘s initial assessment of the costs, 

effectiveness, and lead-time considerations for a range of advanced vehicle technologies that 

can significantly increase fuel economy and decrease GHG emissions and it includes new 

information that has been gathered since the 2012 – 2016 federal final rule. As discussed 

above, and presented in the Executive Summary and in detail in Chapter 6, the report also 

presents an analysis for a range of increasing levels of potential stringency for 2020 and 2025, 

along with costs and benefits for using certain advanced technologies for achieving those 

targets. This is an important first step for EPA and NHTSA in meeting the requirements of 

the President‘s Memorandum, which will also include the agencies issuing a Joint Notice of 

Intent, a Joint Notice of Proposed Rulemaking, and a Joint Final Rule in the future.

Being the first step, it is important to note that this Technical Assessment must be 

viewed in the context of the additional work NHTSA and EPA will do going forward. The 

two agencies have a number of significant, on-going projects which will inform the future 

joint Federal rulemaking. As discussed in Chapter 3, these include: new technical 

assessments of advanced gasoline, diesel, and hybrid vehicle technology effectiveness being 

conducted with Ricardo, Inc.; several new projects to evaluate the cost, feasibility, and safety 

impacts of mass reduction from vehicles; and an on-going project with FEV & Munro to 

improve our cost estimations for advanced technologies; further consideration of battery life, 

durability, cost and safety; consideration of several technology cost factors including Indirect 

Cost Multiplier values, time based learning over extended periods of time; maintenance costs; 

and further review of the leadtime needed to implement advanced technologies. An analysis 

of the effects of mass reduction on vehicle safety has not been included in this Technical 

Assessment. For the 2017-2025 NPRM, NHTSA and EPA will conduct an analysis of the 

effects of the proposed rulemaking on vehicle safety, including societal effects. CARB is 
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undertaking a study of the safety effects of a future vehicle designed for high levels of mass 

reduction, and CARB is coordinating with EPA and NHTSA on that study. In addition, EPA 

and NHTSA will continue to meet with and consider input from the full range of stakeholders 

as we develop the joint Federal rulemaking. All of this future information will enhance the 

accuracy of our technological assessment.

In addition, the assessment of scenarios and the accompanying results presented in 

Chapter 6 of this report should be considered an initial analysis because it does not consider 

the full range of factors which EPA and NHTSA must consider for a rulemaking under our 

respective statutory authorities. As discussed in Chapter 6, these include (but are not limited 

to): consideration of the full range of societal benefits, including consumer welfare effects, 

specific evaluation of potential safety implications of future standards, consideration of the 

costs and feasibility of the standards for individual automotive firms, and the development of 

separate attribute-based standards for passenger cars and light-duty trucks for each model year 

covered by the rulemaking. 
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Chapter 1 References

1

Presidential Memorandum: ―Improving Energy Security, American Competitiveness and Job Creation, and 

Environmental Protection Through a Transformation of Our Nation‘s Fleet of Cars And Trucks,‖ Issued May 21, 

2010, published at 75 Fed. Reg. 29399 (May 26, 2010), also available at http://www.whitehouse.gov/the-pressoffice/presidential-memorandum-regarding-fuel-efficiency-standards.

2

Source; Transportation Energy Data Book Edition 28 

3

 Source: EIA Annual Energy Outlook 2010 released May 11, 2010.

4

U.S. Environmental Protection Agency. 2009. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-

2007. EPA 430-R-09-004. 

5

U.S. Environmental Protection Agency (2010). Regulatory Impact Analysis: Final Rulemaking to Establish 

Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards,

Chapter 2, page 2-4. EPA-420-R-10-009. Available at: http://www.epa.gov/otaq/climate/regulations.htm.

6

Presidential Memorandum, See Note 1.

7 Remarks by the President on National Fuel Efficiency Standards, May 19, 2009, available at 

http://www.whitehouse.gov/the-press-office/president-obama-announces-national-fuel-efficiency-policy, see 

also http://www.whitehouse.gov/the-press-office/remarks-president-national-fuel-efficiency-standards

8

75 FR 25324 (May 7, 2010).

9

49 U.S.C. 32902

10 74 FR 32744 (July 8, 2009). 

11 The California Air Resources Board commitment letter is available at: 

http://www.epa.gov/otaq/climate/regulations.htm.

12 The manufacturer commitment letters are available at: http://www.epa.gov/otaq/climate/regulations.htm.

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2 Technical Input from Stakeholders

2.1 Overview of Stakeholder Outreach Process

As mentioned above, the May 21, 2010 Presidential Memorandum requests that EPA 

and NHTSA, working with the State of California, develop a Technical Assessment to inform 

the rulemaking process ―reflecting input from an array of stakeholders on relevant factors, 

including viable technologies, costs, benefits, lead time to develop and deploy new and 

emerging technologies, incentives and other flexibilities to encourage the development and 

deployment of new and emerging technologies, impacts on jobs and the automotive 

manufacturing base in the United States, and infrastructure for advanced vehicle 

technologies....‖13

To fulfill that request, during June through August 2010, EPA, NHTSA, and CARB 

held numerous meetings with a wide variety of stakeholders to gather input to consider in 

developing this Technical Assessment Report, and to ensure that the agencies had available to 

them the most recent technical information directly from the stakeholders themselves. These 

stakeholders included many automobile original equipment manufacturers (OEMs), 

automotive suppliers, non-governmental organizations, states and state organizations, 

infrastructure providers, and labor unions. For many of the meetings with the OEMs, as well 

as labor unions, representatives from the federal Council of Environmental Quality and the 

White House Office of Energy and Climate Change also participated. The agencies sought 

these stakeholders‘ technical input and perspectives on the key issues that should be 

considered, as the President‘s memo identified, in assessing a national program to reduce 

greenhouse gas emissions and improve fuel economy for light-duty vehicles in model years 

2017-2025. NHTSA and EPA anticipate continuing the productive dialogue with 

stakeholders as our joint federal rulemaking to develop the new national program proceeds, in 

order to continue to ensure that our analysis reflects the best available information.

2.2 Input from Various Stakeholder Groups

2.2.1 Automobile Original Equipment Manufacturers

EPA, NHTSA and CARB met with twenty different automotive OEMs to discuss the 

development of a national program for MYs 2017-2025. As discussed below, these include 

very large firms which sell large volumes of vehicles in the U.S. (and in most cases around 

the world), small and medium sized firms who sell relatively low volumes of vehicles in the 

U.S., and three relatively new ―start-up‖ automotive firms whose business strategy for the 

U.S. market is focused on the production of all electric vehicles and/or plug-in hybrid electric 

vehicles. These meetings included senior management and staff from both the companies and 

the three agencies.

EPA, NHTSA and CARB met with eleven of the manufacturers with the largest U.S. 

vehicle sales volume to seek their input on both the key technical and policy issues that the 

agencies should consider in developing the MYs 2017-2025 technical assessment. The 
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agencies met individually with the following companies: General Motors, Ford, Chrysler, 

Toyota, Honda, Nissan, Hyundai, Kia, Volkswagen, BMW, and Daimler. These 

manufacturers account for more than 90 percent of the vehicles produced for sale in the 

United States. While the views they expressed and the forecasts they shared for the future 

vehicle market covered a considerable range, especially in terms of specific details, the 

agencies view this range as unsurprising, considering uncertainty regarding key factors (e.g., 

fuel prices) in the 2017-2025 time frame, the relatively long-time frame over which requested 

companies to consider (15 years into the future) and considering manufacturers‘ various 

strategies for competing in the automotive market. A number of messages were stressed by 

all or nearly all manufacturers and we have summarized those below. The agencies have 

carefully considered the information and views these manufacturers have shared, and NHTSA 

and EPA will continue to do so as part of the formal rulemaking process for post-2016 CAFE 

and GHG emissions standards. 

In addition, the agencies met with several medium to smaller volume manufacturers, 

including Mitsubishi, Jaguar Land-Rover, Ferrari, Aston-Martin, Lotus, and McLaren. These 

medium and smaller volume manufacturers may face unique compliance challenges because 

they sell a limited number of vehicle types in the U.S., and/or they serve relative small market 

segments that tend to value highly priced luxury vehicles with very high levels of vehicle 

performance (e.g., vehicles with very rapid acceleration and top vehicle speeds) much more 

highly than fuel economy, such that fuel-saving technologies (e.g., turbochargers), even when 

applied, are often used to increase performance rather than to increase fuel economy. Several 

of these manufacturers have traditionally been ―fine-payers‖ under the CAFE system, and like 

all manufacturers—including those that do comply with CAFE standards—are required to pay 

―gas guzzler‖ taxes for specific models with especially low fuel economy levels. The input 

from these medium and smaller volume manufacturers will be important to the agencies in 

determining how to structure the national program for MYs 2017-2025.

The agencies also met with new entrants to the automotive industry who are focusing 

on development of electric vehicles and/or plug-in hybrid electric vehicles, including Fisker, 

Tesla, and BYD. These electric vehicle manufacturers provided input regarding the cost of 

key EV technologies (e.g., batteries), the outlook for expanding the EV market, and the need 

for infrastructure and public incentives to support PHEV and EV purchase and operation.

The agencies requested the OEMs‘ input in the following key areas, consistent with 

the President‘s memorandum: 

Technology development status for MYs 2017-2025. For each major 

technology development area we requested details regarding effectiveness, 

costs, technology development and future product introduction plans, and 

the anticipated market penetration in the 2017-2025 timeframe. The major 

technology areas in which the agencies specifically sought information 

included powertrain improvement for advanced gasoline and diesel engines 

and transmissions, hybrid vehicles (HEVs), plug-in hybrid electric vehicles 

(PHEVs) and electric vehicles (EVs) (with a focus on battery technology 

for HEV/PHEV/EVs), fuel cell vehicles, and vehicle mass reduction, as 
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well as thermal management technologies including air conditioning 

improvements. 

Key regulatory design elements

Infrastructure issues

Perspective on the impacts on the U.S. manufacturing base and jobs

Potential incentives and flexibilites

In response, the automotive OEMs presented detailed technical information to the 

agencies addressing these topics, and requested confidential treatment for much of it. In order 

to respect these requests for confidentiality, the agencies cannot reveal specific details of the 

business information provided at these meetings, but taken in the aggregate, the following 

summarizes information gathered from the OEM meetings. It is important to note that while 

we requested information for the 2017-2025 time frame, nearly every manufacturer indicated 

that they do not have detailed product development and launch plans which extend 15 years 

into the future. In general, the firms‘ plans for 2010-2015 are fairly well defined, most firms 

do have product plans which extend into the 2016-2020 time frame, and no firm had product 

plans of any significant detail which cover the 2021-2025 time frame. Below we summarize 

the general trends we heard from the OEMs in the following broad areas: advanced 

gasoline/diesel engine and transmission technologies; vehicle mass reduction technologies; 

HEV, PHEV, EV technologies; fuel cell vehicle technologies; air conditioning and other 

technologies; regulatory program design; electric vehicle charging infrastructure, and; 

perspectives on US manufacturing and automotive-related jobs.

Advanced gasoline/diesel engine and transmission technologies

Nearly universally, the manufacturers agreed with the agencies‘ projections in the 

MYs 2012-2016 final rule that the following technologies will be much more prevalent in 

2016 and beyond than they are today. These unclude more efficient turbocharged direct 

injection downsized gasoline engines (turbo-GDI engines) as well as, for larger displacement 

engines, a mix of turbo-GDI engines and some products with GDI coupled with cylinder 

deactivation and advanced valve timing control - all matched with more efficient 6+ speed 

automatic or dual-clutch transmissions.C However, beyond this particular combustion and 

transmission technologies, OEM feedback with regard to what technologies would be 

employed to meet future more stringent CAFE and GHG standards was mixed. Companies 

indicated that they intended to pursue a variety of different strategies, including diesel, lean 

burn gasoline direct injection, homogeneous charge compression ignition, high Brake Mean 

Effective Pressure (BMEP)Dturbocharged/cooled exhaust gas recirculation systems, and 

 

C

See, e.g., id. at 25621-25624.

D Brake Mean Effective Pressure is the average amount of pressure in pounds per square inch (psi) that must be 

exerted on the piston to create the measured horsepower. This indicates how effective an engine is at filling the 
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other advanced engine configurations. Some of these technologies are still in development, 

and OEM comments usually noted that while they remain promising advanced powertrains, 

further development will still be needed to bring them to production. For example, while 

manufacturers were often optimistic about upcoming advanced gasoline engine technologies, 

some also cited concerns such as launch performance of highly-downsized turbocharged 

engines (though most of those manufacturers also stated they are working to resolve this 

issue), or the sensitivity of emission controls on lean-burn engines to gasoline sulfur content. 

Several manufacturers also indicated that nationwide increases in gasoline minimum octane 

levels could be important to attain the maximum potential fuel efficiency and GHG emissions 

improvements for advanced gasoline engines while avoiding driver dissatisfaction with not 

being able to use regular octane fuel. While there was general consensus that more can be 

done for gasoline engines, there was no general consensus, and in some cases no projections 

were provided, regarding the projected costs of these technologies in the 2020 to 2025 time 

frame.

Vehicle mass reduction technologies

Nearly all OEMs had strategies for reducing the mass of their vehicles, that in many 

cases were described as a new or improved technical approach. Some firms stated that they 

would also be taking advantage of opportunities to reduce engine size without compromising 

vehicle power/weight ratios and thus maintain or increase vehicle performance. The majority 

of manufacturers stated that they were making every effort to remove weight from their 

vehicles through careful redesigns, material substitution, and mass reduction compounding 

going forward. Nearly every automotive firm indicated that vehicle mass will actually 

decrease over the 2010 to 2025 time frame, though the level predicted level of mass decrease 

varied significantly across the firms. Nevertheless, several OEMs indicated that vehicle 

safety technologies, both those driven by regulation and those planned by the firms to meet 

internal company objectives or voluntary standards, would add mass to vehicles in the future 

and this would partially off-set the gains they would see if the focus were only on mass 

reduction and the current status-quo with respect to vehicle safety related technology. A few 

firms also speculated that future criteria pollutant emission standards may also result in a 

small increase in mass that would partially offset the other mass reduction technologies being 

considered by the companies.

Manufacturers cited varied plans to change vehicle designs and/or increase the use of 

high-strength steel (HSS), ultra-high strength steel, aluminum, composites, and/or other 

materials in order to offset these increases and achieve further mass reduction. 

Manufacturers generally indicated that universal material substitution (such as a 

complete switch from steel to aluminum body-in white structures) would not be feasible to 

implement across the majority of their high volume vehicle product lines in the 2017-2025 

time frame due to cost constraints as well as many other engineering and manufacturing 

challenges. Therefore, while more lighter-weight materials might be seen in the future, most 

 

combustion chamber with an air/fuel mixture, compressing it and achieving the most power from it. A higher 

BMEP value contributes to higher overall efficiency.
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OEMs expressed that they still saw the need to continue utilizing steel on many of the 

structural components of vehicles. Also, most manufacturers indicated they either currently 

use significant levels of HSS and/or plan to increase use of HSS in response to recentlypromulgated MYs 2012-2016 standards, which some emphasized could mean that further 

mass reduction through MYs 2017-2025 would necessitate more aggressive (and, therefore, 

potentially more expensive) strategies. Balancing all of these factors, most manufacturers 

generally estimated the potential to reduce actual vehicle mass ranges from 10% to 15% 

between today (2010) and 2025. 

A number of firms also discussed the more advanced light-weight materials such as 

carbon fiber and magnesium. While these materials can offer very significant mass reduction, 

in general these materials are only used on more exotic luxury or high performance vehicles. 

There are, of course, examples of vehicles today which use carbon fiber, but they tend to be 

very expensive, ultra-high performance vehicles (such as the limited edition Ferrari Enzo, or 

the Mercedes SLR MacLaren) or in other cases the amount of carbon fiber in the vehicle is for 

a few select components (such as in the high performance Corvette ZR1 or the high 

performance Lexus ISF). A number of automotive firms are exploring the ability to produce a 

less expensive automotive grade carbon fiber, but in general companies did not see carbon 

fiber, or for that matter magnesium, as playing a major role in the 2017-2025 time frame.

HEV, PHEV, EV technologies

Virtually all of the manufacturers are planning for greater electrification of their fleet, 

although there were varying degrees of this: from 12 volt stop-start systems, to full hybrid 

electric vehicles (HEV), to plug-in HEVs (PHEV), to electric vehicles (EV). OEMs stated 

that the relative penetration of these technologies varied greatly depending on a number of 

factors, including, future gasoline fuel prices, future decreases in battery costs, anticipated 

regulatory fuel economy/GHG requirements. In particular for PHEV and EVs, OEMs also 

identified the charging infrastructure development and costs as well as external (federal, state 

and local) incentives, and consumer demand/acceptance of vehicles requiring recharging and 

which may have reduced range (in the case of EVs) as additional factors which will impact 

the future penetration of these technologies. For example, with regard to consumer demand, a 

number of OEMs expressed reservations regarding the potential, without government 

assistance, to increase significantly the market for PHEVs and EVs, much beyond the likely 

first-adopters who have already indicated interest in purchasing these vehicles. Nevertheless 

a number of the firms suggested that in the 2020 time frame their U.S. sales of HEVs, PHEVs, 

and EVs combined could be on the order of 15-20% of their production, and while not all 

firms provided forecasts out to 2025, some did indicate that this percent of production could 

grow to be on the order of 40-50%, depending on the factors described above. Other firms 

provided lower projections for the 2020 to 2025 time frame, or no projection at all.

All of the major OEMs recognize that for PHEV and EV vehicles, the battery costs are 

by far the most significant contributor to the cost increase over a gasoline vehicle. 

Universally the OEMs believe that large-format lithium-ion batteries offer the most promising 

trade-off between battery performance, weight, size, and costs. A large number of lithium-ion 

battery chemistries and designs are being explored and considered for commercialization. 

With respect to costs, there also was a wide range in OEM-projected battery-pack cost in the 
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2020 to 2025 timeframe, with the majority of estimates in the $300/kW-hour to $400/kWhour range for 2020 and $250 to $300/kW-hour range for 2025.

Fuel cell vehicle technologies

A number of the larger automotive firms described active research and product 

development programs they have underway with respect to fuel cell vehicles. Several 

companies have planned limited product introductions for California within the next several 

years. The companies that discussed such programs identified two major challenges for fuel 

cell vehicles: reducing vehicle system costs and the development of a refueling infrastructure.

With respect to costs, several of the firms had specific technology development 

roadmaps which they estimated could significantly lower the costs of fuel cell vehicles over 

the next ten to fifteen years, which they indicated could potentially make fuel cell vehicle 

incremental costs competitive with all electric vehicles in the 2020 to 2025 time frame.

With respect to infrastructure, while the OEMs noted that California is actively 

working to develop and expand a hydrogen refuel infrastructure centered in Southern 

California, they also stressed that without a significant development in other regions of the 

U.S., fuel cell vehicles will not be able to penetrate the market beyond limited, centrally 

fueled fleet programs.

For the U.S. market, most major firms expressed a belief that fuel cell vehicles will 

play a significant role in the longer-term. Several firms expect that this will be in the time 

frame beyond 2025 for the nation as a whole, outside of specific geographic areas (such as 

California) where a refueling infrastructure is being developed. 

Air conditioning and other technologies

Many of the OEMs stated that they were anticipating switching air conditioner (A/C) 

refrigerant from the current R134a (with its high global warming potential, GWP) to the much 

lower HFO1234yf as soon as they could, with most firms projecting this would occur between 

now and approximately 2018. Many OEMs noted, however, that this switch is dependent on 

EPA SNAP approval,Eas well as availability and price from suppliers for the new refrigerant. 

Manufacturers noted that these two issues had the potential to delay much of the switchover to 

HFO1234yf, with the period of the delay depending upon the specifics of EPA‘s future action 

and how the market place forces play out with respect to the supply and demand for the new 

refrigerant.. 

With regard to other vehicle technologies, each of the companies had their own suite 

of other technologies that would improve efficiency based on their unique expertise and 

 

E The Significant New Alternatives Policy (SNAP) Program is EPA's program to evaluate and regulate 

substitutes for the ozone-depleting chemicals that are being phased out under the stratospheric ozone protection 

provisions of the Clean Air Act (CAA). Before any new or substitute refrigerant can be utilized in mobile A/C 

applications, EPA must receive a SNAP submission and reach a determination. If EPA finds the substitute 

acceptable, its use must comply with conditions set forth in the SNAP determination. 
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product plans. These included aerodynamic improvements, friction reduction, further 

reductions in tire rolling resistance, and a number of other technologies that cannot be 

described in detail given confidentiality restrictions. 

Regulatory program design input

Specific company suggestions for the appropriate design of regulatory programs, often 

relating to OEM-specific strategies for coming into compliance under various scenarios and 

their particular desired program flexibilities, were considered to be confidential business 

information by all of the manufacturers. These suggestions varied greatly depending on the 

specific company, as did manufacturers‘ plans for future compliance. However, there was 

universal consensus that a national program should continue, and that a single national fleet 

should be able to comply with California and federal GHG standards as well as federal CAFE 

standards. 

Several OEMs also discussed the importance of a mid-term technology review which 

would occur after the 2017-2025 standards are promulgated. The May 19, 2010 support 

letters from all of the OEMs and the two major automotive trade associations also supported 

the concept of a mid-term technology review. In addition, several OEMs were supportive of 

the continuation of attribute-based standards and of separate standards for cars and trucks.

Electric vehicle charging systems

A number of the automakers provided input on the electrical vehicle charging systems 

needed for EVs and PHEVs. The OEMs generally agreed that most charging will occur at 

home and will be Level 1 or Level 2, with a greater likelihood of Level 2 charging as vehicle 

range and size increases.F OEMs suggested that workplace charging, if available, could 

significantly increase the vehicle‘s daily driving range (under the assumption the vehicle can 

be charge two times in a day, once at home in the morning, and once at work during the day) 

and may help to increase market appeal of EVs and PHEVs. OEMs also indicated that public 

charging (Level 2 or Level 3 quick charging) could provide additional comfort to EV/PHEV 

owners and may help to facilitate the mass adoption of these vehicles. OEMs also generally 

agreed that costs of electric vehicle service equipment installation will vary widely by the age 

of the house, location of the charging equipment, and difficulty of installation. Some urban 

locations without dedicated parking, such as apartments and townhouses with street parking, 

may present charging challenges. These issues are discussed in more detail in Chapter 4 

below.

A number of OEMs also indicated that they believe that federal and state incentives 

are helpful in encouraging charging system development and charge point deployment. In 

addition, stakeholders emphasized that standardization of charging facilities and codes for 

 

F Details regarding EV and PHEV charging levels are included in Chapter 4 of this report. In general, Level 1 

charging uses a lower voltage than Level 2. Level 1 chargers require more time for battery charging than Level 

2. As discussed in Chapter 4, there is also a Level 3 charging approach, sometimes called ―quick charging‖, 

which uses even higher voltages and takes even less time than Level 1 or Level 2.
Chapter 2

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installing equipment will streamline and encourage the widespread deployment of charging 

infrastructure and promote the adoption of PHEVs and EVs. Some OEMs also suggested that 

so-called ―smart metering‖ equipment and strategies could enable consumers and utilities to 

choose the best time to charge vehicles for the lowest cost while maintaining maximum 

vehicle availability. 

Perspectives on US manufacturing and automotive-related jobs

Not all manufacturers discussed potential impacts on jobs and the U.S. manufacturing 

base, but of those that did, many were optimistic about the opportunities to build fuel-efficient 

cars in the United States and the concurrent boost to the U.S. job market. Most OEMs were 

predicting significant increase in sales after the drop in 2009, and further sales increases into 

2017+, with concomitant increases in U.S. manufacturing jobs. Further, OEMs stated that 

increased technological content in vehicles will likely require more development, testing, and 

additional manufacturing requirements and thus potentially lead to more jobs in the supplier 

chain, both in the U.S. as well as abroad. Several manufacturers noted that Federal 

government stimulus bill investments, as well as additional incentives provided by a number 

of state and local governments, were an important factor in locating manufacturing operations

for electrification components (including new battery, electric motor, and power electronic 

manufacturing facilities) in the U.S., and that continuation of this type of investment would be 

an important consideration to locating future facilities in the U.S.

2.2.2 Automotive Suppliers

EPA, NHTSA and CARB met with a cross section of automotive suppliers to seek 

their input on a number of key technical issues. Suppliers conduct their own research and 

development on a wide variety of automotive products that directly and indirectly influence 

the fuel economy and CO2 emissions of vehicles. The agencies met individually with the 

following companies and associations: Delphi, Bosch, Denso, Borg Warner, Honeywell, 

Valeo, Johnson Controls, A123, BYD, Dupont, the American Iron and Steel Institute and a 

number of their member companies, the Aluminum Transportation Group (a part of the 

Aluminum Association) and a number of their member companies, and the Rubber 

Manufacturers Association and a number of their tire manufacturing company members. We 

note that there are a very large number of automotive suppliers, making it impossible to meet 

with even all of the major companies given the time frame for this technical assessment 

report. The companies and associations with whom we met represent a small but significant 

fraction of these suppliers, given their importance in the market and/or the uniqueness of their 

product offerings. 

The agencies requested input in the following key areas: expected technology 

development status for MYs 2017-2025, cost, effectiveness, and potential limitations of 

technologies, and impact on jobs. In response, as with the automotive OEMs, the supplier 

companies presented detailed technical information to the agencies addressing these topics, 

and requested confidential treatment for much of it. In order to respect these requests for 

confidentiality, the agencies cannot reveal specific details of the business information 

provided at these meetings, but taken in the aggregate, the following summarizes information 

gathered from the supplier meetings. 
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In general, the suppliers were optimistic that supplier-developed advanced 

technologies could play a critical role in 2017-2025 vehicles, and they were actively engaged 

with OEMs for not only application of near-term technologies but also collaborative 

development of production road maps for technologies currently in the R&D phases within 

their organizations. Generally the suppliers stated that future R&D activities would allow 

them to decrease costs, increasing production capacity, and produce innovative solutions for 

OEM needs. However, suppliers also independently discussed some of OEMs key issues —

such as the potential future penetration and challenges for large market adoption of HEVs, 

PHEVs, EVs, and FCVs. Some suppliers‘ cost estimates were more consistent with or even 

lower than the figures used by the agencies in the present analysis. The steel and aluminum 

industry emphasized that weight can be reduced in vehicles without sacrificing safety, 

although the agencies note that the assessment of safety identified by these industries does not 

include the type of detailed aggregate societal impacts assessment that NHTSA and EPA will 

conduct for the upcoming joint Federal rulemaking.

On the issue of potential job impacts, suppliers strongly supported the recent federal 

funding for advanced battery development. Suppliers stated that this has already led to many 

engineering and manufacturing jobs created in the U.S., in part due to Federal stimulus 

funding, and expressed confidence that this sector will continue to grow. 

On the issue of infrastructure, some of the suppliers did discuss issues regarding 

EV/PHEV vehicle infrastructure. In general, their themes on this topic were consistent with 

what we also heard from the OEMs discussed above.

2.2.3 Non-Governmental Environmental Organizations

The agencies also received input from numerous environmental organizations, 

including the Natural Resources Defense Council, Union of Concerned Scientists, 

Environmental Defense, Sierra Club, the American Council for an Energy-Efficient Economy, 

Safe Climate Campaign, Environment America, and the National Wildlife Federation. These 

environmental organizations stated that they are very supportive of the President‘s call for 

setting new fuel economy and greenhouse gas standards for light-duty vehicles for the 2017-

2025 model years. These groups believe this will help to cut U.S. oil dependency and move 

the nation toward a clean energy economy. The groups stated that they support setting 

standards at the maximum technically feasible level in order to bring new technologies to the 

marketplace, calling on the agencies generally to establish future standards which would push 

efficiency limits on conventional internal combustion engine vehicles, bring hybrids into 

mainstream commercial production, and pull advanced electric-drive vehicles into the market. 

These organizations requested that the agencies establish standards for 2017-2025 which 

would put light-duty vehicles on a path to achieve an 80 percent reduction (from 2005 levels) 

in global warming emissions by 2050. The groups also encouraged EPA and NHTSA to work 

quickly to propose and finalize the new standards.

The environmental groups emphasized that the rulemaking process be open and 

transparent to the public. They commended the transparency of the process thus far, and 

expect it to be continued moving forward. The environmental groups stated that transparency 

is critical in several specific areas, including manufacturers‘ compliance, test data, technology 
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costs, modeling of technology adoption (e.g., EPA‘s OMEGA model and NHTSA‘s Volpe 

model), vehicle safety assessments, assumptions of advanced vehicle adoption, and 

accounting for electric vehicle upstream emissions and other off-cycle factors.

Another issue raised by the environmental groups was the concept of a mid-term 

technology review, as indicated in the auto manufacturers‘ letters supporting the President‘s 

memorandum. The environmental groups emphasized that any mid-term technology review, 

if conducted, should not undermine innovation, should be very narrow in scope, and be a onetime review after 2020. They stated that a technology review should not create uncertainty 

regarding the requirements established by the agencies, or be considered an ―escape route‖ to 

delaying requirements. They also stated that a technology review may be unnecessary if the 

2017-2025 standards can be achieved by using multiple technology pathways, as opposed to a 

single, ―silver-bullet‖ technology.

The environmental groups requested that EPA and NHTSA continue to rely on what 

they characterized as reasonable discount rates when evaluating the consumer benefits of fuel 

savings, so as to not undervalue the consumer benefits of higher fuel economy standards. 

The groups reiterated prior arguments that discount rates higher than the 3 and 7 percent rates 

recommended in OMB guidance documents are inappropriate, due to the highly imperfect 

automobile market, with limited information, uncertainty of future gasoline prices, and a 

limited set of options with regard to fuel economy. The groups expressed interest in working 

on the discount rate issue with EPA, NHTSA, and others during the upcoming joint federal 

rulemaking process.

These groups stated that the standards should rely on an updated and accurate safety 

analysis, consistent with EPA and NHTSA‘s discussion of this issue in the final rule for the 

MY2012-2016 standards. The environmental groups stated that their understanding of the 

analysis in the MYs 2012-2016 rule is that vehicle mass reduction can be applied in a way 

that saves lives while also cutting fuel consumption and GHG emissions. The groups 

expressed support for the commitments made by NHTSA in the MYs 2012-2016 final rule, as 

discussed below in Chapter 3, to collaborate with EPA, CARB and the Department of Energy, 

in conducting further safety and mass reduction research.

Finally, the environmental groups stated that the tailpipe compliance calculation for 

electric-drive vehicles should account for upstream GHG emissions due to electricity and 

hydrogen generation. Their concern is that if manufacturers are allowed to treat EVs (or the 

electric portion of a PHEV) as 0 grams of CO2/mile for compliance purposes, they may be 

able to meet the standards through producing only a small number of electric-drive vehicles, 

while avoiding fuel economy improvements in conventional vehicles. Further discussion of 

this issue is contained in Chapter 7.

2.2.4 State and Local Government Organizations

The agencies met with representatives from the National Association for Clean Air 

Agencies (NACAA), the Northeast States for Coordinated Air Use Management 

(NESCAUM), and approximately 10 individual state and local governments. The state and 

local organization stressed broad objectives, and generally expressed strong support of the 
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agencies‘ efforts to develop a national program for the 2017-2025 timeframe. The states 

emphasized, consistent with California‘s letter supporting the Presidential memorandum, that 

the agencies should evaluate a range of potential standards of 3 to 6 percent annual increases 

in stringency for the 2017-2025 time frame. The states expressed a strong preference toward 

the higher stringencies in that range, stating that the standards must be technology forcing in 

order to help them achieve their individual and regional GHG reduction goals.

The states also strongly supported the collaborative process in which EPA, NHTSA, 

and CARB are engaging in order to assess the technical information going into the 2017-2025 

assessment. Several states mentioned activities they have underway to develop the 

infrastructure needed to support electrified vehicles. The states also expressed support for 

transparency in the process of developing the technical assessment, and the eventual proposed 

rulemaking, and an interest in continued dialogue.

2.2.5 Infrastructure Providers

The agencies met with representatives from the Electric Power Research Institute 

(EPRI) and charging infrastructure providers. EPRI believes the focus for EV and PHEV 

charging systems should be on home charging, with a goal of a seamless installation process 

(permitting, electrical installation, inspection) for homeowners. However, EPRI recognizes 

that home charging infrastructure is expensive, estimating an average cost of about $1,500 for 

home charging installations. Some charging infrastructure providers see a more important role 

for public charging, which could expand EV/PHEV markets to people who live in apartments, 

condominiums, or otherwise do not have garage access for convenient home charging. EPRI 

believes more work is needed to assess how workplace and public charging infrastructure 

should be developed, both in terms of where to best locate stations for consumers‘ 

convenience and who should own the them (e.g., municipalities, private sector, employers, 

utilities). 

EPRI believes that overall electric utilities will be able to support the rollout of EVs 

and PHEVs. However, there is a possibility of isolated impacts on some residential 

transformers, particularly in neighborhoods with older distribution systems. To mitigate these 

potential impacts, EPRI suggests that early notification to the local utilities of EV/PHEV 

charging plans would help the utilities assess any potential need for upgrades to the electric 

power delivery system. EPRI also believes that potential stresses on power delivery systems 

can be mitigated by the wise application of smart charging, which has the potential to even 

out charging loads. Charging infrastructure providers generally agreed with this assessment. 

EPRI is currently examining these issues. 

2.2.6 Labor Unions

EPA, NHTSA and CEQ met with representatives of the United Auto Workers (the 

UAW). The UAW was supportive of continuing the National Program for 2017 and beyond. 

The UAWs overarching concern was how the future development and market penetration of 

advanced vehicle technologies will impact automotive industry manufacturing employment in 

the United States. The UAW stated their general belief that a high percentage the subsystems and vehicle assembly for hybrid electric vehicles sold in the U.S. today are not 
Chapter 2

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manufactured in the United States. The UAW is concerned that this trend could continue, and 

that the potential future introduction of plug-in hybrid electric vehicles and electric vehicles in 

addition to the potential future expansion of hybrid electric vehicles could results in an overall 

decline in the automotive manufacturing jobs in the United States. The UAW stated that the 

government funding for advanced technology vehicles had made an important difference in 

the past year, resulting in many companies deciding to manufacturer batteries, electric motors, 

and vehicle assembly plants in the U.S.; the UAW was concerned that without the continued 

economic support from the federal government, future manufacturing facilities for these 

advanced technology vehicles may not occur in the U.S.

In addition to this important issue, the UAW made two specific requests which they 

would like the federal government to consider in the development of the 2017-2025 joint 

federal rulemaking. The UAW believes it is important for the agencies to analyze and report 

the net domestic employment effects of any future proposed standards. In addition, the UAW 

requested that future regulations include provisions with respect to GHG emissions from 

automobiles other than the CO2 captured by the CAFE program for the eventual integration 

of those emissions regulations with any broader national GHG program that might be 

developed by Congress or that may be proposed by EPA under the Clean Air Act in the 

future. Specifically the UAW was referring to methane, nitrous oxide, and hydroflurocarbon 

emissions, as well as CO2 emissions related to a vehicles air conditioning system operation, 

which is not capture under today‘s CAFE test procedures. Finally, the UAW raised some 

concerns with the future projections contained in the Energy Information Administration‘s 

Annual Energy Outlook reports and the accuracy of those reports projections regarding future 

improvements in fuel economy absent new standards.
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Chapter 2 References

13 75 Fed. Reg. 29399 (May 26, 2010).

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3 Technology, Cost, Effectiveness and Lead-time Assessment

3.1 What technologies did the Agencies Consider?

The agencies assume, in this analysis, that manufacturers will add a variety 

technologies to each of their vehicle model platforms in order to improve their fuel economy 

and GHG performance. In order to analyze a variety of regulatory control scenarios (as we 

do in this report), it is thus essential to understand what is feasible within the timeframe of the 

rule. Technical feasibility of potential standards requires a thorough study of the technologies 

available to the manufacturers. This study includes an assessment of the cost, effectiveness, 

as well as the lead time of the technologies. The lead time relates to the availability, 

development time, and manufacturability of the technology within the normal redesign 

periods of a vehicle line (or in the design of a new vehicle). As we describe below, lead time 

issues can in turn affect the cost as well as the technology penetration rate (or caps) that are 

assumed in the analysis. 

The agencies considered over 30 vehicle technologies that manufacturers could use to 

improve the fuel economy and reduce CO2 emissions of their vehicles during the 2017-2025 

timeframe. A majority of the technologies described in this chapter are readily available

today, are well known, and could be incorporated into vehicles once product development 

decisions are made. These are ―near-term‖ technologies and are identical to those applied in 

the 2012-2016 light-duty rule. Other technologies considered may not currently be in 

production, but are beyond the initial research phase, under development and are expected to 

be in production in the next few years. These are technologies which can, for the most part, 

be applied both to cars and trucks, and which are capable of achieving significant 

improvements in fuel economy and reductions in CO2 emissions at reasonable costs in the 

2017 to 2025 timeframe. The agencies did not consider technologies that are currently in an 

initial stage of research because of the uncertainty involved in the lead time available to 

implement the technologies with significant penetration rates for this assessment. 

3.2 How did the Agencies Determine the Costs and Effectiveness of Each of These 

Technologies?

3.2.1 How are Cost and Effectiveness Estimates Different from the 2012-2016 Rule? 

Virtually all of the technologies considered in this analysis are identical to those 

described in the 2012-2016 light-duty CAFE and GHG final rule. Those that are new or 

modified are described in greater detail in this chapter. In general, the costs of fuel 

consumption improvement technologies considered in this assessment are taken straight from 

the 2012-2016 light-duty CAFE and GHG final rule, with six exceptions that impact 

individual technology costs in different ways. The first exception is that the agencies have 

reconsidered the costs for several technologies for which extensive tear-down studies were 

completed during development of the MYs 2012-2016 final rule. These teardown studies 

were conducted under the continuing EPA contract with FEV and Munro in support of that 

rulemaking and were discussed in detail in the Technical Support Document.14 The second 
Chapter 3

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exception is that the agencies have reconsidered the costs for hybrid electric vehicles (HEV), 

plug-in hybrid (PHEV), electric vehicles (EV), and fuel cell electric vehicles (FCEV), due in 

part to the rapid changes taking place in battery technology and cost estimation methods 

based on the expert judgment of the Department of Energy (DoE), EPA, CARB, and NHTSA 

and using updated costs as compared to the 2012-2016 light-duty rule. The third exception is 

that the agencies have updated the cost for mass reduction based on more recent studies. The 

fourth exception is that the indirect cost markups (ICM) used in the 2012-2016 light-duty 

rulemaking and have added an additional factor of 0.06 to each. This factor has been added to 

reflect return on capital of 6% in the automotive industry, described further below.15 The fifth 

exception is that cost estimates have been updated to reflect 2008 dollars while the 2012-2016 

light-duty rule expressed costs in terms of 2007 dollars. This update was done using a ratio of 

GDP price deflators in a manner consistent with the procedure used in the 2012-2016 lightduty rule. The sixth exception is that learning effects have been allowed to continue beyond 

the 2016 model year so that the individual piece costs in the 2017 and later model years will, 

in general, be lower than the costs estimated for the 2012-2016 model years. We note, 

however, that the type of learning – volume-based or time-based, as described in the 2012-

2016 light-duty rule – has not changed. Each of these exceptions is discussed in more detail 

below and in Appendix B.

Most of the effectiveness numbers of the technologies have also not changed from the 

previous final rule. The few changes that were made are also described below. The agencies 

are pursuing additional work to update the effectiveness of virtually all of the technologies 

listed in this chapter. 

3.2.2 Costs from Tear-down Studies 

The agencies have updated costs of certain technologies that had been based on teardown studies conducted during the 2012-2016 rulemaking. The agencies believe that the best 

method to derive technology cost estimates is to conduct studies involving tear-down and 

analysis of actual vehicle components. A ―tear-down‖ involves breaking down a technology 

into its fundamental parts and manufacturing processes by completely disassembling vehicles 

and vehicle subsystems and precisely determining what is required for its production. More 

details about tear down studies can be found in the studies supporting the 2012-2016 lightduty rule as well as the FEV and Munro Associates report for EPA.

16,17

 This tear-down 

method of costing technologies is often used by manufacturers to benchmark their products 

against competitive products. Historically, vehicle and vehicle component tear-down has not 

been done in large scale by researchers and regulators due to the expense required for such 

studies. 

To-date, such tear-down studies have been completed on the six technologies listed 

below. These completed tear-down studies provide a thorough evaluation of the component 

or system cost relative to their baseline (or replaced) technologies. A more detailed 

description of these technologies can be found in the Technical Support Document prepared 

for the 2012-2016 light-duty final rule.14 For these technologies, the agencies have relied on 

the tear-down data available and scaling methodologies used in EPA‘s ongoing study with 

FEV. Note, this costing methodology has been published and has been peer reviewed. 18
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1. StoichiometricGgasoline direct injection and turbo charging with engine 

downsizing (T-DS) for a large DOHC (dual overhead cam) 4 cylinder engine to a 

smaller DOHC 4 cylinder engine.

2. Stoichiometric gasoline direct injection and turbo charging with engine 

downsizing for a SOHC (single overhead cam) 3 valve/cylinder V8 engine to a 

SOHC V6 engine. 

3. Stoichiometric gasoline direct injection and turbo charging with engine 

downsizing for a DOHC V6 engine to a DOHC 4 cylinder engine. 

4. 6-speed automatic transmission replacing a 5-speed automatic transmission.

5. 6-speed wet dual clutch transmission (DCT) replacing a 6-speed automatic 

transmission.

 In addition, FEV and EPA extrapolated the engine downsizing costs for the following 

scenarios that were based on the above study cases: 

1. Downsizing a SOHC 2 valve/cylinder V8 engine to a DOHC V6.

2. Downsizing a DOHC V8 to a DOHC V6.

3. Downsizing a SOHC V6 engine to a DOHC 4 cylinder engine.

4. Downsizing a DOHC 4 cylinder engine to a DOHC 3 cylinder engine.

In the 2012-2016 light-duty rule, the agencies relied on the findings of FEV in part for 

estimating the cost of these technologies. However, for some of the technologies, NHTSA 

and EPA modified FEV‘s actual estimated costs. This was done because FEV based their 

costs on the assumption that these technologies would be mature when produced in large 

volumes (450,000 units or more). The agencies believed that there was some uncertainty 

regarding each manufacturer‘s near-term ability to employ the technology at the volumes 

assumed in the FEV analysis with fully learned costs. There was also the potential for near 

term (earlier than 2016) supplier-level Engineering, Design and Testing (ED&T)Hcosts to be 

in excess of those considered in the FEV analysis because existing equipment and facilities 

need to be converted to the production of new technologies and may lead to stranded capital I

if done too rapidly. The agencies consider the FEV results to be generally valid for the 2017-

2025 timeframe because the factors considered in the 2012-2016 light-duty rule should no 

longer exist and sales volumes of 450,000 units are likely due to, at least in part, the new 

GHG and fuel economy requirements. More detail on which specific technologies are 

 

G

Stoichiometric Gasoline Direct Injection refers to a gasoline fueled spark-ignition internal combustion engine 

with direct fuel injection into the combustion chamber that is designed to operate primarily at a chemically 

balanced ratio of air and fuel thus allowing the effective use of standard precious-metal based (Rh combined 

with Pd and/or Pt) three-way exhaust catalysts for control of criteria pollutants 

H

Product Development Costs are the ED&T costs incurred for development of a component or system. These 

costs can be associated with a vehicle specific application and/or be part of the normal research and development 

(R&D) performed by companies to remain competitive. In the cost analysis, the product development costs for 

suppliers are included in the mark-up rate as ED&T suppliers.

I

Stranded Capital is defined as manufacturing equipment and facilities owned by a vehicle manufacturer that 

cannot be used in the production of a new technology.
Chapter 3

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impacted by this change is presented in Appendix B. The agencies will continue to review the 

FEV results and methodology as necessary in the upcoming federal rulemaking. 

3.2.3 Costs of HEV, PHEV, EV, and FCEV

The agencies have also reconsidered the costs for HEVs, PHEVs, EVs, and FCEVs as 

the result of two issues: The first issue is that there is a rapid development taking place on 

electrified vehicle technologies and an effort has been made to capture the results from the 

most recent analyses. The second issue is that the 2012-2016 rule employed a single $/kWhr 

estimate and did not consider the specific vehicle and technology application for the battery 

when we estimated the cost of the battery. Specifically, batteries used in HEVs versus EVs 

need to be considered appropriately to reflect the design differences and differences in cost 

per kW-hr as the power to energy ratio of the battery changes for different applications. For 

this assessment, the agencies have used a battery cost model developed by Argonne National 

Laboratory (ANL) for the Vehicle Technologies Program of the U.S. Department of Energy 

(DoE) Office of Energy Efficiency and Renewable Energy. The model developed by ANL 

provides unique battery pack cost estimates for each of the three major types of electrified 

vehicles. The DoE has established long term industry goals and targets for advanced battery 

systems as it does for many energy efficient technologies. ANL was funded by DoE to 

provide an independent assessment of Li-ion battery costs because of their expertise in the 

field as one of the primary DoE National Laboratories responsible for basic and applied 

battery energy storage technologies for future HEV, PHEV and EV applications. A basic 

description of the ANL Li-ion battery cost model and initial modeling results for PHEV 

applications were published in a peer-reviewed technical paper presented at EVS-2419. ANL 

has extended modeling inputs and pack design criteria within the battery cost model to 

include analysis of manufacturing costs for EVs and HEVs as well has PHEVs.20 A complete 

peer-review of the model and its inputs and results for HEV and EV applications is pending, 

and ANL expects to have a peer review completed within 1 year. NHTSA and EPA will 

consider the results of the peer review as we develop the future joint federal notice of 

proposed rulemaking. The agencies expect to continue to work with DOE and ANL (as well 

as battery manufacturers, OEMs, and other stakeholders) to get the most up to date 

information for the upcoming NPRM. 

The agencies have decided to use the ANL model for estimating large-format lithiumion batteries for this assessment for the following reasons. The ANL model has been 

described and presented in the public domain and does not rely upon confidential business 

information (which would therefore not be reviewable by the public). The model was 

developed by scientists at ANL who have significant experience in this area. The model uses 

a bill of materials methodology which the agencies believe is the preferred method for 

developing cost estimates. The ANL model appropriately considers the vehicle applications 

power and energy requirements, which are two of the fundamental parameters when designing 

a lithium-ion battery for an HEV, PHEV, or EV. The ANL model can estimate high volume

production costs, which the agencies believe is appropriate for the 2025 time frame. Finally, 

the ANL model‘s cost estimates, while generally lower than the estimates we received from 

the OEMs, is consistent with some of the supplier cost estimates the agencies received from 

large-format lithium-ion battery pack manufacturers. A portion of the data was received from 

on-site visits done by the EPA. 
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The ANL battery cost model is based on a bill of materials approach in addition to 

specific design criteria for the intended application of a battery pack. The costs include 

materials, manufacturing processes, the cost of capital equipment, plant area and labor for 

each manufacturing step as well as the design criteria include a vehicle application‘s power 

and energy storage capacity requirements, the battery‘s cathode and anode chemistry, and the 

number of cells per module and modules per battery pack. The model assumes use of a 

laminated multi-layer prismatic cell and battery modules consisting of double-seamed rigid 

containers. The model also assumes that the battery modules are air-cooled. The model takes 

into consideration the cost of capital equipment, plant area and labor for each step in the 

manufacturing process for battery packs and places relevant limits on electrode coating 

thicknesses and other processes limited by existing and near-term manufacturing processes. 

The ANL model also takes into consideration annual pack production volume and economies 

of scale for high-volume production.

The cost outputs from the ANL model used by the Agencies to determine 2025 HEV, 

PHEV and EV battery costs were based upon 500,000 packs/year production volume and the 

use of a common cathode and anode chemistry, LiMn2O4-spinel for the cathode and graphite 

for the anode. The agencies assumed a change in battery state of charge (% SOC) of 50% for 

HEVs, 70% for PHEVs and 80% for EVs in 2025. The agencies also estimated 2020 HEV, 

PHEV and EV battery costs based upon the same battery chemistry and a production volume 

of 100,000 packs/year. EPA considered one other battery chemistry, LiFePO4-graphite. While 

it is expected that other Li-ion battery chemistries with higher energy density, higher power 

density and lower cost will likely be available in the 2017-2025 timeframe, the specific 

chemistry used for the cost analysis was chosen due to its known characteristics and to be 

consistent with publicly available information on current and near term HEV, PHEV and EV 

product offerings from Hyundai, GM and Nissan.21,22,23,24 The cost of active materials is 

somewhat higher for LiMn2O4-spinel than for LiFePO4, but battery pack costs are generally 

higher for LiFePO4 when comparing battery packs with the same energy and power 

requirements. This is due primarily to the lower energy density of LiFePO4 relative to 

LiMn2O4-spinel. We expect that incremental improvements in battery energy density will 

continue through 2025 and thus the higher energy density represented by the choice of a 

LiMn2O4-spinel cathode/graphite anode within the ANL cost model is more appropriate for 

determining the future cost of batteries in the 2017-2025 timeframe. Examples of the cost 

outputs from the ANL model used by the agencies in this analysis are shown in Table 3.2-1

and Table 3.2-2. A more detailed discussion of battery pack costs is contained in Appendix 

B. The agencies note that costs used in the analysis are lower than the costs generally 

reported in stakeholder meetings, which ranged from $300/kW-hour to $400/kW-hour range 

for 2020 and $250 to $300/kW-hour range for 2025. Because of uncertainty with regard to 

future battery costs, the agencies also conducted a sensitivity study using PHEV and EV 

battery pack costs approximately $100/kW-hr higher and $50/kW-hr lower than the costs 

estimates from the ANL battery cost model. Further details regarding the sensitivity analysis 

are described Chapter 6 of this report and in Appendix B, section B4.2.1.3.
Chapter 3

3-6

Table 3.2-1: Direct Manufacturing Costs on a $/kWh-basis for Large Car HEVs, PHEVs 

and EVs (2008 dollars, markups not included).

Application Direct Manufacturing Cost, MY2020

(100,000 packs/year volume)

Direct Manufacturing Cost, MY2025

(500,000 packs/year volume)

$ $/kW-hr $ $/kW-hr

P2 HEV Battery Pack $801 $1,214 $641 $971

PHEV20 Battery Pack $2,916 $324 $2,333 $259

PHEV40 Battery Pack $4,285 $238 $3,428 $190

EV75 Battery Pack $5,847 $217 $4,678 $173

EV100 Battery Pack $7,443 $191 $5,954 $153

EV150 Battery Pack $11,005 $175 $8,804 $140

Table 3.2-2: Direct Manufacturing Costs on a $/kWh-basis for subcompact HEVs, 

PHEVs and EVs (2008 dollars, markups not included).

Application Direct Manufacturing Cost, MY2020

(100,000 packs/year volume)

Direct Manufacturing Cost, MY2025

(500,000 packs/year volume)

$ $/kW-hr $ $/kW-hr

P2 HEV Battery Pack $541 $1,177 $433 $941

PHEV20 Battery Pack $2,187 $347 $1,749 $278

PHEV40 Battery Pack $3,244 $251 $2,595 $201

EV75 Battery Pack $4,013 $197 $3,211 $157

EV100 Battery Pack $5,143 $184 $4,115 $147

EV150 Battery Pack $7,666 $170 $6,133 $136

The potential for future reductions in battery cost and improvements in battery 

performance will play a major role in determining the overall cost and performance of future 

PHEVs and EVs. The U.S. Department of Energy manages major battery-related R&D 

programs and partnerships, and has done so for many years, including the ANL model utilized 

in this report. DOE has reviewed the battery cost projections underlying today‘s TAR. DOE 

supports the cost projections, and while the overall projections are in some cases optimistic, 

DOE believes they are reasonable for a long-term, technology-based assessment as utilized in 

this report. In addition, as discussed above, DOE intends to work with ANL to ensure the 

ANL model undergoes a thorough peer review. Finally, DOE recommends that the agencies 

consider evaluating a range of assumptions for rulemaking, including the evaluation of other 

battery cost estimation models as appropriate. NHTSA and EPA intend to conduct additional 

analysis for the NPRM and final rule that is consistent with these recommendations from 

DOE.

The agencies have also carefully reconsidered the power and energy requirements for 

each electrified vehicle type, which has a significant impact on the cost estimates for HEVs, 

PHEVs, and EVs as compared to the estimates used in the 2012-2016 rulemaking. In 

addition, the agencies have considered battery pack costs separately from the remainder of the 

systems added to each type of electrified vehicle. The advantage of separating the battery 

pack costs from other system costs is that it allows each to carry unique indirect cost 
2017-2025 Technical Assessment

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multipliers and learning effects which are important given that battery technology is an 

emerging technology, while electric motors and inverters are more stable technologies. We 

note that, for this analysis, the agencies have assumed batteries will be capable of lasting the 

lifetime of the vehicleJ, which is consistent with what manufacturers have shared with us are 

the expected customer demands from this technology. Manufacturers have acknowledged, 

however, that there may be some performance degradation in the batteries over time. For the 

NPRM, the agencies may analyze the maintenance cost differences among technologies, 

including batteries. Lastly, the agencies have focused attention on an emerging HEV 

technology known as a P2-hybrid, a technology not considered in the 2012-2016 light-duty 

rule. 

A P2 hybrid is a vehicle with an electric drive motor coupled to the engine crankshaft 

via a clutch. The engine and the drive motor are mechanically independent of each other, 

allowing the engine or motor to power the vehicle separately or combined. This is similar to 

the Honda HEV architecture with the exception of the added clutch, and larger batteries and 

motors. Examples of this include the soon-to-be sold Hyundai Sonata, Elantra and the Nissan 

Fuga (expected to be rebadged as an Infiniti product for the North American market). The 

agencies believe that the P2 is an example of a ―strong‖ hybrid technology that is typical of 

what we will see in the timeframe of this rule. The agencies could have equally chosen the 

power-split architecture as the representative HEV architecture. These two HEV‘s have 

similar average effectiveness values (combined city and highway fuel economy), though the 

P2 systems may have lower cost due to the lower number of parts and complexity. 

The effectiveness used for vehicle packages with the P2-hybrid configuration within 

this analysis reflects a conservative estimate of system performance. Vehicle simulation 

modeling of technology packages using the P-2 hybrid configuration is currently underway 

under contract with Ricardo Engineering. The agencies plan to update the effectiveness of 

hybrid electric vehicle packages using the new Ricardo vehicle simulation modeling runs 

prior to the NPRM. 

The agencies have also considered, for this analysis, the costs associated with in-home 

chargers expected to be necessary for PHEVs and EVs. Further details on in-home chargers 

and their estimated costs are presented in Section 4.2.3 and Appendix B. Details of the 

updated HEV, PHEV, EV and FCEV costs are presented in Appendix B.

3.2.4 Mass Reduction Impacts and Costs 

Mass reduction encompasses a variety of techniques ranging from improved design, and 

increased component integration to the application of lighter and higher-strength materials. 

Initial mass reduction can be further compounded by reductions in engine power and ancillary 

systems (transmission, steering, brakes, suspension, etc.) to provide increased vehicle mass 

reduction overall. The agencies recognize there is a wide diversity and range of complexity 

 

J Median life of a passenger vehicle is 13.8 years and 14.5 years for light trucks. Lu, S., NHTSA, Regulatory 

Analysis and Evaluation Division, ―Vehicle Survivability and Travel Mileage Schedules,‖ DOT HS 809 952, 8-

11 (January 2006). Available at http://www-nrd.nhtsa.dot.gov/Pubs/809952.pdf (last accessed March 1, 2010).
Chapter 3

3-8

for mass reduction and material substitution technologies, and that there are many techniques 

that automotive and other industry suppliers and manufacturers are using or plan to use to 

achieve the levels of this technology that the agencies model in our analysis. Manufacturers‘ 

opinions in stakeholder meetings over the summer varied widely as to how much mass 

reduction could be realized and at what cost in the time frame of 2017-2025, ranging from 

some mass increase to 10-15 percent mass reduction. While the agencies limited the amount 

of mass reduction in our analysis for the MYs 2012-2016 final rule to 10 percent, for the 

purposes of this Technical Assessment Report the agencies have considered three levels of 

mass reduction that could be achieved in 2025 compared to a baseline 2008 vehicle: one 

pathway with less aggressive mass reduction of 15 percent, one with 20 percent mass 

reduction, and one with technology forcing mass reduction of 30 percent. The agencies 

assume, as part of these reduction amounts, that vehicle size and full functionality are 

maintained. We note the ability of the industry to reduce mass beyond 20% while 

maintaining vehicle size and functionality is an open technical issue, which the agencies are 

carefully evaluating and will continue to as we move forward. We also note, as discussed in 

the MYs 2012-2016 final rule, that the agencies believe that the effects of vehicle mass 

reduction on safety should be evaluated from a societal perspective (including an analysis or 

fatalities and casualties), which could affect the maximum levels used for rulemaking. This 

analysis has not been included in this report. NHTSA and EPA will include a thorough safety 

assessment of mass reduction for the upcoming joint federal NPRM and final rule. 

With respect to the feasibility of reducing mass by 15-30 percent by 2025, the 

agencies discussed the application of mass reduction technologies at length in meetings with 

vehicle manufacturers in preparation for this Technical Assessment Report. One of the 

challenges the manufacturers identified with respect to mass reduction was the feasibility of 

substituting some lower density materials for higher density materials. These material 

substitution issues included material availability, forming, joining, painting, corrosion, 

reparability, and impact performance. The agencies have established a collaborative team 

among DOT/NHTSA, DOE and EPA to address vehicle mass reduction and mass/safety 

issues generally, and have undertaken work on several tasks to begin addressing these 

particular issues identified by the manufacturers, including 1) a peer review of the Lotus 

Engineering report25 regarding holistic vehicle mass reduction opportunities, 2) a 2nd phase of 

analysis by Lotus Engineering using computer aided engineering (CAE) to assess phase 1 

designs for functional and safety performance, to modify designs as necessary to achieve 

performance levels similar to the baseline vehicle, and to determine the mass reduction that is 

feasible, 3) a DOE funded project investigating the amount of mass reduction that is 

technologically feasible, and 4)a DOE funded project consisting of an actual vehicle build 

(Multi Material Vehicle – MMVK). NHTSA and EPA may fund other studies to explore the 

feasible amount of mass reduction and cost for MY 2017-2025 separately from the study 

contracted to Lotus engineering by CARB. Computer Aided Engineering (CAE) tools would 

be used to analyze the structure of the vehicle. The proposed design should meet at least the 

 

K DOE Notice of Intent to Issue Funding Opportunity Announcement N.:DE-FOA-000239. 

http://www.netl.doe.gov/business/solicitations/NOTICE%20OF%20INTENT.pdf
2017-2025 Technical Assessment

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same functional objectives as the baseline vehicle. If funded, this study would be finished in 

time for the final rule for MYs 2017-2025.

With respect to cost, in the MYs 2012-2016 final rule, NHTSA and EPA applied a 

cost of $1.32 per pound of mass reduction, and the limit of mass reduction (penetration cap) 

was set to 10%14. This cost estimate was based on three studies: 2002 NAS report26, Sierra 

Research27, and MIT28. For the purposes of this Technical Assessment Report, however, the 

agencies expect based on the meetings this summer with OEMs, that manufacturers will be 

capable of mass reduction levels greater than 10 percent net in the 2017-2025 timeframe. The 

agencies recognize that higher percentages of mass reduction may result in higher costs and 

that these costs are likely to increase non-linearly with increasing mass reduction levels. 

Furthermore, the agencies and OEMs also recognize that there is some initial amount of mass 

reduction which can be accomplished with zero or very little cost (much lower than that 

estimated in the 2012-2016 rule). Thus, in this report, the agencies have begun updating their 

mass reduction cost model to reflect this progressively increasing level of cost. A preliminary 

non-linear cost model employed for this current analysis is shown in the figure below. The 

figure shows the present cost model in comparison to the costs used for the 2012-2016 final 

rule. The agencies have relied on a parabolic shape for the cost curve – where the cost per 

pound increases as the square of the percentage mass reduction. The endpoint of the model is 

based on an average of the final rule costs and the results from the Lotus Engineering mass 

reduction study. A more complete description of how this cost model was developed is 

described in Appendix B. For the purposes of the upcoming federal rulemaking, the agencies 

intend to improve the model using additional studies that are expected to be complete before 

the NPRM and final rule – the agencies do not intend for this preliminary model to be the 

final cost model used. The federal interagency mass/safety team has initiated several work 

tasks to inform and update the cost model, including meeting with vehicle manufacturers, 

updating DOE‘s 2007 study on feasibility and cost, and EPA funding a 3rd party cost 

assessment of the Lotus Report. 
Chapter 3

3-10

Figure 3.2-1: Mass Reduction Cost Model in Dollars per Pound in Model Year 2020 

Compared to the Lotus Results and 2012-2016 Final Rule Cost.

With respect to the effects of net vehicle mass reduction amounts of 15-30 percent on 

overall societal safety, the federal interagency mass/safety group has been meeting several 

times a week since shortly after the MY 2012-2016 rule was released to coordinate study of 

the effects of mass reduction and vehicle size on societal safety. This work will be used to 

update the safety model for future federal rulemaking. The agencies are conducting several 

statistical studies using a common database with updated historical crash data (MY 2000-

2007 FARS data, common state accident data and updated vehicle attributes). The studies 

include an updated NHTSA study of the relationship between vehicle mass, size and safety, 

two separate DOE funded fatality and casualty vehicle mass, size and safety analyses to be 

performed by Lawrence Berkeley National Laboratory, and peer reviews of the 

methodologies used in over 20 significant reports published. 

NHTSA is also looking into conducting two additional studies of crash compatibility 

that may help inform the effects of mass reduction and design on societal safety. If 

conducted, these studies may use vehicle models developed for the CARB funded Lotus 

phase 2 study and/or the potential NHTSA and EPA study for the feasible amount of mass 

reduction and cost for MY 2017-2025. These studies may inform how designs that 

incorporate lower density or higher strength materials, meet FMVSS regulations, and 

perform well in NCAP and IIHS tests, affect vehicle crash compatibility. The findings may 

be used to help inform the effects of mass reduction on societal safety. Because this study 

$(2.50)

$(2.00)

$(1.50)

$(1.00)

$(0.50)

$-

$0.50 

$1.00 

$1.50 

0 % 5 % 10% 15% 20% 25% 30% 35% 40%

$ per pound Cost (w/o ICM)

% Mass Reduction

Lotus Results

2012-2016 Cost Model

2017-2025 Cost Model
2017-2025 Technical Assessment

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cannot begin until the Lotus or NHTSA/EPA studies have been completed, and this study 

requires significant modeling work, there is some risk the study will not be completed in time 

to inform a final rule.

3.2.5 Indirect Cost Multipliers

Since the 2012-2016 rulemaking, the agencies have reconsidered the indirect cost 

multiplier approach and believe it to be more appropriate to include in the ICM a factor to 

reflect return on invested capital. In the automotive industry, this is on the order of 6%.29 To 

account for this, the agencies added a 0.06 factor added to the ICMs used in the rulemaking. 

These values are shown in Table 3.2-3. A note of clarification on the table, the low, medium 

and high complexity levels are meant to account for the complexity of integrating a 

technology into a vehicle. For example, adding variable valve timing to an engine is 

relatively not difficult and, for that reason, we would consider it a low complexity technology. 

By contrast, converting to a hybrid powertrain is considerably more complex to do and, for 

that reason, we would consider it a high complexity technology. The indirect costs are higher 

for the high complexity technology given the higher level of effort (and therefore costs) that 

would be incurred to implement the technology. The near term and long term values reflect 

the way that indirect costs are expected to change over time as new technologies are 

implemented. In the near term, the indirect costs are highest because the development effort 

is underway, the warranty costs are higher, etc. In the long term, many of these costs are no 

longer attributable to regulatory changes and, therefore, are no longer applied. Similarly, the 

warranty costs, while still present, have come down because the technology has achieved 

mature status and those costs have returned to an average level. For this assessment, the near 

term and long term cutoff points are different for different technologies. In short, 

conventional gasoline technologies are considered long term beginning in 2017, hybrid 

technologies are considered long term beginning in 2020, advanced gasoline technologies and 

both range extended and full electric vehicles are considered long term beginning in 2022.

Table 3.2-3 Comparison of Indirect Cost Multipliers used in the 2012-2016 Rulemaking 

versus this Assessment Report

Complexity 2012-2016 Rulemaking Assessment Report

Near term Long term Near term Long term

Low 1.11 1.07 1.17 1.13

Medium 1.25 1.13 1.31 1.19

High 1 1.45 1.26 1.51 1.32

High 2 1.64 1.39 1.70 1.45

For this analysis, the indirect costs are estimated by applying indirect cost multipliers 

(ICM) to direct cost estimates. ICMs were developed by EPA during the 2012-2016 lightduty rulemaking as a basis for estimating the impact on indirect costs of individual vehicle 

technology changes that would result from regulatory actions. Separate ICMs were derived 

for low, medium, and high complexity technologies, thus enabling estimates of indirect costs 

that reflect the variation in research, overhead, and other indirect costs that can result from the 

application of various technologies in direct response to a regulatory action. 
Chapter 3

3-12

Previous NHTSA and EPA rulemakings applied a retail price equivalent (RPE) factor 

to estimate indirect costs and mark up direct costs to the retail level. Retail Price Equivalents 

are estimated by dividing the total revenue of a manufacturer by their direct manufacturing 

costs. As such, it includes all forms of indirect costs for a manufacturer, regardless of 

whether all of those costs change in response to the regulatory action and assumes that the 

ratio applies equally for all technologies. ICMs, in contrast, are based on RPE estimates that 

are then modified to reflect only those elements of indirect costs that would be expected to 

change in response to a regulatory action. For example, warranty costs would be reflected in 

both RPE and ICM estimates since new technologies, whether added in response to a 

regulatory action or other reason, will almost always incur some level of warranty expense. 

In contrast, marketing costs might only be reflected in an RPE estimate and not an ICM 

estimate for a particular technology if the new technology added in response to a regulatory 

action is not one expected to be expressly marketed to consumers. Because the ICMs 

developed for the 2012-2016 rulemaking are for individual technologies, many of which are 

relatively simple to implement (e.g., variable valve timing), they often reflect a subset of RPE 

costs; as a result, the RPE is typically higher than an ICM. This is not always the case, as 

ICM estimates for complex technologies may reflect higher than average indirect costs due 

perhaps to increased R&D and/or integration demands, with the resulting ICM larger than the 

averaged RPE for the industry.

Precise association of ICM elements with individual technologies based on the varied 

accounting categories in company annual reports is difficult. Hence, there is a degree of 

uncertainty in the ICM estimates. The agencies are continuing to study ICMs and the most 

appropriate way to apply them, and it is possible revised ICM values may be used for the 

upcoming NPRM. For that reason, the agencies have considered the range of data in the 

survey responses used to develop the ICMs used in the 2012-2016 rule.

30

 The survey data 

showed a standard deviation of 0.14 to 0.21 on the short term ICMs against average values 

ranging from 1.16 (for the low ICM) to 1.64 (for the high ICM). The coefficient of variance 

(the standard deviation divided by the average) would then be roughly 12% for the low ICM 

and 13% for the high ICM. Based on these results, the ICM values could range from 13% 

lower to 13% higher than the primary ICM values. Using the range of cost estimates 

presented in Chapter 6 for future potential scenarios, this range of ICMs could result in an 

approximate change in 2025 costs between +/- $100 to as much as +/- $450, depending on the 

overall level of the 2025 targets analyzed.

As mentioned earlier, the agencies have also conducted some sensitivity surrounding 

the issue of battery costs. A more complete discussion of this is presented in Chapter 6.

3.2.6 Cost Adjustment to 2008 Dollars

As noted above, the costs presented in the 2012-2016 rule have been updated from 

2007 dollars to 2008 dollars using the Gross Domestic Product (GDP) Price Deflator. The 

GDP Price Deflator is one means of adjusting the value of the dollar in different years. The 

data we have used, which is indexed to 2005, shows that it takes $1.062 in 2007 dollars and 

$1.085 in 2008 dollars to purchase a $1 item in 2005.31 Therefore, we have adjusted all of 

the 2012-2016 costs, valued in 2007 dollars, by a factor of 1.022 (1.085/1.062) to express 

costs in 2008 dollars.
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3.2.7 Costs Effects due to Learning

The agencies have also reconsidered learning effects. For this assessment, we 

continue to reflect the phenomenon of volume-based learning curve cost reductions in our 

modeling using two algorithms – ―volume-based‖ for newer technologies and ―time-based‖ 

for mature technologies. The observed phenomenon in the economic literature which supports 

manufacture learning cost reductions are based on reductions in costs as production volumes 

increase, and the economic literature suggests these cost reductions occur indefinitely, though 

the absolute magnitude of the cost reductions decrease as production volumes increase (with 

the highest absolute cost reduction occurring with the first doubling of production).32 The 

agencies use the terminology ―volume-based‖ and ―time-based‖ to distinguish among newer 

technologies and more mature technologies, and how we apply learning cost reductions in our 

assessment. Our volume-based learning algorithm applies for the early, steep portion of the 

learning curve and is estimated to result in 20 percent lower costs after two full years of 

implementation (i.e., a 2014 MY cost would be 20 percent lower than the 2012 and 2013 

model year costs for a new technology being implemented in 2012). Our time-based learning 

algorithm applies for the flatter portion of the learning curve and is estimated to result in 3 

percent lower costs in each of the five years following first introduction of a given 

technology. Once two volume-based learning steps have occurred (for technologies having 

volume-based learning applied), time based learning would begin. For technologies to which 

time based learning is applied, learning would begin in year 2 at 3 percent per year for 5 

years. Beyond 5 years of time-based learning at 3 percent per year, 5 years of time-based 

learning at 2 percent per year, then 5 at 1 percent per year become effective. Going forward, 

the agencies intend to investigate industry learning curves in more detail and whether learning 

should continue to be applied indefinitely, or whether cost reductions due to learning should 

go to zero after some period of time. The learning curve used in this assessment may be 

modified for the rule making.‖

3.2.8 Cooled EGR Cost and Effectiveness

While not considered in the 2012-2016 light-duty rule, the agencies have considered 

an emerging technology referred to as cooled exhaust gas recirculation (cooled-EGR) as 

applied to downsized, turbocharged GDI engines. The agencies have considered this 

technology as an advanced gasoline technology since, as noted, it is emerging and not yet 

available in the light-duty gasoline market. While a cooled or ―boosted‖ EGR technology was 

discussed in the 2012-2016 light-duty rule, the technology considered here is comparatively 

more advanced than the one considered previously, and as such, the agencies have considered 

new costs and new effectiveness values for it. The details behind those updated costs and 

effectiveness values are presented in Appendix B. The effectiveness values used for vehicle 

packages with cooled EGR within this analysis reflect a conservative estimate of system 

performance at approximately 24-bar BMEP. Vehicle simulation modeling of technology 

packages using the more highly boosted and downsized cooled EGR engines (up to 30-bar 

BMEP) with dual-stage turbocharging is currently underway as part of EPA‘s contract with 

Ricardo Engineering as described below. The agencies plan to update the effectiveness of 

vehicle packages with cooled EGR using the new Ricardo vehicle simulation modeling runs 

prior to the NPRM.
Chapter 3

3-14

3.2.9 HEV Effectiveness

At time of this publication, the effectiveness of HEVs requiring equivalent towing 

capacity to their traditional, gasoline powered counterpart (large pick-up trucks for example) 

is similar to those used in the 2012-2016 light-duty rule for vehicles. For several other 

subclasses, the agencies increased HEV effectiveness by approximately 2% based on 

published data for new HEVs that have entered production since the last study was complete 

(including the new Toyota Prius, Ford Fusion hybrid and othersL). In addition, for the Large 

Car, Minivan and Small Truck subclasses, the agencies further increased HEV effectiveness 

by assuming that towing capacity could be reduced from their current ratingM to 

approximately 1,500 pounds for some vehicles in these subclasses without significantly 

impacting consumers‘ need for utility in these vehicles.N The agencies believe that the towing 

capacity in these HEV classes was maintained at an overly stringent performance level in the 

technical analysis of the 2012-2016 rule. The agencies believe that consumers who require 

higher towing capacity could acquire it by purchasing a vehicle with a more capable nonhybrid powertrain (as they do today).O

 Moreover, it is likely that some fraction of consumers 

who purchase the larger engine option do so for purposes of hauling and acceleration 

performance, not just maximum towing. 

A reduction in towing capacity allows greater engine downsizing, which increases 

estimated overall HEV system incremental effectiveness by 5 to 10 percent and brings 

estimated absolute HEV system effectiveness to approximately 30 percent for Large Cars, 

Minivans, and Small Trucks, similar to the HEV effectiveness value assumed for Small Cars 

and Compact Cars.P Refer to Appendix B for a more detailed summary of the effectiveness 

values assumed for both towing and relaxed towing HEVs.

 

L The agencies will continue to evaluate hybrid effectiveness estimates through vehicle simulation research 

currently underway but will not be completed as of the publication of this NOI and TAR. 

M Current small SUVs and Minivans have an approximate average towing capacity of 2000 lbs (without a towing 

package), but range from no towing capacity to 3500 pounds.

N We note that there are some gasoline vehicles in the large car/minivan/small truck segments sold today which 

do not have any towing rating. 

O The agencies recognize that assuming that certain consumers will choose to purchase non-hybrid vehicles in 

order to obtain their desired towing capacity could lead to some increase in fuel consumption and CO2 emissions 

as compared to assuming that towing capacity is maintained for hybrid vehicles across the board and all vehicles 

are therefore hybrids. However, the agencies think it likely that the net improvement in fuel consumption and 

CO2 emissions due to the increased numbers of hybrids available for consumers to choose will offset any 

potential increase in fuel consumption and CO2 emissions resulting from consumers selecting the higherperformance non-hybrid powertrain vehicles.

P The effectiveness of HEVs for heavier vehicles which require conventional towing capabilities is markedly less 

because the rated power of the IC engine must be similar to its non-hybrid brethren. As such, there is less 

opportunity for downsizing with these vehicles.
2017-2025 Technical Assessment

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3.2.10 Ongoing Vehicle Simulation to Update Effectiveness

The other critical factor in the assessment of the cost-effectiveness of technologies is 

the effectiveness valueQassociated with a particular technology. The agencies have, in 

general, used the same effectiveness estimates used in the 2012-2016 light-duty rule.

To assess the effectiveness of emerging technologies and advances in conventional 

technologies in the 2017 to 2025 timeframe, EPA also commissioned an extension of earlier 

vehicle simulation modeling work with Ricardo, Inc. Besides updating the technology

effectiveness estimates of the previous work, the present study substantially broadened the 

scope to include two new vehicle classes and several advanced technologies, including P2 and 

other HEVs. Among the major additions: 

1. Two new vehicle classes intended for use in EPA‘s OMEGA model: a 

subcompact car and a light heavy-duty truck

2. Highly-boosted and significantly downsized direct injection gasoline engines, 

including lean-burnRand stoichiometric/cooled-EGR variants

3. 8-speed automatic and dual-clutch transmissions

4. Advanced hybrids, including P2 and powersplitShybrids

5. Vehicle mass reduction, in conjunction with engine downsizing

The Ricardo study has not been completed to a degree that allow results to be used for 

this analysis, but EPA and NHTSA expect to use the findings from this work to inform the 

estimates of technology effectiveness used for the model year 2017-2025 NPRM.

3.3 Vehicle Manufacturer Lead Time

With respect to the practicability of the standards in terms of lead time, during MYs 

2017-2025 manufacturers are expected to go through the normal automotive business cycle of 

redesigning and upgrading their light-duty vehicle products, and in some cases introducing 

entirely new vehicles not in the market today. This assessment allows manufacturers the time 

needed to incorporate technology to achieve GHG reductions and improve fuel economy 

during the vehicle redesign process. This is an important aspect of the assessment, as it 

avoids the much higher costs that would occur if manufacturers need to add or change 

technology at times other than their scheduled redesigns. This time period also provides 

manufacturers the opportunity to plan for compliance using a multi-year time frame, again 

consistent with normal business practice. Over these 9 model years, there will be an 

opportunity for manufacturers to evaluate, presumably, every one of their vehicle model 

platforms and add technology in a cost effective way to control GHG emissions and improve 

fuel economy. This includes all the technologies considered here and redesign of the air 

 

R Lean-burn simply means less fuel per unit air than would be used under stoichiometric combustion. Lean burn 

operation is a way to reduce throttling losses and allows for higher compression ratios and, thus, better 

performance and/or fuel efficiency.

S This is the HEV architecture initially developed by Toyota and now more widely used in several models. 
Chapter 3

3-16

conditioner systems in ways that will further reduce GHG emissions and improve fuel 

economy. Most vehicles would likely undergo two redesigns during this period. 

Even with multiple redesign periods, it is still likely that some of the more advanced 

and costly technologies (such as cooled boosted EGR engines, or advanced (P)HEVs) may 

not be able to be fully implemented within the timeframe of this rule. These limitations are 

captured in ―maximum technology penetration rates‖ within the modeling analysis. 

In order to assess the four technology pathways, we developed ―Maximum 

Technology Penetration Rates‖ which we could implement within the OMEGA model in 

order to represent the four pathways. Each technology path was defined by these maximum 

technology penetration rates, which were specified as the maximum modeled fleet penetration 

of classes of technology into the new vehicle fleet in MY 2020 and MY 2025 (these broad 

classes of technology as described in detail below). We developed these penetration rates 

based on agency expert judgment with regard to a number of factors such as manufacturer 

production capacity, vehicle suitability, technical feasibility considerations, as well as our 

goal of purposely analyzing multiple potential pathways for this technical assessment. The 

maximum technology penetration rates serve as exogenous limits on technology application 

within the OMEGA model and are shown in Table 3.3-1.
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Table 3.3-1 Scenario Maximum Technology Penetration Rates

Technology MY 2020

3 MY 2025

Path A Path B Path C Path A Path B Path C Path D

Conventional SI 100% 100% 100% 100% 100% 100% 100%

Advanced SI 10% 30% 40% 50% 75% 100% 0%

Hybrid vehicles 40% 30% 40% 75% 50% 75% 60%

Electric Vehicle 4% 4% 8% 8% 8% 15% 20%

Plug-in Hybrid 4% 4% 8% 8% 8% 15% 20%

Mass 

Reduction1,2 15% 15% 25% 15% 20% 30% 15%

1 The mass reduction shown is with respect to the 2008 MY.

2 The mass reduction shown is not an actual phase-in cap, but the maximum amount of mass reduction which 

could be allowed on any vehicle.

3Technology Path D was not run in MY 2020, please see chapter 6 for a discussion of this topic.

The broad technology classes evaluated for purposes of this analysis are defined below 

and a brief discussion of the limiting factors considered are presented. For a more detailed 

discussion of any individual technology, please see the joint Technical Support Document for 

the 2012-2016 rule and Appendix B of this report:

Conventional Spark Ignition (SI) - This technology category includes all technologies 

that are not contained in other categories such as gasoline direct injection engines, 

cylinder deactivation, six and eight speed automatic and dual clutch transmissions, and 

start-stop micro-hybrid technology. Most of these technologies were anticipated as 

being available in the MY 2012-2016 time frame in the recent NHTSA and EPA final 

rule, and it is expected manufacturers could expand production to all models by model 

year 2025, and therefore the maximum technology penetration rate is set at 100% for 

all four pathways.

Advanced SI - This technology includes gasoline spark ignition engines which are 

currently under development by OEMs and suppliers and are not anticipated to be 

widely used in the 2012- 2016 time frame. For purposes of this analysis, based on 

agency expert judgment to define these advanced SI engines, we modeled a direct 

injection gasoline engine with cooled exhaust gas recirculation, and with a larger 

degree of engine downsizing and higher level of turbocharging as compared to the 

turbo-downsized engines included in our analysis for the MYs 2012-2016 final rule. 

This technology is discussed in more detail above and the appendix B, and is similar 

to the technologies that many OEMs indicated were underdevelopment and which they 

anticipate will be introduced into the market in the 2017-2025 time frame. As there 

are no production vehicles presently using these technologies, we set the maximum 

technology penetration rate for these technologies at less than 100% in MY 2025 for 

Paths A and B. 

Hybrid – While the agencies recognize there are many types of full-hybrids either in 

production or under development, for the purposes of this analysis we have 

specifically modeled two types of hybrids, P-2 and 2-Mode type hybrids. These 
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technologies are discussed in detail in Chapter 3. While the agencies expect the 

proliferation of these vehicles to increase in this timeframe, the maximum technology 

penetration rate are set at less than 100% due to potential battery supply constraints, as 

well as industry-wide engineering and capacity constraints, for converting the entire 

new vehicle fleet to strong hybrids in this time frame. The four path ways using 

varying levels in order to capture both the current uncertainty with how rapidly these 

technologies can penetrate into the new vehicle fleet in the 2017-2025 time frame as 

well as the potentially different strategies auto companies may choose with respect to 

the degree of HEV penetration they may pursue.

Plug-in Hybrid (PHEV) - This technology includes PHEV‘s with a range of 20 and 40 

miles and is discussed above. The maximum technology penetration rates are set at 

less than 100% due to the same general potential constraints as listed for the HEVs, 

but are lower for PHEVs due to the current status of the development of these 

advanced vehicles. Further, as discussed in Appendix B, we project that PHEV 

technology is not available to some vehicle types, such as large pickup. While it is 

possible to electrify such vehicles, there are tradeoffs in terms of cost, electric range, 

and utility that would reduce the appeal of the vehicle to a narrower market. 

Electric Vehicle (EV) - This technology includes vehicles with actual on-road ranges 

of 75, 100, and 150 miles. The actual on-road range was calculated using a projected

30% gap between two-cycle and on-road range. These vehicles are powered solely by 

electricity and are not powered by any liquid fuels. The maximum technology 

penetration rates are set at less than 100% due to the same general potential constraints 

as discussed for PHEVs. Further, as with PHEVs, and as discussed in Appendix B, 

we assume that EV technology is not available to some vehicle types, such as large 

pickups. While it is possible to electrify such vehicles, there are tradeoffs in terms of 

cost, range, and utility that would reduce the appeal of the vehicle to a narrower 

market. These trade-offs are expected to reduce the market for other vehicle types as 

well, and for this analysis we have considered this in the development of the 

maximum technology penetration rates we use for the four pathways. Although the 

agencies have assumed that range limitations would entail no loss in value to EV 

owners, we will further consider the reasonableness and applicability of this 

assumption, and will conduct our analyses for the forthcoming NPRM accordingly.T

Mass Reduction - This technology includes material substitution, smart design, and 

mass reduction compounding. The actual amount of reduction from the 2008 baseline 

was determined based on confidential business information provided by vehicle 

manufacturers, assessments provided by material suppliers, and existing studies in the 

literature, including the 2010 report from Lotus Engineering. As discussed above as 

well as in Chapter 1 and Appendix B, NHTSA and EPA intend to conduct a thorough 

 

T

If the agencies determine that the loss of range does entail some loss in value to vehicle owners, we anticipate 

that accounting for this loss in value would affect our estimates of potential EV application rates and our 

estimates of the private and social benefits of new standards that could lead to increases in EV application rates.
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assessment of the levels of the levels of mass reduction that could be achieved which 

is both technologically feasible and which can be implemented in a safe manner for 

the joint federal NPRM.

3.4 Other Technologies Assessed

In addition to the technologies already mentioned, the technologies generally 

considered in the agencies‘ analysis are briefly described below. They fall into five broad 

categories: engine technologies, transmission technologies, vehicle technologies, 

electrification/accessory technologies, hybrid technologies and mass reduction. For a more 

detailed description of each technology and their costs and effectiveness, we refer the reader 

to Chapter 3 of the Joint TSD, Chapter III of NHTSA‘s FRIA, and Chapter 1 of EPA‘s final 

RIA.33 Technologies to reduce CO2 and HFC emissions from air conditioning systems are 

discussed in Appendix D. We note that not all of these technologies were actually modeled in 

the analysis for this Technical Assessment Report given the agencies‘ decision to simplify 

that analysis as discussed further below in Section 3.5 and in Chapter 6, but all of the 

technologies will be available for the models in the upcoming rulemaking analysis.

3.4.1 Types of engine technologies that improve fuel economy and reduce CO2

emissions include the following:

Low-friction lubricants – low viscosity and advanced low friction 

lubricants oils are now available with improved performance and better 

lubrication. If manufacturers choose to make use of these lubricants, they 

would need to make engine changes and possibly conduct durability testing 

to accommodate the low-friction lubricants. The cost and GHG and fuel 

economy effectiveness is unchanged from estimates used for 2016 model 

year vehicles in the 2012-2016 final rule. 

Reduction of engine friction losses – can be achieved through low-tension 

piston rings, roller cam followers, improved material coatings, more 

optimal thermal management, piston surface treatments, and other 

improvements in the design of engine components and subsystems that 

improve engine operation. The cost and GHG and fuel economy 

effectiveness is unchanged from estimates used for 2016 model year 

vehicles in the 2012-2016 final rule.

Conversion to dual overhead cam with dual cam phasing – as applied to 

overhead valves designed to increase the air flow with more than two 

valves per cylinder and reduce pumping losses. The GHG and fuel 

economy effectiveness is unchanged from estimates used for 2016 model 

year vehicles in the 2012-2016 final rule. The cost has changed only in 

that learning effects have continued to decrease piece costs.

Cylinder deactivation – deactivates the intake and exhaust valves and 

prevents fuel injection into some cylinders during light-load operation. 

The engine runs temporarily as though it were a smaller engine which 
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substantially reduces pumping losses. The GHG and fuel economy 

effectiveness is unchanged from estimates used for 2016 model year 

vehicles in the 2012-2016 final rule. The cost has changed only in that 

learning effects have continued to decrease piece costs.

Variable valve timing – alters the timing of the intake valve, exhaust valve, 

or both, primarily to reduce pumping losses, increase specific power, and 

control residual gases. The GHG and fuel economy effectiveness is 

unchanged from estimates used for 2016 model year vehicles in the 2012-

2016 final rule. The cost has changed only in that learning effects have 

continued to decrease piece costs.

Discrete variable valve lift – increases efficiency by optimizing air flow 

over a broader range of engine operation which reduces pumping losses. 

Accomplished by controlled switching between two or more cam profile 

lobe heights. The GHG and fuel economy effectiveness is unchanged from 

estimates used for 2016 model year vehicles in the 2012-2016 final rule.

The cost has changed only in that learning effects have continued to 

decrease piece costs.

Continuous variable valve lift – is an electromechanical or electrohydraulic 

system in which valve timing is changed as lift height is controlled.34,35,36,37 

This yields a wide range of performance optimization and volumetric 

efficiency, including enabling the engine to be valve throttled. The GHG 

and fuel economy effectiveness is unchanged from estimates used for 2016 

model year vehicles in the 2012-2016 final rule. The cost has changed only 

in that learning effects have continued to decrease piece costs.

Stoichiometric gasoline direct-injection technology – injects fuel at high 

pressure directly into the combustion chamber to improve cooling of the 

air/fuel charge within the cylinder, which allows for higher compression 

ratios and increased thermodynamic efficiency. The GHG and fuel 

economy effectiveness is unchanged from estimates used for 2016 model 

year vehicles in the 2012-2016 final rule. The costs for this technology 

differ from those used in the 2012-2016 light-duty rule (refer to Table 3.2-

1).

Turbocharging and downsizing – increases the available airflow and 

specific power level, allowing a reduced engine size while maintaining 

performance. Engines of this type use gasoline direct injection (GDI) and 

dual cam phasing. This reduces pumping losses at lighter loads in 

comparison to a larger engine. The GHG and fuel economy effectiveness 

changed from estimates used for 2016 model year vehicles in the 2012-

2016 final rule. The current estimates reflect engines that are now entering 

the light-duty vehicle market38 or are under advanced development.39,40,41 

We now estimate an effectiveness of approximately 15% relative to a 2008 
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baseline engine technology. The costs for this technology also differ from 

those used in the 2012-2016 light-duty rule (refer to Table 3.2-1). 

Turbocharging and downsizing with cooled exhaust-gas recirculation 

(EGR) – additional charge dilution reduces the incidence of knocking 

combustion and obviates the need for fuel enrichment at high engine 

power. This allows for higher boost pressure and/or compression ratio and 

further reduction in engine displacement and both pumping and friction 

losses while maintaining performance. Engines of this type use GDI and 

both dual cam phasing and discrete variable valve lift. The EGR systems 

considered in this assessment would use a dual-loop system with both high 

and low pressure EGR loops and dual EGR coolers. The engines would 

also use single-stage, variable geometry turbocharging with higher intake 

boost pressure available across a broader range of engine operation than 

conventional turbocharged SI engines. Such a system is estimated to be 

capable of an additional 5% effectiveness relative to a turbocharged, 

downsized GDI engine without cooled-EGR.39, 42,43 The agencies are also 

considering a more advanced version of such a cooled EGR system that 

would employ very high combustion pressures by using dual stage 

turbocharging. The agencies have at our disposal only very preliminary 

effectiveness estimates for this approach as modeling efforts are ongoing 

via vehicle simulation modeling by Ricardo Engineering. The simulation 

modeling is similar to work that Ricardo conducted for EPA for its 2008 

staff report on GHG effectiveness of light-duty vehicle technologies.

44 The 

agencies will reconsider this more advanced cooled EGR approach in the 

upcoming NPRM when the Ricardo simulation work should be complete. 

The costs for the cooled EGR system considered in this assessment (i.e., 

single stage turbocharging) are presented in Appendix B. 

Diesel engines – have several characteristics that give superior fuel 

efficiency, including reduced pumping losses due to lack of (or greatly 

reduced) throttling, and a combustion cycle that operates at a higher 

compression ratio and with a very lean air/fuel mixture relative to an 

equivalent-performance gasoline engine. This technology requires 

additional enablers, such as a NOx adsorption catalyst system or a 

urea/ammonia selective catalytic reduction system for control of NOx 

emissions during lean (excess air) operation. For purposes of this current 

assessment, we have not included advanced diesel engines in our modeling 

scenarios. During our meetings with the automotive companies, a few 

companies did indicate that diesel technology would represent a 

meaningful portion of their future product offerings in the US, and these 

companies commented that there are opportunities for improving the fuel 

economy/reducing CO2 from diesel in the 2017 to 2025 time frame which 

they are pursuing. For today‘s assessment, the three agencies did not have 

sufficient time to further investigate these potential improvements for 

diesels, both the improvements in effectiveness and the potential costs 

associated with those improvements. Therefore, we did not include diesel 
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engines in our modeling assessment presented in Chapter 6. This does not 

mean that the agencies do not see a role for diesels in the future fleet since 

we fully expect some manufacturers will rely on diesels as part of their 

future strategy. We intend to continue to work on this area of our 

assessment and expect to perform additional evaluations in the future 

regarding diesel engine technology. 

3.4.2 Types of transmission technologies considered include:

Improved automatic transmission controls – optimizes shift schedule to 

maximize fuel efficiency under wide ranging conditions, and minimizes 

losses associated with torque converter slip through lock-up or modulation. 

The GHG and fuel economy effectiveness is unchanged from estimates 

used for 2016 model year vehicles in the 2012-2016 final rule. The cost has 

changed only in that learning effects have continued to decrease piece 

costs.

Six-, seven-, and eight-speed automatic transmissions – the gear ratio 

spacing and transmission ratio are optimized to enable the engine to 

operate in a more efficient operating range over a broader range of vehicle 

operating conditions. While a six speed transmission application was most 

prevalent for the 2012-2016 final rule, eight speed transmissions are 

expected to be readily available and applied in the 2017 through 2025 

timeframe. We applied the six speed transmission GHG and fuel economy 

effectiveness estimates used from 2016 model year vehicles in the 2012-

2016 final rule. We plan to conduct further analysis to determine the 

effectiveness of increasing the number of available gear ratios beyond six 

speeds and increasing the ratio spread prior to the 2017-2025 notice of 

proposed rulemaking. The costs for a 6-speed automatic transmission 

differ from those used in the 2012-2016 light-duty rule (refer to Table 3.2-

1). The agencies have estimated new costs for an 8-speed automatic 

transmission, which are presented in Appendix B.

Dual clutch or automated shift manual transmissions – are similar to 

manual transmissions, but the vehicle controls shifting and launch 

functions. A dual-clutch automated shift manual transmission uses 

separate clutches for even-numbered and odd-numbered gears, so the next 

expected gear is pre-selected, which allows for faster and smoother 

shifting. The 2012-2016 final rule limited DCT applications to a maximum 

of 6-speeds. We applied the GHG and fuel economy effectiveness 

estimates used from 2016 model year vehicles in the 2012-2016 final rule. 

We plan to conduct further analysis to determine the effectiveness of 

increasing the number of available gear ratios beyond six speed and 

increasing the ratio spread prior to the 2017-2025 notice of proposed 

rulemaking. The costs for a DCT differ from those used in the 2012-2016 

light-duty rule (refer to Table 3.2-1).
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Continuously variable transmission – commonly uses V-shaped pulleys 

connected by a metal belt rather than gears to provide ratios for operation. 

Unlike manual and automatic transmissions with fixed transmission ratios, 

continuously variable transmissions can provide fully variable and an 

infinite number of transmission ratios that enable the engine to operate in a 

more efficient operating range over a broader range of vehicle operating 

conditions. CVTs have not been considered in this assessment.

Manual 6-speed transmission –offers an additional gear ratio, often with a 

higher overdrive gear ratio, than a 5-speed manual transmission. The GHG 

and fuel economy effectiveness is unchanged from estimates used for 2016 

model year vehicles in the 2012-2016 final rule. The cost has changed only 

in that learning effects have continued to decrease piece costs.

3.4.3 Types of vehicle technologies considered include:

Low-rolling-resistance tires – have characteristics that reduce frictional 

losses associated with the energy dissipated in the deformation of the tires 

under load, thereby improving fuel economy and reducing CO2 emissions. 

The costs and GHG and fuel economy effectiveness is unchanged from 

estimates used for 2016 model year vehicles in the 2012-2016 final rule. 

This is conservative as reducing rolling resistance in tires is something that 

can likely continue to improve. The agencies may consider adding a 

second level of improvement in tire rolling resistance for the upcoming 

NPRM. 

Low-drag brakes – reduce the sliding friction of disc brake pads on rotors 

when the brakes are not engaged because the brake pads are pulled away 

from the rotors. The costs and GHG and fuel economy effectiveness is 

unchanged from estimates used for 2016 model year vehicles in the 2012-

2016 final rule.

Front or secondary axle disconnect for four-wheel drive systems – provides 

a torque distribution disconnect between front and rear axles when torque 

is not required for the non-driving axle. This results in the reduction of 

associated parasitic energy losses. The costs and GHG and fuel economy 

effectiveness is unchanged from estimates used for 2016 model year 

vehicles in the 2012-2016 final rule.

Aerodynamic drag reduction – This can be achieved via two approaches, 

either reducing the drag coefficients or reducing vehicle frontal area. To 

reduce drag coefficients, skirts, air dams, underbody covers, and more 

aerodynamic side view mirrors can be applied. In addition to the standard 

aerodynamic treatments, the agencies have included a second level of 

aerodynamic technologies which could include active grille shutters, rear 

visors, and larger under body panels. The GHG and fuel economy 

effectiveness is unchanged from estimates used for 2016 model year 
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vehicles in the 2012-2016 final rule. This second level of aerodynamic 

technologies was not considered in the 2012-2016 light-duty rule and, as 

such, the estimated costs are new and are presented in Appendix B.

Mass Reduction – Already mentioned above. 

Types of electrification/accessory and hybrid technologies considered include:

Electric power steering (EPS)/ Electro-hydraulic power steering (EHPS) –

is an electrically-assisted steering system that has advantages over 

traditional hydraulic power steering because it replaces a continuously 

operated hydraulic pump, thereby reducing parasitic losses from the 

accessory drive. Manufacturers have informed the agencies that full EPS 

systems are being developed for all light-duty vehicles applications, 

including large trucks. The GHG and fuel economy effectiveness is 

unchanged from estimates used for 2016 model year vehicles in the 2012-

2016 final rule. The cost has changed only in that learning effects have 

continued to decrease piece costs.

Improved accessories (IACC) – may include high efficiency alternators, 

electrically driven (i.e., on-demand) water pumps and cooling fans. This 

excludes other electrical accessories such as electric oil pumps and 

electrically driven air conditioner compressors. The GHG and fuel 

economy effectiveness is unchanged from estimates used for 2016 model 

year vehicles in the 2012-2016 final rule. The cost has changed only in that 

learning effects have continued to decrease piece costs.

Air Conditioner Systems – These technologies include improved hoses, 

connectors and seals for leakage control. They also include improved 

compressors, expansion valves, heat exchangers and the control of these 

components for the purposes of improving tailpipe CO2 emissions and fuel 

economy as a result of A/C use. The GHG and fuel economy 

effectiveness is unchanged from estimates used for 2016 model year 

vehicles in the 2012-2016 final rule. We have estimated new costs for A/C 

systems which are presented in Appendix D.

12-volt micro-hybrid (MHEV) – also known as idle-stop or start-stop and 

commonly implemented as a 12-volt belt-driven integrated startergenerator, is the most basic hybrid system that facilitates idle-stop 

capability. Along with other enablers, this system replaces a common 

alternator with a belt-driven enhanced power starter-alternator, and a 

revised accessory drive system. These systems incorporate an additional 

battery, ELDC or other subsystems to prevent voltage-droop on restart, one 

of the shortcomings of previous 12V micro-hybrid sytems relative to 

higher voltage systems. Such a system is estimated to be capable of 

roughly 1.5% to 2.5% effectiveness. The cost has changed only in that 

learning effects have continued to decrease piece costs.
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Higher Voltage Stop-Start/Belt Integrated Starter Generator (BISG) –

provides idle-stop capability and uses a higher voltage battery with 

increased energy capacity over typical automotive batteries. The higher 

system voltage allows the use of a smaller, more powerful electric motor. 

This system replaces a standard alternator with an enhanced power, higher 

voltage, higher efficiency starter-alternator, that is belt driven and that can 

recover braking energy while the vehicle slows down (regenerative 

braking). The GHG and fuel economy effectiveness is unchanged from 

estimates used for 2016 model year vehicles in the 2012-2016 final rule.

The cost has changed only in that learning effects have continued to 

decrease piece costs.

Integrated Motor Assist (IMA)/Crank integrated starter generator (CISG) –

provides idle-stop capability and uses a high voltage battery with increased 

energy capacity over typical automotive batteries. The higher system 

voltage allows the use of a smaller, more powerful electric motor and 

reduces the weight of the wiring harness. This system replaces a standard 

alternator with an enhanced power, higher voltage, higher efficiency 

starter-alternator that is crankshaft mounted and can recover braking 

energy while the vehicle slows down (regenerative braking). The GHG and 

fuel economy effectiveness is unchanged from estimates used for 2016 

model year vehicles in the 2012-2016 final rule. The cost has changed only 

in that learning effects have continued to decrease piece costs.

P2 Hybrid – A newly emerging hybrid technology that uses a transmission 

integrated electric motor placed between the engine and a gearbox or CVT, 

much like the IMA system described above except with a wet or dry 

separation clutch which is used to decouple the motor/transmission from 

the engine. In addition, a P2 Hybrid would typically be equipped with a 

larger electric machine. Engaging the clutch allows all-electric operation 

and more efficient brake-energy recovery. Disengaging the clutch allows 

efficient coupling of the engine and electric motor and, when combined 

with a DCT transmission, reduces gear-train losses relative to PSHEV or 

2MHEV systems. This technology was not included in the 2012-2016 

GHG and CAFE rulemaking technical analysis. We have estimated new 

costs for this technology which are presented in Appendix B.

2-mode hybrid (2MHEV) – is a hybrid electric drive system that uses an 

adaptation of a conventional stepped-ratio automatic transmission by 

replacing some of the transmission clutches with two electric motors that 

control the ratio of engine speed to vehicle speed, while clutches allow the 

motors to be bypassed. This improves both the transmission torque 

capacity for heavy-duty applications and reduces fuel consumption and 

CO2 emissions at highway speeds relative to other types of hybrid electric

drive systems. The GHG and fuel economy effectiveness is unchanged 

from estimates used for 2016 model year vehicles in the 2012-2016 final 
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rule. We have estimated new costs for this technology which are presented 

in Appendix B.

Power-split hybrid (PSHEV) – a hybrid electric drive system that replaces 

the traditional transmission with a single planetary gearset and a 

motor/generator. This motor/generator uses the engine to either charge the 

battery or supply additional power to the drive motor. A second, more 

powerful motor/generator is permanently connected to the vehicle‘s final 

drive and always turns with the wheels. The planetary gear splits engine 

power between the first motor/generator and the drive motor to either 

charge the battery or supply power to the wheels. Power-split hybrids have 

not been considered in this assessment.

Plug-in hybrid electric vehicles (PHEV) – are hybrid electric vehicles with 

the means to charge their battery packs from an outside source of 

electricity (usually the electric grid). These vehicles have larger battery 

packs with more energy storage and a greater capability to be discharged 

than other hybrid electric vehicles. They also use a control system that 

allows the battery pack to be substantially depleted under electric-only or 

blended mechanical/electric operation and batteries that can be cycled in 

charge sustaining operation at a lower state of charge than is typical of 

other hybrid electric vehicles. The GHG and fuel economy effectiveness is 

unchanged from estimates used for 2016 model year vehicles in the 2012-

2016 final rule. We have estimated new costs for this technology which are 

presented in Appendix B along with estimates of their electricity usage per 

mile. Battery costs assume that battery packs for PHEV applications will 

be designed to last for the full useful life of the vehicle at a useable state of 

charge equivalent to 70% of the nominal battery pack capacity. 

Electric vehicles (EV) – are vehicles with all-electric drive and with 

vehicle systems powered by energy-optimized batteries charged primarily 

from grid electricity. While the 2016 FRM did not anticipate a significant 

penetration of EV‘s, in this analysis, EV‘s with several ranges have been 

included. The GHG and fuel economy effectiveness is unchanged from 

estimates used for 2016 model year vehicles in the 2012-2016 final rule.

We have estimated new costs for this technology which are presented in 

Appendix B along with estimates of their electricity usage per mile. 

Battery costs assume that battery packs for EV applications will be 

designed to last for the full useful life of the vehicle at a useable state of 

charge equivalent to 80% of the nominal battery pack capacity. 

Fuel cell electric vehicles (FCEVs) – utilize a full electric drive platform 

but consume electricity generated by an on-board fuel cell and hydrogen 

fuel. Fuel cells are electro-chemical devices that directly convert reactants 

(hydrogen and oxygen via air) into electricity, with the potential of 

achieving more than twice the efficiency of conventional internal 

combustion engines. High pressure gaseous hydrogen storage tanks are 
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used by most automakers for FCEVs that are currently under development. 

The high pressure tanks are similar to those used for compressed gas 

storage in more than 10 million CNG vehicles worldwide, except that they 

are designed to operate at a higher pressure (350 bar or 700 bar vs. 250 bar 

for CNG). We have estimated new costs for this technology which are 

presented in Appendix B. Due to the uncertainty of the future availability 

for this technology, FCEVs were not included in any OMEGA runs.

3.5 Technology Packages in OMEGA

The large number of possible technologies to consider and the breadth of vehicle 

systems that are affected mean that consideration of the manufacturer‘s design and production 

process plays a major role in assessing the ability of the US fleet to achieve various GHG 

levels and fuel economy, and the costs associated with achieving those levels. Vehicle 

manufacturers typically develop their many different individual vehicle models by basing 

them on a limited number of vehicle platforms. Several different models of vehicles may be 

produced using a common platform, allowing for efficient use of design and manufacturing 

resources. The platform typically consists of common vehicle architecture and structural 

components, such as the underbody, chassis and suspension. Given the very large investment 

put into designing and producing each vehicle model, manufacturers cannot reasonably 

redesign any given vehicle every year or even every other year, let alone redesign all of their 

vehicles every year or every other year. At the redesign stage, the manufacturer will typically 

upgrade or add all of the technology and make all of the other changes needed so the vehicle 

model will meet the manufacturer‘s plans for the next several years. This includes meeting all 

of the fuel economy, emissions, safety, and other requirements that would apply during the 

years before the next major redesign of the vehicle. This is in contrast to what would be a 

much more costly approach of trying to achieve small increments of reductions over multiple 

years by adding technology to the vehicle piece by piece outside of the redesign process.

However, making all of these changes at once typically involves significant 

engineering, development, manufacturing, and marketing resources to create a new product 

with multiple new features. In order to leverage this significant upfront investment, 

manufacturers plan vehicle redesigns with several model years‘ of production in mind. 

That said, vehicle models are not completely static between redesigns as limited 

changes are often incorporated for each model year. This interim process is called a ―refresh‖ 

of the vehicle. It generally does not allow for major technology changes although more minor 

ones can be done (e.g., aerodynamic improvements, valve timing improvements), usually 

aimed at improving the vehicle‘s market appeal. We note, though, that more major 

technology upgrades that affect multiple systems of the vehicle thus occur at the vehicle 

redesign stage and not in the time period between redesigns.

In determining the projected technology needed to meet the standards, and the cost of 

those technologies, EPA is using an approach that accounts for and builds on this redesign 

process and bundles technologies into ―packages‖ to capture synergistic aspects and reflect 

progressively larger CO2 reductions with additions or changes to any given package. As an 

input to this approach, EPA groups technologies into packages of increasing estimated cost 
Chapter 3

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and effectiveness. EPA determined that 19 different vehicle types provided adequate 

resolution required to accurately model the entire fleet. We discuss the approach to 

developing packages and how those packages are used in the OMEGA model in Appendix B.

For the reader‘s reference, we note that NHTSA‘s CAFE Compliance and Effects 

Model (often referred to as ―the Volpe model‖), which NHTSA uses for CAFE rulemaking 

analysis was not used for purposes of this Technical Assessment Report, also assumes 

manufacturers add most technology to vehicles as part of the vehicle redesign and freshening 

process. While the CAFE model considers technologies similar to those considered by EPA‘s 

OMEGA model, the CAFE model accumulates discrete technologies incrementally, taking 

into account model-estimated cost effectiveness, as well as engineering and other constraints. 

While the CAFE model does not require that packages be determined exogenously, in the 

analysis supporting the MYs 2012-2016 CAFE standards, the CAFE model often formed 

packages similar to those included in EPA‘s analysis supporting the MYs 2012-2016 GHG 

emissions standards. Although NHTSA is not, in today‘s report, presenting analysis 

performed using the CAFE model, the agency will do so in support of the upcoming NPRM 

for post-MY 2016 CAFE standards.
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Chapter 3 References 

14 Joint Technical Support Document: Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas Emission 

Standards and Corporate Average Fuel Economy Standardsfor EPA and NHTSA 2012-2016 GHG and CAFE

Rule. EPA-420-R-10-901, April, 2010.

15 Rogozhin, A., et al., Using indirect cost multipliers to estimate the total cost of adding new technology in the 

automobile industry. International Journal of Production Economics (2009), doi:10.1016/j.ijpe.2009.11.031. 

16 75 FR 25324, 25382-396, May 7, 2010.

17 U.S. Environmental Protection Agency, ―Light-Duty Technology Cost Analysis Pilot Study,‖ Contract No. 

EP-C-07-069, Work Assignment 1-3, December 2009, EPA-420-R-09-020, Docket EPA-HQ-OAR-2009-0472-

11282; peer review report dated November 6, 2009, is at EPA-HQ-OAR-2009-0472-11285; ―Light-duty 

Technology Cost Analysis – Report on Additional Case Studies,‖ EPA-HQ-OAR-2009-0472-11604

18 U.S. Environmental Protection Agency, ―Light-Duty Technology Cost Analysis Pilot Study,‖ Contract No. 

EP-C-07-069, Work Assignment 1-3, December 2009, EPA-420-R-09-020, Docket EPA-HQ-OAR-2009-0472-

11282; peer review report dated November 6, 2009, is at EPA-HQ-OAR-2009-0472-11285; ―Light-duty 

Technology Cost Analysis – Report on Additional Case Studies,‖ EPA-HQ-OAR-2009-0472-11604

19 Nelson, P.A., Santinit, D.J., Barnes, J. ―Factors Determining the Manufacturing Costs of Lithium-Ion Batteries 

for PHEVs,‖ 24th World Battery, Hybrid and Fuel Cell Electric Vehicle Symposium and Exposition EVS-24, 

Stavenger, Norway, May 13-16, 2009 (www.evs24.org).

20 Santini, D.J., Gallagher, K.G., and Nelson, P.A. ―Modeling of Manufacturing Costs of Lithium-Ion Batteries 

for HEVs, PHEVs, and EVs,‖ Paper to be presented at the 25th World Battery, Hybrid and Fuel Cell Electric 

Vehicle Symposium and Exposition, EVS-25, Shenzhen, China, November 5-9, 2010 (www.evs25.org). 

Advance draft provided by D.J. Santini, Argonne National Laboratory, August 24, 2010.

21 ―Hyundai ups tech ante with Sonata Hybrid,‖ Automotive News, August 2, 2010.

22 ―Chevrolet Stands Behind Volt With Standard Eight-Year, 100,000-Mile Battery Warranty,‖ GM Press release 

(http://media.gm.com/content/media/us/en/news/news_detail.brand_gm.html/content/Pages/news/us/en/2010/Jul

y/0714_volt_battery)

23 ―Nissan‘s new 2012 hybrid system aims for 1.8-L efficiency with a 3.5-L V6,‖ SAE Automotive Engineering 

Online, February 15, 2010.

24 ―Lithium-ion Battery,‖ Nissan Technological Development Activities (http://www.nissanglobal.com/EN/TECHNOLOGY/INTRODUCTION/DETAILS/LI-ION-EV/), 2009. 

25 Lotus Engineering, Inc. ―An Assessment of Mass Reduction Opportunities for a 2017 – 2020 Model Year 

Vehicle Program,‖ Published by the The International Council on Clean Transportation and available on the 

Internet at http://www.theicct.org/2010/03/lightweight-future/, March 30, 2010.

26 Effectiveness and Impact of Corporate Fuel Economy Standards, NAS, 2002.

27 Basic Analysis of the Cost and Long-Term Impact of the Energy Independence and Security Act Fuel 

Economy Standard, Sierra Research, 2008.

28 The Impact of Mass Decompounding on Assessing the Value of Vehicle Lightweighting, MIT 2008.

29 Rogozhin, A., et al., Using indirect cost multipliers to estimate the total cost of adding new technology in the 

automobile industry. International Journal of Production Economics (2009), doi:10.1016/j.ijpe.2009.11.031.
Chapter 3

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30

 Gloria Helfand and Todd Sherwood,  ̳ ̳Documentation of the Development of Indirect Cost Multipliers for 

Three Automotive Technologies,‘‘ Office of Transportation and Air Quality, U.S. EPA, August 2009 (Docket 

EPA–HQ–OAR–2009–0472).

31 Bureau of Economic Analysis, US Department of Commerce, National Income and Product Accounts Table 

1.1.4; accessed via www.bea.gov on May 27, 2010.

32 See ―Learning Curves in Manufacturing‖, L. Argote and D. Epple, Science, Volume 247; ―Toward Cost Buy 

down Via Learning-by-Doing for Environmental Energy Technologies, R. Williams, Princeton University, 

Workshop on Learning-by-Doing in Energy Technologies, June 2003; ―Industry Learning Environmental and the 

Heterogeneity of Firm Performance, N. Balasubramanian and M. Lieberman, UCLA Anderson School of 

Management, December 2006, Discussion Papers, Center for Economic Studies, Washington DC.

33 Joint Technical Support Document: Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas Emission 

Standards and Corporate Average Fuel Economy Standardsfor EPA and NHTSA 2012-2016 GHG and CAFE 

Rule. EPA-420-R-10-901, April, 2010; Regulatory Impact Analysis, U.S. EPA, EPA-420-R-10-009, April 2009.

34 Luttermann, C., Schünemann, E., Klauer, N. ―Enhanced VALVETRONIC Technology for Meeting SULEV 

Emission Requirements,‖ SAE Technical Paper Series, No. 2006-01-0849, 2006.

35 Murphy, T. ―Fiat Breathing Easy with MultiAir,‖ Wards Auto, March 26, 2010.

36 ―Fiat Multiair,‖ SAE Automotive Engineering International, June 2009, p. 48.

37 Battistonic, M., Foschini, L., Postrioti, L., Cristiani, M. ―Development of an Electro-Hydraulic Camless VVA 

System,‖ SAE Technical Paper Series, No. 2007-24-0088, 2007.

38 Yi., J., Wooldridge, S., Coulson, G., Hilditch, J., Iyer, C., Moilanen, P., Papaioannou, G., Reiche, D., Shelby, 

M. VanDerWege, B., Wearver, C., Xu, Z., Davis, D., Hinds, B., Schamel, A. ―Development and Optimization of 

the Ford 3.5L V6 EcoBoost Combustion System,‖ SAE Technical Paper Series, No. 2009-01-1494. 

39 Turner, J.W.G., Pearson, R.J., Curtis, R. Holland, B. ―Sabre: a cost effective engine technology combination 

for high efficiency, high performance and low CO2 emissions,‖ Low Carbon Vehicles 2009: Institution of 

Mechanical Engineers conference proceedings, May 2009.

40 Lumsden, G. OudeNijeweme, D., Fraser, N., Blaxill, H. ―Development of a Turbocharged Direct Injection 

Downsizing Demonstrator Engine,‖ SAE Technical Paper Series, No. 2009-01-1503, 2009.

41 Kirwan, J.E., Shost, M., Zizelman, J. ―3-Cylinder Turbocharged Gasoline Direct Injection: A High Value 

Solution for Low CO2 and Low NOx Emissions,‖ SAE Technical Paper Series, No. 2010-01-0590, 2010.

42 Kaiser, M., Krueger, U., Harris, R., Cruff, L. ―Doing More with Less - The Fuel Economy Benefits of Cooled 

EGR on a Direct Injected Spark Ignited Boosted Engine,‖ SAE Technical Paper Series, No. 2010-01-0589.

43 Kapus, P.E., Fraidl, G.K., Prevedel, K., Fuerhapter, A. ―GDI Turbo – The Next Steps,‖ JSAE Technical Paper 

No. 20075355, 2007.

44 ―EPA Staff Technical Report: Cost and Effectiveness Estimates of Technologies Used to Reduce Light-duty 

Vehicle Carbon Dioxide Emissions,‖ EPA420-R-08-008, March 2008, Docket EPA-HQ-OAR-2009-0472-0132.
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4 Infrastructure Assessment

4.1 Overview

The May 21, 2010 Presidential Memorandum specifically requests that the EPA, 

NHTSA, and CARB‘s joint technical assessment include an assessment of infrastructure for 

advanced technology vehicles. Section 3 of the Memorandum requests the Department of 

Energy (DOE) to promote the deployment of advanced technology vehicles by providing 

technical assistance to cities preparing for deployment of electric vehicles, including plug-in 

hybrids and electric vehicles. The Memorandum also asks DOE to work with stakeholders on 

the development of voluntary standards to facilitate the robust development of advanced 

vehicle technologies and coordinate these efforts with DOT/NHTSA and EPA. Because of 

DOE‘s key role in these areas, EPA, NHTSA, and CARB have closely collaborated with DOE 

in developing our assessment of infrastructure issues, and DOE contributed significantly to 

this chapter. 

This technical assessment report identifies electric drive vehicles as an important part

of the vehicle mix that will likely be used to meet fuel economy and GHG emission reduction 

standards. Electric drive vehicles, including battery electric vehicles (EVs), plug-in hybrid 

electric vehicles (PHEVs), and hydrogen-fueled fuel cell electric vehicles (FCEVs), have the 

potential to dramatically improve fuel economy and reduce GHG emissions compared to 

conventional technologies. Further, given their use of fuels that eventually could be derived 

from entirely renewable and zero carbon resources, they have a large potential to transform 

the vehicle future to a low carbon fleet and significantly reduce U.S. petroleum imports.

These technologies require new infrastructure to become a significant part of the 

vehicle fleet. In the case of EVs and PHEVs, electric charging infrastructure is needed in the 

form of charging stations, most often at home, but also at the workplace or other public 

locations, such as parking lots or retail stores. While at present, few public charging points 

are available, there are significant projects underway to deploy new electric-drive vehicle 

charging infrastructure across the U.S. and to collect data to facilitate analyses of future 

needs. In the case of FCEVs, hydrogen fueling stations analogous to gasoline stations are

needed to support commercialization.

DOE has begun efforts to support a shift to electric-drive vehicles by coupling a long 

history of advanced vehicle research and development with more recent efforts to develop a 

holistic view of electric-vehicle infrastructure by compiling internal expertise, seeking input 

from outside experts and stakeholders and identifying areas where further investigation is 

needed. These combined efforts indicate that most electric vehicle owners will charge at 

home using equipment they pay to install and electricity from a grid that utility providers are 

capable of upgrading, where necessary, to meet charge demand. It is expected that 97 to 99% 

of charging energy will be delivered at home.45 Home charging capability is not seen as a 

hurdle to electric vehicles in the near future. However, driver demand for and interaction with 

public infrastructure is not as well understood, so several DOE-supported projects will deploy 

public charging stations and collect data to inform an analyses of the role that public 

infrastructure will play nationally. These projects are currently underway and will be 

completed within the next 3-4 years. Additionally, DOE is coordinating government 
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interaction with cities to share best practices. DOE is further coordinating with both national 

and international organizations, and with other federal agencies, to ensure that the 

development of codes and voluntary standards for electric-vehicles and support infrastructure 

happens as smoothly and quickly as possible. 

This chapter provides an assessment of both electric charging infrastructure needed to 

support electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) and the 

hydrogen infrastructure needed to support fuel cell electric vehicles (FCEVs). The electric 

vehicle infrastructure section summarizes current activities to demonstrate and deploy electric 

recharging infrastructure, the current availability and future potential of home recharging, the 

costs of charging systems, the potential impacts on the electric grid and distribution network, 

and government cooperation in developing voluntary codes and standards. The hydrogen 

infrastructure section discusses the current status of hydrogen fueling stations, the costs of 

hydrogen and refueling stations, prospects for cost and technology improvement, a strategy 

for how a hydrogen infrastructure could roll out to support fuel cell vehicle introductions, and 

potential policies and public/private partnerships that could further facilitate infrastructure 

development.

4.2 Electric Vehicle Infrastructure

A shift from petroleum-powered to electric-drive vehicles will involve a parallel shift 

in refueling: Where gasoline and diesel fuel vehicles refill at a gas station, electric-drive 

vehicles recharge at a charging station. Three charging levels are currently under 

consideration.46 Level 1 charging uses a standard 120 volt (V), 15-20 amps (A) rated (12-16 

A usable) circuit and is available in standard residential and commercial buildings. Level 2 

charging uses a single phase, 240 V, 20-80 A circuit and allows much shorter charge times. 

Level 3 charging—sometimes colloquially called ―quick‖ or ―fast‖ charging—uses a 480 V, 

three-phase circuit, available in mainly industrial areas, typically providing 60-150 kW of offboard charging power. 

This electric vehicle infrastructure section summarizes current activities to 

demonstrate and deploy electric recharging infrastructure, the current availability of home 

recharging, the cost of electric vehicle support equipment (EVSE), the potential impacts on 

the electric grid and distribution network, and government cooperation in developing 

industry-recognized electric vehicle support equipment standards. 

4.2.1 DOE Charging Infrastructure Projects Underway

The Department of Energy (DOE) recognizes the importance of the variety of factors 

that will contribute to the success of grid-connected vehicles and is currently undertaking 

numerous activities to study and address them. Through the American Recovery and 

Reinvestment Act of 2009 (ARRA), DOE has awarded cost-shared grants to companies under 

the Transportation Electrification Initiative to establish development, demonstration, 

evaluation, and education projects to accelerate the market introduction and penetration of 

advanced electric drive vehicles. The Transportation Electrification Initiative, its component 

projects, and other DOE electric-drive vehicle infrastructure activities are discussed below. 
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4.2.1.1 American Recovery and Reinvestment Act: Transportation Electrification 

Initiative

Funded through the ARRA, the Transportation Electrification Initiative provides 

approximately $400 million in federal funding, leveraged through cost-shared grants with 

industry and educational institutions, to develop, demonstrate, and evaluate electric drive 

vehicles and charging infrastructure. Through the projects funded under this activity, over 

13,000 electric-drive vehicles will be deployed in conjunction with nearly 23,000 charging 

stations, starting in 2010 and to be completed in the next 3-4 years, in residential, commercial, 

and public locations, in numerous and diverse geographic locations nationwide.

The majority of the vehicles deployed through Transportation Electrification projects 

will be privately-owned light-duty vehicles; however, many medium-duty trucks 

incorporating advanced electric and plug-in hybrid electric powertrains will be developed and 

demonstrated in a wide range of geographic, climatic, and operating environments. 

Additionally, the vast majority of electric vehicle charging infrastructure deployed through 

these projects will be Level 2 (220V), 3.3-6.6 kW charging stations, though several hundred 

Level 3 DC ―fast‖ chargers will also be deployed along corridors linking cities within 

deployment areas. For privately-owned vehicles and commercial fleet vehicles, Level 2 

chargers will be installed at the vehicle owners‘ residences or the central fleet parking area, 

where the vehicles will most likely be domiciled for overnight charging. Many more Level 2 

charging stations will be deployed in commercial and public locations, which may provide 

vehicle owners the opportunity to travel in expanded geographic areas without the ―range 

anxiety‖ that could otherwise limit electric vehicles‘ utility. The effect of charging station 

availability (Level 1, 2 and 3) on driver behavior will be studied as part of this initiative. 

Some researchers believe the duration of a driver‘s experience with an EV has more to do 

with reducing range anxiety than public charging, and that public charging may reduce 

―purchase anxiety‖ instead.47

The coordinated deployment of electric drive vehicles and charging infrastructure 

under the Transportation Electrification Initiative will facilitate DOE‘s collection and analysis 

of a comprehensive set of data from both the vehicles and the charging stations.U Vehicle 

data collected will include parameters such as vehicle miles driven, battery state-of-charge, 

GPS location, and, in the case of PHEVs and FCEVs, the liquid fuel consumption. 

Infrastructure data collected will include parameters such as charger connect/disconnect 

times, charge event start/stop times, average and peak power delivered, and total energy 

delivered per charge event. Evaluation of this data, managed by Idaho National Laboratory, 

will provide critical information regarding the influences on vehicle and charging 

infrastructure use, performance, and location suitability. These data collection and analysis 

activities will identify how consumers use electric drive vehicles; where, when, and how 

frequently they charge the vehicles; how usage and charging behavior impact the performance 

of the vehicle; what the impacts are to the electric grid; how consumers respond to pricing 

signals with respect to vehicle charging; and a myriad of other questions related to consumer 

 

U A condition of participating in the program will be that participants agree to data collection.
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acceptance and market viability of grid-connected vehicles. After the projects are completed 

in the 2013-2014 timeframe, this information will then be used to guide the much broader 

deployment of electric drive vehicles and charging infrastructure in the future.

A summary of infrastructure-related projects funded through the Transportation 

Electrification Initiative follows in Table 4.2-1, which shows, for each project: the number of 

charging stations and electric vehicles to be deployed, the targeted locations and timeframe 

for deployment and data collection, and the intended benefit of the data to be collected. 

Additional information about each of these projects is in Appendix G.

Table 4.2-1 ARRA Transportation Electrification Initiative and Clean Cities Projects 

Summary

Project

Level 2 

Charging 

Stations 

Deployed

Vehicles Location Timeframea Data Collected

ECOtality 

North 

America 

($115M)

14,850 

(and 320 

Level 3)

8,500 

lightduty cars

AZ, CA, DC, 

OR, TN, TX

2010-

2013

operational and 

charging behavior of 

electric-drive vehicle 

owners

Coulomb 

Technologies 

($15M)

5,000 2,600 

lightduty cars

CA, DC, FL, MI, 

NY, TX, WA

2010-

2014

operational and 

charging behavior of 

electric-drive vehicle 

owners

Navistar 

($39M)

950 950 

mediumduty 

trucks

CA 2010-

2013

performance and 

suitability of mediumduty electric vehicles 

and support 

infrastructure required

General 

Motors 

($30M)

650 125 lightduty carsCA, FL, MI, NY, 

NC, SC, TX, 

VA, DC

2010-

2013

light-duty vehicle 

usage and operational 

needs, supporting 

vehicle design and 

infrastructure planning

Smith 

Electric 

Vehicles 

($32M)

500 500 

mediumduty 

trucks

CA, GA, MO, 

NJ, NY, OH, 

OR, TX, DC

2011-

2013

applicability of 

electric-drive 

powertrains in 

vocational mediumduty trucks

South Coast 

Air Quality 

Management 

District 

($45M)

378 378 

mediumduty 

trucks 

and 

shuttle 

CA, CT, GA, HI, 

KY, LA, MD, 

MI, MO, NJ, 

NY, OH, OR, 

PA, TN, TX, WI, 

DC

2010-

2013

PHEV technologies 

for Class 4/5 vehicles
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buses

Chrysler 

Group LLC 

($48M)

153 153 lightduty 

trucks

AZ, CA, CO, HI, 

MA, MI, MO, 

NV, NY, ND, 

TX

2011-

2013

real-world product 

viability and 

quantified benefits

Clean Cities 

($115M)

500-550 100 lightduty and 

280 

heavyduty 

vehicles

CT, IL, MI, MO, 

NC, NY, OH, 

TX, UT, WA, 

WI

2010-

2011

charging station usage

a Timeframe is approximate. More details about all Transportation Electrification Initiatives are found in 

Appendix G.

Smart Grid

The ARRA authorizes DOE‘s Office of Electricity to administer the Smart Grid 

Investment Grant (SGIG), which supports projects to update today‘s electric grid to a ―smart 

grid‖—a modernized electric grid utilizing real-time two-way communication for improved 

reliability, efficiency, security, and safety and the possibility of dynamic pricing and even 

vehicle-to-grid energy exchange (in which a charged vehicle battery provides energy to the 

grid). As part of the projects supported with these grants, 12 awardees plan to deploy 

approximately 100 charging stations. Additionally, under DOE‘s Smart Grid Regional 

Demonstrations, electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) are part 

of several smart grid technology demonstrations projects. In most of the regional 

demonstration projects, grid-connected vehicles are integrated in broader smart grid 

technology deployment activities. Because EV/PHEVs are a relatively nascent technology, 

their contribution to the overall smart grid technology deployment and regional demonstration 

activities is likely to be small, particularly in the early years of the multi-year deployment and 

demonstration programs.

4.2.1.2 Other Projects

Through its national laboratories, DOE also supports other various projects aimed at 

overcoming barriers related to electric drive vehicles and their interaction with the electric 

grid. These projects target the development of codes and standards that govern the vehiclegrid interface, including communications between the vehicle, the charging infrastructure, and 

the electric grid. Additional projects are intended to streamline the process of deploying 

electric vehicle charging infrastructure and minimize the impact on electricity generation, 

transmission, and distribution resources. Together, activities conducted through the national 

laboratories will help speed the wide-spread adoption of electric drive transportation 

technologies.

Many stakeholders have expressed the need for timely and standardized local 

permitting procedures for installing electrical vehicle supply equipment. The National 

Electric Vehicle Infrastructure Permitting Project at the National Renewable Energy Lab 

(NREL) seeks to standardize local permitting procedures to speed the deployment of EVSE 
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across the U.S. NREL has drafted a National Electric Vehicle Charging Station Permit 

template,48 which conforms to Article 625 of the National Electric Code, and is engaging 

select cities to promote the use of this permit to streamline the process of installing electric 

vehicle supply equipment. This draft permit is intended to establish a mechanism for local 

jurisdictions to provide a simplified approval process for the installation and operation of 

electric vehicle charging equipment, rather than the existing wide variety of permitting 

procedures that currently exist at the local level. Adoption of the draft permit could reduce 

the typical administrative delays that might otherwise impede the deployment of charging 

infrastructure and slow the market adoption of grid-connected vehicles. This draft permit was 

created with input from industry and electrical contractors, and will allow electric vehicle 

charging stations to be installed quickly and safely in the municipalities where the process is 

adopted. Other organizations have published similar documents: Pacific Gas & Electric‘s 

(PG&E) released an ―Electric Vehicle Infrastructure Installation Guide‖ in 1999,

49 and the 

Electric Power Research Institute (EPRI) published ―Plug-in Electric Vehicle Infrastructure 

Installation Guidelines‖ in 2009.50 

4.2.2 Home Charging Adequacy

Charging availability affects consumer value and the development of the EV/PHEV 

market.51,52 Understanding the number of American consumers who can plug-in a vehicle at 

home is instructive in estimating the number of who might choose to own an electric drive 

vehicle. More charging points enable more potential EV/PHEV buyers, but the role of an 

additional charging point depends on whether it is attached to a home, a workplace or a public 

place. A home charging point may enable a new EV/PHEV buyer, while a workplace charge 

point may make the prospective car buyer who already has home charging availability more 

determined to own a PHEV or EV. Availability of adequate home recharging will likely have 

the most impact on deployment, because home is usually where a vehicle parks the most often 

and longest, resulting in more recharging energy and fuel-saving benefit. Based on past 

experience, 97%-99% of charging energy is delivered at home.53 Even with available 

workplace or public charging, consumers will probably feel it is more convenient and less 

stressful to charge at home. Surveys show that consumers state stronger preferences for home 

recharging.54 Other surveys show that EV users with home recharging rarely use public 

recharging55 and some PHEV users choose not to use available public recharging during 

weekdays because of the inconvenience they perceive.56

There may be opportunities for supplemental charging outside the home. Public 

charging stations with Level 2 or Level 3 charging, possibly offered by restaurants, 

supermarkets, gyms, or health centers, can extend the electric range in an equivalent sense, 

which may be especially important for a EV driver in an unexpected long distance trip. The 

ability of a charging point to extend the electric range depends on both the length of available 

charging time and the charging speed. Higher charging speed may be more necessary in 

public places where consumers usually do not park their vehicles as long as at home or the 

workplace. But for consumers with home charging and typical driving patterns, topping off 

partially a depleted battery can be more desirable than recharging a fully depleted one, which 

reduces the need for high charging speed. For home or workplace charging, the usual long 

parking time makes expensive upgrades to faster charging less necessary, especially for 

PHEVs with a small battery.
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As described above, three charging levels are currently under consideration.57 Level 1 

charging uses a standard 120 V, 15-20 amps (A) rated (12-16 A usable) circuit and is 

available in standard residential and commercial buildings. Level 1 charging for 7-9 hours of 

home nighttime is sufficient to fully charge a small PHEV20.V,W Level 2 charging uses a 240 

V, 20-80 A circuit, enabling a much shorter charge time. With Level 2 charging, a full 

recharge requires less than 4 hours for a PHEV40 SUV and about half hour for a PHEV10 

small car. Level 3 charging uses a 480 V, three-phase circuit, typically providing 60-150 kW 

of off-board charging power. Level 3 charging for PHEVs is probably not necessary due to 

small battery capacity and the vehicles‘ internal combustion engine range extended design. 

For this reason, it is not envisioned that manufacturers will equip all PHEVs with capability 

for accepting Level 3 charging. In addition, due to the relatively small battery when 

compared to an EV, battery charge can be completed at home or workplace where vehicle 

parking duration is normally long. High cost, lack of 3-phase power, and potential safety 

concerns also make Level 3 implementation in these places unlikely, at least for the near term. 

Nevertheless, Level 3 charging may be more beneficial to EV owners who lack the 

hybrid-drive backup of a PHEV. An EV midsize car with 150-mile driving range will likely 

require more than 10 hours of Level 2 charging to reach a full recharge, but only 2-3 hours 

with Level 3 charging. Fast-charging an EV with 100-mile driving range can provide 80 

miles of urban-driving range in less than 30 minutes.58 In commercial places where drivers 

park and conduct personal or business activities, 1-2 hours of Level 3 charging is sufficient to 

provide an 80% rechargeX,59 for most EVs. 

Level 1 charging may prove to be appropriate for a significant fraction of the initial 

EV market. Tesla has reported that, based on their experience, there is potential for 

approximately 25% of the 244-mile range Tesla Roadster EV to make use of Level 1

charging.

60

 It may also be more appropriate to consider average charge times that correspond 

to normal daily use instead of what is required for the exceptional circumstance to charge a 

fully depleted EV. At the national average of 28 miles of driving per day, a small EV would 

only require ~7 kWh to charge. This would require less than 5 hours with a standard Level 1 

cordset. An important feature available on many Level 1 cordsets or grid-connected vehicles 

is the ability for the user to select a lower-than-usual charge rate so that users may make use 

of lower-capacity, non-dedicated Level 1 circuits until a dedicated circuit is installed.

 

V

For the purposes of estimating charging times, it is assumed that a small EV consumes ~200 AC Wh/mile, 

mid-size EV or PHEV is 300 AC Wh/mile, and larger PHEV SUV is 350 AC Wh/mile; Level 1 charging power 

is assumed to be 1.44 kW nominal; Level 2 is 3.3 kW nominal on 20 A rated circuits (208 x 16); and Level 2 

charging is 6.6 kW nominal on 40 A circuits (208 x 32).

W A PHEV20 is a PHEV with a 20-mile charge-depleting range, or, the range of battery operation over which 

energy is consumed from the battery at a greater rate than it is recharged through regenerative breaking. Once 

the battery is sufficiently depleted, the vehicle operates in charge sustaining mode, during which time the energy 

captured through regenerative breaking is roughly equivalent to the rate of battery energy consumption; this 

mode is identical to the operation of a grid-independent HEV. The nomenclature is analogous for PHEV with 

larger (e.g., PHEV40 has a 40-mile charge-depleting range) or smaller (PHEV10 has a 10-mile charge-depleting 

range) batteries.

X OEMs have indicated that fast charging is expected to replace 80% of max state-of-charge
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Currently, there are approximately 1,000 charging stations in the United States.61 

Most of these stations allow public access, while the rest are restricted for workplace use. 

Home charging, which is not included in this count, is considered more important for 

EV/PHEV market success,62 which is understandable since home is where a vehicle parks the 

most often and longest. 

Although there is not clear data indicating home charging capacity, two indicators of 

charging readiness are the availability of a garage or carport, where the electric circuit is 

usually equipped, and the proximity of an electrical outlet. Having a garage or carport does 

not necessarily mean charging readiness, as a garage may lack parking functionality.Y For 

example, garages in old homes can be too small to hold today‘s large vehicles, forcing the 

owners to park their vehicles on the driveway, and some garages may mainly be used for nonparking purposes. One alternative measurement of home charging readiness is the availability 

of an electric outlet where the vehicle is usually parked when arriving home. According to a 

survey conducted by University of California, Davis (UCD),

63,64 61%, 52%, 44%, and 36% of 

the U.S. new vehicle buying households have an electric outlet within 50, 25, 15, and 10 feet, 

respectively, from the home parking location.Z These percentages are slightly lower than the 

garage ownership share in the American Housing Survey or the share of detached single 

house in the 2001 National Household Travel Survey data. 

The home charging availability for a specific consumer will need to be differentiated 

among EV/PHEVs with different battery capacity. The electric outlets in existing homes are 

most likely ready for Level 1 charging, which is about sufficient for fully recharging a 

PHEV20 SUV during normal nighttime, provided the outlet is not being heavily utilized by 

other loads. Shorter available charging time or owning a vehicle with a larger battery make 

the capability to fully charge overnight with a Level 1 system less likely, but upgrading to a 

Level 2 system in such cases will allow full recharge to happen more quickly.

The DOE-supported infrastructure projects described above in section 4.2.1 will 

collect data that significantly improve the understanding of how consumers interact with 

electric-vehicle support infrastructure. With respect to the availability of home charging, 

these data collection and analysis activities will identify how consumers use electric drive 

vehicles and infrastructure and how consumers respond to pricing signals with respect to 

vehicle charging as well as a myriad of other questions related to consumer acceptance and 

market viability, which can eventually be used to guide the much broader deployment of 

electric drive vehicles and charging infrastructure in the future.

 

Y Based on the 2001 National Household Travel Survey (NHTS), 63.8% of the U.S. households live in detached 

single houses. According to the American Housing Survey (AHS), 62.5% of homes in the U.S., regardless of 

home type, include a garage or carport. The share is a little higher (65.4%) for year-round occupied homes, much 

lower (45.1%) for vacant homes and much higher (81.5%) for new constructions up to 4 years old. The closeness 

between the share of detached single houses from the 2001 NHTS data and the share of garage ownership from 

the AHS data should not be interpreted as that the form of detached single house is an equivalent indicator of 

garage ownership. The estimation closeness is more likely a coincidence, since not all detached houses include a 

garage or carport, and some homes with a garage or carport are attached homes.

Z These estimates are based on the one-day 24-hour travel diary completed by respondents from 2,373 U.S. 

households that represent U.S. new vehicle buying households.
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4.2.3 Charging System Cost

Charging an electric vehicle or plug-in hybrid will generally require specialized 

equipment, including:

A charger that converts electricity from alternating current (AC) from the electricity 

source to direct current (DC) required for the battery, and also converts the incoming 120 or 

240 volt current to 300 or higher volts. Grid-connected vehicles carry an on-board charger 

capable of accepting AC current from a wall plug (Level 1 circuit) or, from a Level 2 

charging station. On-board charger power capability ranges from 1.4 to 10 kW and is usually 

proportional to the vehicle‘s battery capacity.AA The lowest charging power,BB 1.4 kW, is 

expected only when grid-connected vehicles are connected to 120 volt (Level 1) outlets, and 

all currently known PHEV and EV on-board chargers are expected to provide at least 3.3 kW 

charging when connected to a Level 2 (220 volt, 20+ A) charging station. The latest SAE 

connection recommended practice, J1772, allows for delivery of up to ~19 kW to an on-board 

vehicle charger. For higher capacity charging, a charging station that delivers DC current to 

the vehicle is incorporated off-board in the wall or pedestal mounted.

The charging station needed to safely deliver energy from the electric circuit to the 

vehicle, called electric vehicle support equipment (EVSE). The EVSE may at a minimum, be 

a specialized cordset that connects a household Level 1/120V socket to the vehicle; otherwise, 

the EVSE will include a cordset and a charging station (a wall or pedestal mounted box 

incorporating a charger and other equipment). Charging stations may include advanced 

features such as timers to delay charging until off-peak hours, communications equipment to 

allow the utility to regulate charging, or even electricity metering capabilities. Stakeholders 

are working on which features are best located on the EVSE or on the vehicle itself, and it is 

possible that redundant capabilities and features may be present in both the vehicle and 

EVSEs in the near future until these issues are worked out. EVSE and vehicle manufacturers 

are also working to ensure that current SAE-compliant ―basic‖ EVSEs are charge-compatible 

with future grid-connected vehicles.

Some public charging stations will likely include fee collection equipment or will be 

networked with nearby fee-collection equipment already in use for parking fee collection. 

Under some local regulations, owners of charging stations cannot resell electricity;CC unless 

the utility itself owns the stations or can directly bill the vehicle owner, the station owner can 

only charge a flat or time-based fee to the vehicle driver. This may require credit/debit card 

readers, pay-to-park kiosks or standard parking meters (in a commercial parking lot, kiosks or 

meters could already be available, so no additional equipment may be needed), or radiofrequency ID cards linked to a subscription service. For the utility to directly bill the vehicle 

 

AA Current mini-e‘s and Tesla Roadsters presently have 11-19 kW on-board charger capability, though such high 

on-board power levels are not expected to be common in the majority of upcoming EV/PHEVs.

BB Some EVs will have an 840W charge setting to allow for a shared Level 1 circuit

CC One exception is provided by the California Public Utilities Commission; it concluded in July 2010 that 

companies that sell electric vehicle charging services to the public will not be regulated as public utilities.
Chapter 4

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owner, the charging station or vehicle must include a communication link to the utility that 

will identify the vehicle or owner.

An electric circuit located close to where the vehicle parks. A Level 1 circuit is 

standard household current, 120V AC, rated at 15 or 20 A (12 or 16 A usable). A Level 2 

circuit is rated at 208 to 240V and up to 80 A and is similar to the type of circuit that powers 

electric stoves (up to 50 A) and dryers (usually 30 A). Generally, level 1 and 2 circuits used 

for electric vehicle recharging must be dedicated circuits,DD i.e., there cannot be other 

appliances on that circuit. For a Level 2 circuit, the homeowner or other user must install a 

charging station and will need a permit.

Optionally, separate metering (EUMD, end use measuring device) for the EV charger 

to allow time-of-day rates for EV recharging; otherwise, homeowners may choose to pay 

standard rates for EV charging or to have all household electricity on time-of-day rates, either 

option with a single meter. 

Protection for the charging stations, including wheel stops, protective bollards, etc. 

Where vandalism is a concern, additional costs may be incurred for fencing or security 

equipment.

In addition to the costs of purchasing and installing charging equipment, charging 

station installation may include the costs of upgrading existing electrical panels and installing 

the electrical connection from the panel to the desired station location. These costs may be 

dramatically lowered if new construction incorporates the panel box and wiring required for 

charging stations, or even includes charging stations or outlets for charging stations as 

standard equipment.

In addition to Level 1 and 2 charging stations, ―Level 3‖ commercial recharging 

stations may be installed in areas where 3-phase power is available; these can deliver 300V600V, 3-phase 150-400 A DC power for rapid charging of EVs. These may be viewed as 

equivalent to gas station pumps due to a similar look.

The current costs of charging stations are highly variable depending on the level of 

service (Levels 1 through 3, and alternative power capabilities within these categories), 

location (individual residence, grouped residences, retail or business, parking lot or garage), 

level of sophistication of the station, and installation requirements, including electrical 

upgrading requirements. Estimated costs for charging stations are included in table below. 

Table 4.2-2 Estimated Costs for Charging Stations65,66,67,68,a

Level Location Equipment Installation

 

DD Some manufacturers are planning for lower-power level 1 charging which can be accomplished on a shared 

120V circuit.
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1 Single 

Residence

$30- $200 (charge cord only, 

included at no cost to consumer 

with EV/PHEV) when an 

accessible household plug (e.g., 

in a garage or adjacent to a 

driveway) with a ground fault 

interrupter is already available

$400-$1000+ may be necessary 

depending on difficulty of 

installing a new circuit at the 

desired location, but in most 

cases, owners with sufficient 

panel capacity would opt for a 

more capable 220 VAC Level 2 

installation instead of a Level 1 

dedicated circuit because the 

additional installation cost is 

only marginally higher

2 Residential, 

Apartment 

Complex, 

or Fleet 

Depotb

3.3 kW EVSE (each): $300-

$4,000 

6.6 kW EVSE (each): $400-

$4,000

3.3- 6.6 kW installation cost: 

$400-$2,300 without 

wiring/service panel upgrade, or

$2,000-$5,000 with panel 

upgrade

2 Public $400-$3,800+ for each EVSE $3,000- $7,000+ installation 

cost, varying significantly with 

distances from service entrance 

and number of EVSEs installed

3 Public $8,000-$50,000

a Detailed information on charger cost for each charging level and location and specific sources for cost 

estimates are available in Appendix G.

b Level 2 EVSE installation costs vary considerably for single-family residences, multi-family residences, and 

fleet depots, depending upon the need for wiring and service panel upgrades. The range depicted here reflects 

the anticipated variability of these costs. However, EPRI estimates that the typical residential Level 2 

installation costs to be approximately $1,500. See Appendix G for additional information.

For the 2017-2025 period, there is a major potential for cost reduction in EVSEs if 

either or both PHEVs and EVs enter the market in substantial numbers – particularly if strong 

markets for these vehicles develop, as expected, in Europe and Asia and EVSEs are 

manufactured globally and compete for market share in this country. Although the reduction 

potential for installation costs would likely be somewhat smaller than for equipment costs, 

installation costs may also be reduced by incorporating EV requirements into building codes 

for new construction, and through standardization of procedures and better training and 

availability of installers. For purposes of the analysis presented in Chapter 6, the agencies‘ 

estimated costs for Level 1 and Level 2 in-home charging equipment for the 2017 to 2025 

time frame is within the range of the values shown above and is detailed in Appendix 

B4.2.2.6.
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4.2.4 Battery End-of-Life Value Assessment and Secondary Use Applications

At the end of an EV/PHEVs useful life, the battery will likely not be fully exhausted 

and could be used for a number of other tasks. Such a used battery would have a secondary 

use value and this expected value could be applied to the original purchase price of the 

vehicle (minus an appropriate discount rate) to lower the overall cost, making electric vehicles 

more affordable for the American public. These batteries could be used in utility peak load 

reduction and management, substation upgrade deferrals, and grid stabilization applications, 

as well as renewable energy installations to store solar and/or wind power.69 Several electric 

utilities currently use large sodium-sulfer (NaS) batteries for these purposes and are exploring 

used EV/PHEV batteries as substitutes. These applications have specific requirements that 

could possibly be met by used automotive batteries.

This is a field being intensely studied at the present time and there is some uncertainty 

as to the extent of the market, as well as the value to the original vehicle purchaser. A 

summary of one such forthcoming study supported by DOE is in Appendix G.

4.2.5 Potential Impacts on the Electric Utility and Distribution Infrastructure

The overall distribution system capacity is expected to be adequate for EV charging. 

However, the effect of EV charging on specific circuits within the localized distribution 

system has not been fully evaluated and the impacts are not clearly understood; though, this 

issue is under study by EPRI, DOE, and several electric utilities.

70

 Understanding the 

relationships between EV charging and the distribution system allows utilities to plan for 

additional stresses placed upon their systems as a result of EV charging.

Distribution system components which may be at risk due to the increased loading are 

substations, primary and laterals feeders, and distribution transformers. Distribution 

transformers are of primary concern. Distribution transformers may be impacted by several 

factors, including total EV penetration, EV clustering, time of charging, ambient operating 

conditions and thermal characteristics of the transformer, the prevalence of air conditioning, 

and the topography and age of the distribution system. These factors affect the cumulative 

thermal history of transformers, leading to their increased ―thermal aging‖ and potential loss 

of transformer life. DOE and others are studying the effect of PHEV/EV charging on thermal 

aging of distribution transformer insulation.

Transformers are also impacted differently under Level 2 versus Level 1 charging. 

With more OEMs making public announcements to offer EVs, which are generally more 

likely to utilize Level 2 charging than PHEVs, there is further discussion of potential impacts 

to the infrastructure. Since Level 2 charging allows for charging power up to 14 times that of 

Level 1 charging, the distribution system impacts could be much more severe under Level 2 

charging assumptions.
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Load diversityEE becomes an issue further upstream in radial distribution systems. 

With diversified load profiles, peaks by individual loads are averaged out. The secondary 

transformer is the first distribution system component that will be exposed to the large 

current. Thus, it is expected that EV/PHEV charging will have the greatest impact on those 

components. The diversity of distribution system component vintages, sizing, and design 

practices varies greatly across the U.S. Older distribution systems, which were initially 

designed to support lower per-customer demand, are more likely to be affected by PHEV/EV 

charging than newer distribution systems, which were designed to support higher percustomer demand.

Potential distribution system impacts reported in the literature indicate that overall 

and, particularly, in newer residential developments (30 years and younger) and rural areas, 

distribution system capacity is expected to be adequate for EV charging. However, the 

potential for distribution system overloading exists with higher concentrations of charging 

vehicles in older residential neighborhoods, such as those in some coastal or mid-western 

metropolitan areas.71 These areas may be of concern to utility infrastructure planners. 

Time-of-use (TOU) ratesFF may incentivize customers to delay charging to off-peak 

periods later at night. While TOU rates are likely to shift loads, they will not alleviate 

potential negative impacts on the distribution infrastructure. Smart load control technologies 

may be required in order to sequence charging or to perform load coordination strategies for 

charging vehicles in order to mitigate possible distribution transformer impacts.

The preceding discussion yields several important conclusions about the potential 

impacts on the electric utility and distribution infrastructure:

The overall electrical distribution system capacity is expected to be 

adequate for EV/PHEV charging.

There is some potential for localized impacts on distribution transformers, 

especially in older neighborhoods, depending on EV/PHEV charging load 

concentrations. However, the success of electric vehicles will not be 

limited by possible disruptions in the distribution system. Additional 

research is required to understand the magnitude and extent of the issue.

Smart load control technologies that include sequencing and coordinating 

the charging of vehicles for Level 2 charging could help mitigate possible 

transformer impacts.

 

EE Load diversity refers to electric loads which come online at random times. Non-diversified loads come online 

at the same time. So, if EV owners come home at 6:00 PM and plug in to charge, the load is not diversified.

FF TOU pricing is a special electric rate feature under which the price per kilowatt-hour depends on the time of 

day; prices can be adjusted upward during periods of peak demand and downward during off-peak periods.
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4.2.6 Voluntary Standards to Support PHEV & EV Infrastructure

DOE has several ongoing activities to support the development of voluntary standards. 

These activities can be expected to accelerate under the May 21, 2010 Presidential 

Memorandum‘s request for DOE to work with stakeholders on the development of voluntary 

standards and coordinate its efforts with the Department of Transportation, NHTSA, and the 

EPA.72 While these efforts on voluntary standardization are important in enhancing long-term 

success of EV/PHEVs, they are not a prerequisite for a successful near-term market launch. 

On a conceptual level, electric-drive vehicles differ from conventional gasoline 

vehicles in the way they are repowered: conventional vehicles are refueled and electric 

vehicles are recharged. But, on a practical level, the means by which repowering happens is 

also very different. Where gasoline pumps and measurement standards are already well 

established, the equipment and measurement devices facilitating and governing electric-drive 

vehicle recharging are still being discussed. Coordination of the means by which EVs and 

PHEVs communicate with the grid—both in terms of hardware and software—offers the 

benefit of assuring that all electric-drive vehicles can plug in almost anywhere. 

The primary link between the DOE vehicle technology activity and industry standards 

is the Society of Automotive Engineers (SAE). The most significant development to date has 

been the adoption of the voluntary standard SAE J1772, specifications for the electrical 

connector between EV/PHEVs and electric vehicle supply equipment (Levels 1 and 2 

charging). DOE national laboratories have provided expertise, development and testing 

resources to support new SAE standards, as discussed further in the following sections.

4.2.6.1 Opportunities for Voluntary Standardization

There are numerous opportunities for standardization (or harmonization) in the plug-in 

vehicle-grid system, including hardware, software, communication and the human-machine 

interface (the device through which a driver interacts with the smart grid and/or charging 

device) – as exemplified in the following figure: 
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Figure 4.2-1 Opportunities for Standardization/Harmonization in the Plug-in VehicleGrid System

Several opportunities for standardization/harmonization are identified in the preceding 

simplified concept of vehicle-grid interaction (and, others are possible). Starting from the 

vehicle and moving upstream to the utility, the first opportunity is the charge coupler—the 

physical connector and vehicle receptacle for hybrid and electric vehicle charging and the 

means by which the vehicle interacts with EVSE. Several additional opportunities are within 

the EVSE: first, the permitting process to facilitate the installation of EVSEs, to be 

coordinated at the local government level; second, the compact metrology, or small device the 

EVSE uses to measure energy consumption; and, third, the method of communication—both 

in terms of hardware (wired and wireless universal communication technologies) and 

software/protocols (grid operator-home-vehicle communication). At the utility, software can 

be standardized or harmonized to facilitate grid-wide smart management with targeted goals 

such as balancing supply and demand and sequencing vehicle charging.

4.2.6.2 Defining voluntary standards

―Voluntary‖ standards, i.e., those not required by regulation,GG address essentially all 

aspects of automobiles and are issued by several organizations around the world; for example 

the Society of Automotive Engineers (SAE) in the US, the International Organization for 

 

GG Although voluntary in some regions of the US, SAE J1772 is essentially a regulatory requirement in 

California and many other states that have adopted the CA ZEV Regulation because California requires vehicles 

to comply with J1772 in order to earn ZEV credit.

Home

Gateway Smart

Meter

35779

Human Machine Interface (HMI)

In-vehicle and remote communication;

Behavioral feedback

Opportunities for Standardization/Harmonization

in the Plug-in Vehicle-Grid System

Compact metrology

Low cost revenue-grade

sub-metering

Universal communication technologies

Wired (Power Line Communication-PLC) ;

Wireless (e.g., GPRS, internet, Software Defined Radio-SDR)

Producers

Utilities

Grid Operators

Grid operator-home-vehicle communication

Protocols for 2-way secure communication

-Vehicle ID, location, charge requirements/preferences

-Power available, price, charge time, recommendations

Comprehends smart grid interoperability standards

Back office software

Comprehends vehicle roaming;

Integrates vehicles in smart grid; 

Balances supply and demand

Electric Vehicle Supply Equipment (EVSE) 

Streamlined residential permitting and installation process; 

Consistent application of National Electrical Code (NEC)

EVSE

Charge couplers

Configuration;

Functionality;

Global interoperability

KH_ANL
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Standardization (ISO) or the International Electrotechnical Commission (IEC) in Europe and 

the Japan Automobile Research Institute (JARI) in Asia. The electrical content of 

automobiles adheres to standards developed by the Institute of Electrical and Electronics 

Engineers (IEEE) and, as plug-in vehicles and EVSE utilize the electric power grid, they are 

subject to standards by Underwriters Laboratories (UL) as well as the fire and building safety 

standards by the National Fire Protection Association (NFPA) including the National 

Electrical Code (NEC). 

4.2.6.3 Standards for Electric Vehicle to Grid Interface

The Grid Interaction Technical Team (GITT) was initiated in 2009 to identify issues 

regarding vehicle electrification and related grid impacts, set functional requirements for the 

vehicle-grid interface and cooperate on key issues/projects to enable plug-in vehicles (PHEVs 

and EVs). The members include DOE (the Vehicle Technologies Program and the Office of 

Electricity Delivery and Energy Reliability), the domestic auto industry and selected electric 

utilities. Current DOE-funded projects under the auspices of the GITT focus on some of the 

immediate needs of the vehicle-grid interface, including: 

A draft national template to streamline the permitting and installation 

process of electric vehicle supply equipment 

The human-machine interface (HMI) for charger-grid communication 

standards validation 

Technology development to support universal vehicle-grid communication 

Standards for PHEV/EV Communications Protocol

4.2.6.4 SAE Standards Development 

SAE is working with stakeholders to develop EV/PHEV and infrastructure-related 

standards. SAE J1772 is a standard for the ―Electric Vehicle and Plug-in Hybrid Electric 

Vehicle Conductive Charge Coupler,‖ and describes the physical, electrical, functional, and 

performance requirements for all grid-connected vehicles in North America. Work is also 

progressing towards the development of improved grid connectivity for electric vehicle 

charging infrastructure through lower cost, secure, universalized wired and wireless 

communications technologies.

SAE is working with organizations and consortia such as the International 

Organization for Standardization (ISO), International Electrotechnical Commission (IEC), 

utility companies, the Institute of Electrical and Electronics Engineers (IEEE), Electric Power 

Research Institute (EPRI), ZigBee Alliance, HomePlug Power Alliance, automotive OEMs 

and suppliers, and many others in the development of specifications and standards to address 

the requirements of the SmartGrid strategy. Several national laboratories directly support the 

committee activities, including Argonee National Lab, Idaho National Lab, National 

Renewable Energy Lab, Oak Ridge National Lab, and Pacific Northtwest National Lab. 
2017-2025 Technical Assessment

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A full list of applicable SAE standards—both completed and upcoming—is provided 

in Appendix G. 

4.2.6.5 International Cooperation and Activities

Increasingly, vehicles are being developed to compete in a worldwide market. A 

manufacturer can realize significant cost savings by building a large number of standardized 

vehicles in several countries. International harmonization of EV/PHEV charging equipment 

and protocols can help speed the market penetration of these vehicles by more rapidly 

lowering the costs of these components.

International cooperation relies on the members and projects of the joint DOE-auto 

industry-utility Grid Interaction Tech Team (see previous section) as well as national 

laboratory personnel that directly support the SAE standards committees to interact to

promote global vehicle-grid interoperability through outreach and programmatic support for 

harmonization of US, European and Asian codes & standards in selected international venues. 

Specific support is provided to the Administration‘s EU and China initiativesHH as well as the 

Departments of Commerce and State.II As mentioned in the preceding description of the SAE 

activities, there are U.S. Technical Advisory Groups (USTAGS) to the ISO activities, with all 

the groups listed on the SAE website.JJ 

4.3 Hydrogen Infrastructure Overview

When run on hydrogen, fuel cell electric vehicles (FCEVs) produce zero tailpipe 

emissions making hydrogen an attractive alternative fuel. When produced from the 

reformation of natural gas (the method used for the vast majority of H2 currently produced) 

hydrogen reduces well-to-wheel (WTW) GHG (CO2 equivalent) emissions by approximately 

50 percent.73 Unlike infrastructure for EVs and PHEVs, where the option of home charging 

exists, the successful rollout of FCEVs depends on the early and strategic placement of 

publicly accessible infrastructure to enable market penetration. This section of the report 

includes discussion on hydrogen infrastructure status today, costs and projections for 

technology improvement, rollout strategies, policies, and conclusions.

4.3.1 Status Today

4.3.1.1 Infrastructure Technologies

Hydrogen is produced through a variety of processes. Some are more suited for large 

scale centralized production; others are more often associated with on-site distributed 

production at traditional fueling stations. Most common technologies utilized today include: 

 

HH e.g., Smart Grid-EV Working Group of the EU-US Energy Council, EU-US Transatlantic EV Workshop, USChina Vehicle and Battery Technology Workshop

II e.g., EU  ̳green‘ trade mission, COP 15 and COP 16 UN Framework Conventions on Climate Change

JJ See http://www.sae.org/servlets/works/
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Steam methane reformation - The U.S produces over 9 million tons of hydrogen annually. 

Ninety Five percent of that amount is produced from natural gas by steam methane 

reformation (SMR) at large scale centralized plants. Most is used at petroleum refineries, 

for food processing and other industrial uses. Renewable hydrogen may also be reformed 

from biogas, landfill gas and ethanol for example. High daily throughput stations (100+ 

kg/day) with ample space can utilize onsite steam reforming on-site. 

Electrolysis - Electrolysis systems use electricity to split water into hydrogen and oxygen. 

The technology is compact, reliable, and has been used for decades in industrial, military 

and space applications. Today‘s typical station electrolyser produces 60 kg/day and 

requires approximately 55kW-hr of electricity to generate a kilogram of hydrogen. A 

clean, renewable electricity source (such as hydro, wind, photovoltaic or natural gas fired 

plant) can minimize upstream GHG emissions from electrolysis. 

Delivery - For those stations not producing hydrogen onsite, typically high pressure 

gaseous product can be delivered to the site in batches that can supply the station for a few 

days or even weeks, depending on station throughput. This method is easy to build but 

needs refilling regularly. Another common delivery method is trucked cryogenic liquid 

hydrogen, which is stored in much larger quantities at the station.

Pipeline – There are over 300 miles of hydrogen pipeline in Texas, Louisiana and 

California serving industrial demand. The hydrogen is not fuel cell grade and is of 

relatively low pressure (350 – 1500 psi typically). With minimal clean-up and added 

storage, compression, and dispensing equipment, this option can be an economical source 

for hydrogen infrastructure placement, where pipelines exist. 

Co-generation - High temperature fuel cells for stationary or ancillary grid electricity 

production (hydrogen energy stations) can provide a fuel source for a hydrogen 

infrastructure. A jointly funded DOE/CARB/South Coast Air Quality Management 

District (SCAQMD) project at a waste water treatment plant near Los Angeles features a 

molten carbonate fuel cell run on treated anaerobic digester gas. The fuel cell produces 

electricity to run the plant, and tail gas from the anode will be further cleaned, compressed 

and dispensed at the on-site hydrogen station for FCEVs.74 

4.3.1.2 Federal Demonstration Programs

The map below shows locations of hydrogen stations (includes lift trucks and transit 

bus stations) in the U.S.75 Since 2004 the U.S. DOE Hydrogen Program has worked with 

multiple partners in several states including California, New York, Florida, Michigan and 

Washington D.C. to demonstrate FCEVs and infrastructure. The program worked in 

partnership with industry, academia, national laboratories, and Federal and international 

agencies to help overcome technical barriers through research and development of hydrogen 

production, delivery, and storage technologies, as well as to address safety concerns and 

develop model codes and standard. NREL has reported that over 130,000 kg of hydrogen has 

been produced or dispensed in 23 of the Nation‘s 56 stations. 
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4.3.1.3 California Demonstration Programs

Although there is much FCEV activity ongoing throughout the U.S. many OEMs are 

focusing their pre-commercial vehicle rollouts in California. The state‘s Zero Emission 

Vehicle (ZEV) regulation requires large volume automakers to produce a certain number of 

―pure‖ zero emission and ―near zero‖ emission vehicles for sale in California as a percentage 

their overall sales.76 To date, over 250 fuel cell vehicles have been deployed in the State 

fueling at over 26 limited access, private and public access fueling stations.

The SCAQMD which includes the greater Los Angeles area has been operating its 

―Five Cities‖ hydrogen stations for over five years now. Each fueling station supports OEM 

FCEVs and a fleet of five gas/electric hybrid vehicles that have been converted to run on 

hydrogen. The aim of the project is to stimulate demand for hydrogen fueling, accelerate the 

expansion of the region‘s hydrogen fueling network, and educate the public on hydrogen 

powered vehicles. City officials and staff have used the converted hybrids in everyday city 

fleet driving and showcased them to community groups, neighborhood associations and 

schools. 

To support continued roll out of FCEVs in California, the state has committed to 

partnering with infrastructure providers to develop a network of stations in the greater Los 

Angeles area, Sacramento and in the San Francisco Bay Area. The following chart shows 

infrastructure and co-funding amounts for stations supporting OEM FCEV rollouts. Cost 

share in most cases varied between 50-70% of expected station costs.

Table 4.3-1 Public Access Stations Nearing Completion in California 
Chapter 4

4-20

Location & Station 

Proposer 

State 

Funds

(Millions)

Total Cost 

Estimated

(Millions)

Capacity

Kg H2/

day

Technology

Emeryville $2.7 $5.56 60 Electrolyzer

100 % renewable

Oakland $4.1 $ 5.96 180+ Liquid Delivery

33 % Biogas credits

San Francisco Airport $1.7 $2.41 120 Liquid Delivery

Burbank $300K/yr Not Available 100 Gas deliver and On-site Steam 

Methane Reformation

Los Angeles - CSULA $2.7 $4.4 60 Electrolyzer

100% renewable 

Los Angeles - UCLA $1.7 $4.32 140 On-site Steam Methane 

Reformation

Torrance $0 Not Available 50 Pipe line supplied

Harbor City $1.7 $2.47 100 High pressure delivered Hydrogen 

Fountain Valley $2.7 $8.19 100 High Temperature Fuel Cell; 100 % 

renewable from digester gas

Newport Beach $1.7 $4.03 100 On-site Steam Methane 

Reformation

4.3.1.4 Station and Hydrogen Costs

The following chart shows actual and estimated ranges of costs to build 350/700 bar 

demonstration pre-commercial hydrogen stations in California. The figures include: site 

preparation, permits, engineering, capital equipment, utility connections, construction, 

renewables, and installation. It excludes operation and maintenance and real-estate. The third

column figures are predicted cost ranges determined from an Institute of Transportation 

Studies (ITS) workshop held at the University of California, Davis. Appendix G shows 

information regarding the cost of hydrogen in the U.S. through 2050.

Table 4.3-2 Actual and Estimated Station Costs by Technology 

Technology Station capacity 

kg/day

CARB Cost

$M 2008-11

ITS Est Cost 

$M 2012-1777

Tube trailer delivery 100 1 0.4-1.0

High pressure composite 

delivery 100 1.0-1.7 0.8-1.0

Liquid delivery 100+ 1.7 - 2.7 1.1-1.4

Onsite electrolyzer(s) 60 - 130 2.0 - 4.0

(renewable) 1.4-2.0

Onsite SMR 100-140 2.5 - 4.0 1.4-2.0

Energy station/gasifier 100+ 6.0 - 8.5

(renewable) n/a
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4.3.2 Prospects for Cost and Technology Improvement

Over the past several years, the DOE Hydrogen Program has tracked, set targets, 

researched and funded studies to better predict the costs to transition to different alternative 

fuels. The DOE 2009 target infrastructure performance metrics for hydrogen were set at 

$3/gasoline gallon equivalent (gge) with a target average hydrogen fueling rate of 1.0 

kg/minute. NREL reported that average fueling rates have improved from 0.66 kg/min in 

2006 to 0.77 kg/min in 2009, and early market hydrogen costs at an on-site natural gas 

reformation station ranged from $7.70 – $10.30, and onsite electrolysis ranged from $10.00 –

$12.90 /gge.78 In this NREL study, the number of refuelings by all OEMs with both 

Generation 1 and Generation 2 vehicles totaled 25,811.79 However, independent of this 

project, industry panels concluded that at 500 replicate 1500 kg/day stations/year, distributed 

natural gas reformation could produce $2.75 – $3.50/kg and distributed electrolysis at $4.90 -

$5.70/kg.80 With the increased efficiency of FCEV relative to conventional vehicles, this 

makes hydrogen potentially competitive to conventional fuels such as gasoline. 

4.3.3 Infrastructure Rollout Strategy 

To help ensure that hydrogen infrastructure is in place to match planned vehicle 

rollouts, CARB and the California Energy Commission (CEC) conducted a confidential 

survey of OEMs. The following table shows the estimated number and timing of FCEV 

releases through the year 2017. The survey, conducted in late 2009, included an additional 

breakdown of regions and cities/clusters in both northern and southern California. 

Table 4.3-3 California Hydrogen Fuel Cell Vehicle Rollout Estimates

Year/Period 2010 2011 2012 2013 2014 2015-2017

Cumulative Number of 

Vehicles 

CARB/CEC 2009 Survey

92 30 95 69 839 44,706

4.3.3.1 Station Location Strategy

Pre-commercial hydrogen infrastructure will roll out in phases consisting of ―clusters.‖ 

A Hydrogen Cluster could be a city or group of cities, group of neighborhoods or 

unincorporated areas that are or will be targeted as a unit in which OEMs plan to place 

FCEVs. Clusters have already been developed in southern California. The Santa 

Monica/West Los Angeles area, the Torrance/Redondo Beach areas, the Hollywood area, and 

the Irvine/Newport Beach areas each have at least one station operating with more under 

construction to ensure increased convenience, sufficient redundancy, and increased capacity 

for future vehicle rollouts.81

Depending on availability and customer acceptance, as vehicle numbers increase, 

station number and capacity will increase within the Clusters. Bridging stations connecting 
Chapter 4

4-22

the clusters and regions as well as destination (vacation cities for example) will be added to 

the infrastructure. Infrastructure will expand and ―secondary Clusters‖ will develop as the 

FCEV market expands and the vehicles become more main stream. 

4.3.3.2 Station Specifications

Pre-commercial hydrogen stations have made the transition from being ―behind the 

fence,‖ to a near full retail experience. Station performance specifications now include 3 – 5 

minute back-to-back fills, both 350 and 700 bar dispensers, convenient 24/7 hours, with no 

attendant required and easy pay pumps. Extensive Codes and Standards have been developed 

to help ensure stations are designed and built to a consistently high standard, are safe and are 

compatible with all OEM vehicles. Appendix G provides a list of Codes and Standards that 

have been developed for hydrogen infrastructure. 

4.3.4 Policies and Partnerships 

Government policies and partnerships can assist in focusing work on the most 

important tasks needed for implementation of hydrogen infrastructure. Foremost in any 

alternative fuel vehicle rollout, timing and execution of alternative fuel infrastructure is 

difficult to achieve without help. A classic chicken and egg dilemma exists, more so with 

hydrogen than with most alternative fuels because of the newness of the fuel and the initial 

investment needed.

4.3.4.1 Partnerships

Partnerships such as the California Fuel Cell Partnership, made up of OEMs, energy 

companies, industrial suppliers, academia and government, have created important tools, 

communication pathways and served to build relationships between OEMs and fuel suppliers 

specific to hydrogen and fuel cell implementation efforts. Memoranda of Understanding 

(MOUs) like ―H2 Mobility‖ in Germany for example are also being explored as a useful way 

to bridge the uncertainty regarding fueling needs and vehicle rollout plans. These MOUs 

between partners such as auto manufacturers, energy companies and local governments can 

formalize vehicle/infrastructure strategies and or goals surrounding vehicle volumes, timing, 

location and necessary fueling capacity. MOUs in Germany and Japan between major energy 

companies and OEMs will help define the business case for hydrogen stations and prepare for 

vehicle introductions. 

4.3.4.2 Government Funding

Federal, State and local co-funding for both vehicle incentives and infrastructure costs

will likely be necessary for some years as a way of sharing risk with early adopters of FCEVs. 

For example, in California, Assembly Bill 118 (2008) added a vehicle registration fee to 

motorists to generate a fund for alternative fuel investments to help reach energy, GHG and 

air quality goals. An annual investment plan is developed and serves as a guidance document 

for the allocation of funding. Funding from this program has been made available for many 

alternative fuels, including hydrogen infrastructure.

82
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Table 4.3-4 Scenarios of Government Support for Hydrogen Fuel Cell Vehicles and 

Infrastructure: Three Policy Cases*

* This table is for illustrative purposes only and does not necessarily reflect a recommendation that 

specific policies should be adopted at this time. 

4.3.4.3 Regulatory Incentives and Requirements

Short of the government support for development of new hydrogen stations to kick 

start the market sufficiently so that station volumes grow on their own, other policies or 

requirements may be necessary as shown in the three scenario table above.83 California is 

exploring a variety of approaches including both regulatory incentives and possible 

requirements for installation of stations to ensure that enough stations are available to market 

FCEVs successfully.

California’s Low Carbon Fuel Standard: Adopted in 2009, the Low Carbon Fuel 

Standard (LCFS) requires producers and importers of gasoline to ensure that the mix of fuel 

they sell into the California market meets, on average, a declining standard for GHG 

emissions. The standard is measured on a lifecycle basis in order to include all emissions from 

fuel consumption and production, including the ―upstream‖ emissions that are major 

contributors to the global warming impact of transportation fuels. Because hydrogen has a 

very low well to wheel carbon content, some regulatory incentive exists for energy companies 

to provide hydrogen as part of their compliance strategy. 
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Clean Fuels Outlet: In the 1990s when it was thought that California‘s Low Emission 

Vehicle regulation would need alternative fuel vehicles to meet the strict fleet average tailpipe 

standards, CARB adopted the Clean Fuels Outlet regulation that would require the installation 

of an alternative fuel pump if a specified number of alternative fuel vehicles needing that fuel 

were marketed in California. This was California‘s approach to ensuring alternative fuel 

would be available when vehicles came to market. The thresholds that would trigger this 

program have not yet been reached. The program is currently being reviewed in the context 

of how it might be used to ensure sufficient hydrogen fueling stations. 

4.4 Conclusions

The combined understanding of home recharging, electric vehicle charging system

costs, and ongoing work to develop voluntary standards indicate that infrastructure to support 

electric-drive vehicles will be adequate to support EV/PHEV rollout in the near term. For 

areas where relative inexperience implies uncertainties—such as the need for and use of 

public infrastructure, and vehicle battery secondary uses—DOE activities have been designed 

and are underway to inform future decisions: Infrastructure deployment projects are 

underway and over the next 3-4 years will establish regional public charging networks and 

collect data on how and when consumers use them to clarify the future role of public charging 

in the U.S. In addition to confronting these technology challenges, DOE will continue to 

support a communication and information campaign at the local, national, and international 

levels. At the local level, DOE will continue to share information and best practice examples 

to ensure that cities and local planning organizations receive the best methods for facilitating 

vehicle electrification and the infrastructure to support it. At the national and international 

levels, DOE will continue to coordinate government activities to ensure that national and 

international voluntary standards for electric vehicles and support infrastructure work for U.S. 

auto manufacturers, utilities, and consumers.

Regarding hydrogen, the considerable learnings brought about by DOE and other 

programs, and the leadership, partnerships and funding commitment of California have 

enabled pre-commercial hydrogen infrastructure to be built today. OEMs are sharing FCEV 

rollout strategies with government leaders so public resources can be paired with private 

sector investment. A number of automobile manufacturers have stated publicly that initial, 

early commercial production of FCEVs could begin as early as 2015 if infrastructure is ready. 

A general understanding has been achieved regarding how to create hydrogen station 

networks using clusters in specific first markets. Government policies including regulations 

and incentives are being developed to support and help guide the progress and help ensure 

success.
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Chapter 4 References

45 Woodard, Tracy, representing Nissan Motor Co., Ltd. (2010). Department of Energy Plug-In Vehicle and 

Infrastructure Workshop, Washington, DC. July 22, 2010.

46 Morrow, Kevin, Donald Karner, James Francfort. Plug-in Hybrid Electric Vehicle Charging Infrastructure 

Review (2008). Idaho National Laboratory report INL/EXT-08-15058. November 2008.

47 BMW (2009), Presentation by Dr. Thomas Becker given at United Nations Climate Change Conference, 

Copenhagen Denmark, December 2009.

48 Rivkin, Carl (2010), National Electric Vehicle Charging Station Permit Template, NREL (Golden, CO).

49 Pacific Gas and Electric Company (1999), ―Electric Vehicle Infrastructure Installation Guide‖, 

<http://www.pge.com/includes/docs/pdfs/about/environment/pge/electricvehicles/vehicle.pdf>, Accessed Aug 

17, 2010.

50 Electric Power Research Institute. Plug-in Electric Vehicle Infrastructure Installation Guidelines. September 

25, 2009.

51 National Research Council (2010). Transitions to Alternative Transportation Technologies--Plug-in Hybrid 

Electric Vehicles. Committee on Assessment of Resource Needs for Fuel Cell and Hydrogen Technologies.

52 Lin, Zhenhong and David Greene. PHEV Market Projection with Detailed Market Segmentation. TRB Annual 

Meeting CD-ROM, January 2010.

53 Woodard, Tracy, representing Nissan Motor Co., Ltd. (2010). Department of Energy Plug-In Vehicle and 

Infrastructure Workshop, Washington, DC. July 22, 2010.

54 Characterizing Consumers' Interest in and Infrastructure Expectations for Electric Vehicles: Research Design 

and Survey Results. EPRI, Palo Alto, CA and Southern California Edison, Rosemead, CA: 2010. 1021285.

55 BMW 2010

56 Kurani, Kenneth S., Jonn Axsen, Nicolette Caperello, Jamie Davies, Tai Stillwater (2009) Learning from 

Consumers: Plug-In Hybrid Electric Vehicle (PHEV) Demonstration and Consumer Education, Outreach, and 

Market Research Program. Institute of Transportation Studies, University of California, Davis, Research Report 

UCD-ITS-RR-09-21.

57 Morrow et al., 2008.

58 Alternative Fuels & Advanced Vehicle Data Center. Advanced Vehicle Testing Activity: Battery Chargers for 

Electric Vehicles. 

<http://www1.eere.energy.gov/vehiclesandfuels/avta/light_duty/fsev/fsev_battery_chargers.html>. Accessed 

Aug 17, 2010.

59 Nissan (2010). ―Nissan Leaf, General Answers.‖ <www.nissanusa.com/leaf-electric-car/faq/list/general>, 

Accessed Aug 17, 2010.

60 JB Straubel, Tesla Motors Inc. CTO (2009), ―Vehicle Fleet Experience Overview‖, 2009 ARB ZEV 

Technology Symposium, Sept 21-22, 2009, 

<http://www.arb.ca.gov/msprog/zevprog/2009symposium/presentations/straubel.pdf>, Accessed Aug 17, 2010.

61 The U.S. Department of Energy (DOE) (2010). Electric Charging Station Locations. 

<www.afdc.energy.gov/afdc/fuels/electricity_locations.html>. Accessed on Aug 07, 2010.
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62 Childers, 2010.

63 Axsen, Jonn and Kenneth S. Kurani (2010) Anticipating plug-in hybrid vehicle energy impacts in California: 

Constructing consumer-informed recharge profiles. Transportation Research Part D 15 (2010) 212–219.

64 Kurani, 2009.

65 Morrow, Karner, and Francfort, 2008.

66 May and Mattila, 2009.

67 ETEC, 2009.

68 Electrification Coalition, 2009.

69 Technical and Economic Feasibility of Applying Used EV Batteries in Stationary Applications, Sandia 

National Laboratories, Albuquerque, NM: 2002. 

70 Kintner-Meyer, M; K. Schneider; R. Pratt (2007). Impacts Assesment of Plug-In Hybrid Vehicles on Electric 

Utilities and Regional U.S. Power Grids. Part 1: Technical Analysis, Journal of EUEC, Volume 1, 2007. Electric 

Utility Environmental Conference, Tucson, AZ. January 22-24, 2007; Electric Power Research Institute (2010). 

18 Utility EV Charging Study.

71 Gerkensmeyer, C., MCW Kintner-Meyer, and JG DeSteese (2010). Technical Challenges of Plug-In Hybrid 

Electric Vehicles and Impacts to the US Power System: Distribution System Analysis. PNNL-19165. Pacific 

Northwest National Laboratory (Richland, WA).

72 The White House, 2010.

73Hydrogen Pathways: Cost, Well-to-Wheels Energy Use, and Emissions for the Current Technology Status of 

Seven Hydrogen Production, Delivery, and Distribution Scenarios, NREL /TP-6A1-46612, September 2009.

74 ―Validation of an Integrated Hydrogen Energy Station‖ DOE Hydrogen Program, FY 2009 Annual Progress 

Report.

75 NREL, www.afdc.energy.gov/afdc/fuels/hydrogen_locations.html.

76 ―Frequently Asked Questions – The California Zero Emission Regulation‖, California Environmental 

Protection Agency, Air Resources Board April 2010.

77 Institute of Transportation Studies, University of California Davis, Workshop, Roadmap for Hydrogen and 

Fuel Cell Vehicles in California: A Strategy through 2017, May 5, 2009.

78 http://nrel.gov/hydrogen/proj_learning_demo.html.

79 ―Controlled Hydrogen Fleet Infrastructure Demonstration and Validation Project‖, NREL, Composite Data 

Project Spring 2010 .

80 ―Current (2009) State of the Art Hydrogen Production Cost Estimate Using Water Electrolysis‖, NREL 

September 2009. http://hydrogen.energy.gov/pdfs/46676.pdf and Distributed Hydrogen Production From Natural 

Gas: Independent Review, National Renewable Energy laboratory, October 2006. 

www.hydrogen.energy.gov/pdfs/40382.pdf.

81 ―Hydrogen Fuel cell Vehicle and Station Deployment Plan: A Strategy for Meeting the Challenge Ahead,‖ 

California Fuel Cell Partnership February 2010.
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82 ―2010-2011 Investment Plan for the Alternative Renewable Fuel and Vehicle Technology Program,‖ 

California Energy Commission, CEC-600-2010-001-CTD.

83 ―Analysis of the Transition to Hydrogen Fuel Cells & the Potential Hydrogen Energy Infrastructure 

Requirements‖ ORNL/TM-2008/30.

Additional References

FreedomCAR and Fuel Partnership Codes and Standards Technical Team. Codes and Standards RD&D 

Roadmap – 2008.

http://www1.eere.energy.gov/vehiclesandfuels/pdfs/program/cstt_roadmap.pdf

MYPP (Multi-Year Research, Development, and Demonstration Plan) 2007. Hydrogen Codes and Standards. 

Washington, D.C.: U.S. Department of Energy, Energy Efficiency and Renewable Energy.

http://www1.eere.energy.gov/hydrogenandfuelcells/mypp/pdfs/codes.pdf 

NRC (National Research Council) 2010. Review of the Research Program of the FreedomCAR and Fuel 

Partnership: Third Report. Washington, D.C.: The National Academies Press. 

http://www.nap.edu/catalog.php?record_id=12939 

NREL (National Renewable Energy Laboratory) 2010. Vehicle Codes and Standards: Overview and Gap 

Analysis. Washington, D.C.: U.S. Department of Energy, Energy Efficiency and Renewable Energy. 

www.nrel.gov/docs/fy10osti/47336.pdf. 

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5 Incentives and Flexibilities

This Chapter includes three sections. Chapter 5.1 provides an overview of the 

regulatory flexibilities and incentives contained in the MYs 2012-2016 final rule for the 

National Program. Chapter 5.2 includes a discussion of the potential regulatory flexibilities 

and incentives for MYs 2017 and later which the agencies received input on during our 

meetings with stakeholders. Chapter 5.3 contains a summary of the non-regulatory incentives 

which the agencies received input on during our meetings with stakeholders. We note that 

some of the flexibilities discussed in this Chapter were used in our analysis of future scenarios 

in Chapter 6, though not all. As a result, when EPA and NHTSA undertake analysis for the 

upcoming federal rulemaking, we would not project additional per-vehicle cost reduction 

potential attributable to the flexibilities that have already been used to the current analysis. 

Chapter 6 contains a detailed discussion of the flexibilities we considered in the analytical 

assessment.

5.1 Overview of Existing Incentives and Flexibilities in the MYs 2012-2016 Program

EPA‘s and NHTSA‘s programs for MYs 2012 – 2016 provide compliance flexibilities 

to manufacturers, some indefinitely (such as those required by statute), and some that are 

designed, pursuant to agency discretion, to ease the transition during the early years of the

National Program to increasingly stringent regulations. These flexibilities are intended to 

help provide sufficient lead time for most manufacturers to make necessary technological 

improvements and reduce the overall cost of the program, without compromising overall 

environmental and fuel economy objectives. 

Under the CAFE program, Congress required through EPCA and EISA that NHTSA 

provide three specific types of compliance flexibilities – credits earned for over-compliance 

with a given standard, credits available due to production of alternative fuel vehicles, and the 

option of paying civil penalties in lieu of compliance.KK For the CAFE program, 49 U.S.C. 

32903 allows manufacturers to earn credits (denominated in tenths of a mpg) if their fleet 

average fuel economy for either passenger cars or light trucks exceeds an applicable CAFE 

standard. Credits may be applied to compliance with a standard in any of the 3 consecutive 

model years immediately before the model year in which the credits were earned (referred to 

as ―carry-back‖), or in any of the 5 model years immediately after the credits were earned 

(referred to as ―carry-forward‖). Credits may also be transferred by a manufacturer from one 

of their fleets to another, or traded (sold) to other manufacturers. Credits may not, however, 

be used to comply with the domestic minimum passenger car standard, and transferred credits 

are subject to a statutory cap, preventing manufacturers from increasing a fleet CAFE level by 

more than 1-2 mpg with transferred credits, depending on the model year. For purposes of the 

MYs 2012-2016 GHG standards, EPA adopted similar averaging, banking, and trading 

 

KK We note that small volume manufacturers (i.e., those that produce less than 10,000 vehicles for sale 

worldwide) may also petition NHTSA for an exemption from the generally-applicable CAFE standards and 

potentially obtain their own individual fuel economy standards under 49 U.S.C. 32902(d), but NHTSA does not 

consider this a generally-available compliance flexibility like the others listed above, given the production 

volume limit.
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provisions allowing manufacturers to bank over-compliance credits, transfer the credits 

between their passenger car and light truck fleets, and trade them to other manufacturers. 

EPA, did not include the EISA cap on transfers – thus, for purposes of GHG compliance, 

manufacturers may transfer credits infinitely between their passenger car and light truck 

fleets.

EPCA has also long contained manufacturing incentives for alternative fuel 

automobiles. ―Dedicated‖ (i.e., ―pure‖) alternative fuel vehicles and ―dual-fueled‖ (i.e., 

―flexible-fuel‖ or ―flex-fuel‖) alternative fuel vehicles both receive special calculations to 

boost their fuel economy levels for compliance purposes under 49 U.S.C. 32905 and 32906. 

In EISA, Congress provided for a phase-out of the alt-fuel credit, so that while manufacturers 

can raise their CAFE levels up to 1.2 mpg using the alt-fuel credit through model year 2014, 

the amount of possible increase due to the credit decreases by 0.2 mpg each year until it 

phases out entirely after MY 2019. For purposes of the MYs 2012-2016 GHG standards, 

EPA will allow FFV credits in line with CAFE program limits, but only during the period 

from MYs 2012 to 2015. In MY 2016 and later, EPA will allow manufacturers to incorporate 

the emissions performance on alternative fuels by basing the FFV‘s compliance value on test 

values for both gasoline and the alternative fuel, weighted according to data provided by 

manufacturers demonstrating that the alternative fuel is actually being used by FFVs in-use.

The final compliance flexibility mandated by statute for the CAFE program, at 49 

U.S.C. 32912, is the option of paying civil penalties in lieu of compliance with an applicable 

CAFE standard in a given model year. Some manufacturers face unique compliance 

challenges because they serve relatively small market segments that tend to value vehicle 

performance and utility much more highly than fuel economy. For these manufacturers, fuelsaving technologies (such as, e.g., turbochargers), even when applied, are often used to 

increase performance or utility rather than to increase fuel economy. Some of these 

manufacturers have relied on this flexibility in past and recent model years, and for CAFE 

purposes, some manufacturers may continue to do so in the future. The CAA does not have a 

similar civil penalty flexibility – manufacturers who do not comply with applicable standards 

may not certify their vehicles for sale in the U.S.

For CAFE purposes, EPCA and EISA are fairly prescriptive with regard to what 

compliance flexibilities may be offered, but for GHG purposes, the CAA gives EPA broader 

authority to craft compliance flexibilities through regulation. The following paragraphs detail 

the flexibilities developed by EPA for the MYs 2012-2016 GHG program, in addition to the 

averaging, banking, and trading provisions and FFV credits noted above.

EPA Air Conditioning System Credits: Air conditioning (A/C) systems contribute to 

GHG emissions in two ways. First, hydrofluorocarbon (HFC) refrigerants, which are 

powerful GHGs, can leak from the A/C system (direct A/C emissions). Second, operation of 

the A/C system also places an additional load on the engine, which results in additional CO2 

tailpipe emissions (indirect A/C related emissions). EPA allows manufacturers to generate 

credits by reducing either or both types of GHG emissions related to A/C systems.

EPA Temporary Lead-time Allowance Alternative Standards (TLAAS): Manufacturers 

with limited product lines may be especially challenged in the early years of the National 
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Program, and need additional lead time. Manufacturers with narrow product offerings may 

not be able to take full advantage of averaging or other program flexibilities due to the limited 

scope of the types of vehicles they sell. For example, some smaller volume manufacturer 

fleets consist entirely of vehicles with very high baseline CO2 emissions. Their vehicles are 

above the CO2 emissions target for that vehicle footprint, but do not have other types of 

vehicles in their production mix with which to average. Often, these manufacturers pay fines 

under the CAFE program rather than meet the applicable CAFE standard. EPA believes that 

these technological circumstances call for more lead time in the form of a more gradual 

phase-in of standards. For these reasons, EPA included a temporary lead-time allowance for 

manufacturers that sell vehicles in the U.S. in MY 2009 and for which U.S. vehicle sales in 

that model year are below 400,000 vehicles. This allowance will be available only during the 

MY 2012-2015 phase-in years of the program. A manufacturer that satisfies the threshold 

criteria will be able to treat a limited number of vehicles as a separate averaging fleet, which 

will be subject to a less stringent GHG standard.LL Specifically, a standard of 25 percent 

above the vehicle‘s otherwise applicable footprint target level will apply to up to 100,000 

vehicles total, spread over the four year period of MY 2012 through 2015. In addition, 

manufacturers with between 5,000 and 50,000 U.S. vehicle sales in MY 2009 will have an 

increased allotment of vehicles, a total of 250,000, compared to 100,000 vehicles (for other 

TLAAS-eligible manufacturers). In addition, the TLAAS program for these manufacturers 

would be extended by one year, through MY 2016, for a total of five years of eligibility. For 

the smallest volume manufacturers, those with below 5,000 U.S. vehicle sales, EPA did not 

set standards but instead deferred standards until a future rulemaking.

EPA Early Credits: EPA established opportunities for early credits in MYs 2009-2011 

through over-compliance with a baseline standard. The baseline standard is set to be 

equivalent, on a national level, to the California standards. Credits can be generated by overcompliance with this baseline in one of two ways – over-compliance by the fleet of vehicles 

sold in California and the CAA section 177 states (i.e., those states adopting the California 

program), or over-compliance with the fleet of vehicles sold in the 50 states. EPA is also 

providing for early credits based on over-compliance with CAFE, but only for vehicles sold in 

states outside of California and the CAA section 177 states. Under the early credit provisions, 

no early FFV credits are allowed, except those achieved by over-compliance with the 

California program based on California‘s provisions that manufacturers demonstrate actual 

use of the alternative fuel. EPA‘s early credits provisions are designed to ensure that there 

would be no double counting of early credits. Credits for over-compliance with CAFE 

standards during MYs 2009-2011 will still be available to be carried forward for 

manufacturers to use toward compliance with CAFE in future model years, just as before.

EPA Advanced Technology Incentive: EPA provides an additional temporary incentive 

to encourage the commercialization of advanced GHG/fuel economy control technologies--

including electric vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), and fuel cell 

 

LL EPCA does not permit such an allowance. Consequently, manufacturers who may be able to take advantage 

of a lead-time allowance under the GHG standards would be required to comply with the applicable CAFE 

standard or be subject to penalties for non-compliance, unless they qualified for an exemption/alternative CAFE 

standard under 49 U.S.C. 32902(d).
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vehicles (FCVs)--for model years 2012-2016. The advanced technology vehicle incentive 

program includes a zero gram/mile emissions compliance value for EVs and FCVs, and the 

electric portion of PHEVs, for up to the first 200,000 EV/PHEV/FCV vehicles produced by a 

given manufacturer during MY 2012-2016 (for a manufacturer that produces less than 25,000 

EVs, PHEVs, and FCVs in MY 2012), or for up to the first 300,000 EV/PHEV/FCV vehicles 

produced during MY 2012-2016 (for a manufacturer that produces 25,000 or more EVs, 

PHEVs, and FCVs in MY 2012). For any production of EV/PHEV/FCV vehicles greater than 

this amount, the compliance value for the vehicle will be greater than zero gram/mile, set at a 

level that reflects the vehicle‘s net increase in upstream GHG emissions in comparison to the 

gasoline vehicle it replaces.MM The Final Rule notes: ―EPA will reassess the issue of how to 

address EVs, PHEVs, and FCVs in rulemakings for model year 2017 and beyond, based on 

the status of advanced technology vehicle commercialization, the status of upstream GHG 

emissions control programs, and other relevant factors.‖ 84

EPA Off-cycle Credits: EPA is also providing an option for manufacturers to generate 

credits for employing new and innovative technologies that achieve GHG reductions that are 

not reflected on current test procedures. Examples of such potential ―off-cycle‖ technologies 

might include solar panels on hybrids, adaptive cruise control, and active aerodynamics, 

among other technologies. This optional credit opportunity is currently available through the 

2016 model year. Credits must be based on real additional reductions of CO2 emissions and 

must be quantifiable and verifiable with a repeatable methodology.

5.2 Potential Credit Programs, Incentives, and Other Flexibilities for 2017 and Later

During the agencies‘ outreach with stakeholders, manufacturers provided early input 

that several of the flexibility provisions in place for MYs 2012-2016 should be retained for 

MY 2017 and later. Environmental groups also provided early input, as discussed below. As 

EPA and NHTSA develop the proposed rule for MY 2017 and beyond standards, the agencies 

will continue to consider the potential need for incentives and flexibilities in the 2017 and 

later program, including whether and how some of EPA‘s MYs 2012-2016 provisions could 

be applied to the new program, as well as whether any additional provisions would be 

appropriate to address lead-time issues. Changes to flexibilities provided under EPCA/EISA 

would require new legislation; NHTSA intends to develop any proposed standards within the

context of its statutory framework.

Most manufacturers support EPA continuing 3-year credit carry-back to cover prior 

debits, 5-year credit carry-forward for use in future years, credit transfers between car and 

truck categories, and credit trading between manufacturers. One manufacturer noted support 

for unlimited credit carry-forward. These provisions, collectively known as Averaging, 

Banking, and Trading (ABT), have been an important part of many mobile source programs 

under CAA Title II, both for fuels programs as well as for engine and vehicle programs. EPA 

believes, and manufacturers have confirmed, that ABT is important because it can help to 

address many issues of technological feasibility and lead-time, as well as considerations of 

 

MM See 75 FR 25436-25437.
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cost.NN EPA will strongly consider proposing to continue these provisions in the MY 2017 

and later program, as these types of compliance flexibilities will remain important as 

standards become more stringent. As discussed above in Section 5.1, these provisions are 

required by EPCA and EISA for the CAFE program.

While not a flexibility in the same sense as other credit programs and incentives 

discussed in this chapter, several manufacturers supported the continued use of attribute-based 

standards using the vehicle‘s footprint for setting GHG standards, consistent with EISA‘s 

requirement that CAFE standards be attribute-based. A number of manufacturers also 

supported the use of separate passenger car and light-truck standards for the GHG standards, 

consistent with EISA‘s requirement that CAFE standards for cars and trucks be separate, 

though one manufacturer indicated a single combined passenger car and truck standard 

(though still attribute-based) should be considered.

Several smaller volume manufacturers have expressed continued concerns regarding 

lead-time, and support for additional flexibility to address the unique needs of small volume 

manufacturers such as the TLAAS program described above. In the MYs 2012-2016 Final 

Rule, EPA determined that smaller volume manufacturers needed additional lead time to meet 

the standards because their CO2 baselines are significantly higher and their vehicle product 

lines are limited, reducing their ability to average across their fleets compared to larger 

manufacturers. The need for this type of flexibility is tied closely to the level of stringency of 

the standards to be proposed, and will be analyzed in that context. 

EPA deferred small volume manufacturers (SVMs) with annual U.S. sales less than 

5,000 vehicles from the MYs 2012-2016 standards. EPA plans to consider establishing 

standards for these very small volume manufacturers as part of the MYs 2017-2025 

rulemaking. SVMs noted in discussions that SVMs only produce one or two vehicle types but 

must compete directly with brands that are part of large manufacturer groups that have far 

more resources available to them. There is often a time lag in the availability of technologies 

from suppliers between when the technology is supplied to large manufacturers and when it is 

available to small volume manufacturers. Also, incorporating new technologies into vehicle 

designs costs the same or more for small volume manufacturers, yet the costs are spread over 

significantly smaller volumes. Therefore, SVMs typically have longer model life cycles in 

order to recover their investments. SVMs further noted that despite constraints facing them, 

SVMs need to innovate in order to differentiate themselves in the market and often lead in 

incorporating technological innovations, particularly lightweight materials. Under the CAFE 

program, manufacturers who manufacture less than 10,000 passenger cars worldwide 

annually may petition for an exemption from generally-applicable CAFE standards, in which 

case NHTSA will determine what level of CAFE would be maximum feasible for that 

particular manufacturer if the agency determines that doing so is appropriate.85

 

NN NHTSA notes that it is statutorily prohibited from considering availability of credits (including the fuel 

economy credits for alternative fuel capability) in determining what levels of CAFE stringency would be 

maximum feasible for a given model year. 49 U.S.C. 32902(h).
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Several manufacturers have also expressed support for the continuation of A/C system 

credits. EPA is strongly considering A/C credits for MYs 2017-2025. EPA has included A/C 

credits in the initial emissions modeling done to support this report, as described in Chapter 6 

and Appendix D. EPA plans to further evaluate the methodology used to determine credits, 

including A/C-related test procedures. 

Some manufacturers have also expressed support for the continuation of EPA‘s offcycle credits program. The off-cycle credits for new and innovative technologies are 

currently available only through MY 2016. Manufacturers have noted that as long as the 

credits represent real-world off-cycle emissions reductions, the credits should be able to be 

generated beyond MY 2016. One manufacturer noted that company innovations do not end 

with MY 2016 and that technologies will always exist which do not show up on the test 

cycles. Also, credits give additional incentives for company investments in R&D and 

innovations. EPA understands this perspective and will evaluate the off-cycle credits 

provisions in the context of the MYs 2017-2025 program, including the potential need to 

update the technology eligibility criteria for determining whether a technology qualifies as 

new and innovative. 

Some manufacturers encouraged EPA to continue to offer FFV credits. EPA finalized 

provisions in the MYs 2012-2016 Final Rule to treat MY 2016 and later FFVs similarly to 

conventional fueled vehicles, in that FFV emissions would be based on actual CO2 results 

from emissions testing on the fuels on which it operates. In calculating the emissions 

performance of an FFV, manufacturers may base FFV emissions in part on vehicle emissions 

test results on the alternative fuel, if they can demonstrate that the alternative fuel is actually 

being used in the vehicles. Performance will otherwise be calculated assuming use only of

conventional fuel. The manufacturer must establish the ratio of operation that is on the 

alternative fuel compared to the conventional fuel. The ratio will be used to weight the CO2

emissions performance over the 2-cycle test on the two fuels. EPA will consider whether it is 

appropriate to retain this approach in the MYs 2017-2025 rulemaking. In addition, one 

manufacturer raised the concept of providing credits for CNG vehicles and vehicles operating 

on E-25 and other bio-fuels.

In the MYs 2012-2016 Final Rule, EPA established four pathways for manufacturers 

to earn early credits prior to MY 2012, and established baselines against which manufacturers 

can earn credits. For MY 2017 and later, we believe the credit carry-forward provisions are 

sufficient to provide manufacturers with credits for achieving reductions beyond those 

required by the MYs 2012-2016 standards. No additional baselines or other provisions would 

be needed if the credit carry-forward provisions remain in place. 

For advanced technology vehicles, manufacturers support an advanced technology 

vehicle incentive in the form of a 0 g/mile compliance value for electric operation for MYs 

2017 and later. Two manufacturers also expressed support for additional credits in the form 

of ―bonus‖ credits or multipliers for advanced technology vehicles. EPA proposed a credit 

multiplier for MYs 2012-2016 advanced technology vehicles but did not finalize it for reasons 

described in the Final Rule.86 Some environmental and public interest groups expressed 

concern that the 0 g/mi value does not adequately capture upstream emissions from the 

charging of electrified vehicles, and believe an upstream emissions factor should be included 
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in the compliance calculation for electrified vehicles. For CAFE compliance purposes, the 

fuel economy of such vehicle models is determined consistent with petroleum equivalency 

factors (PEFs) issued by DOE.87 Current EVs do not receive infinite fuel economy ratings 

that would be equivalent to a 0 g/mi CO2 emission rate; for example, the MY 2008 Tesla 

Roadster received a fuel economy ratings of 248 mpg (equivalent to about 36 g/mi CO2 based 

on gasoline). EPA understands that the treatment of upstream emissions for EVs, fuel cell 

vehicles, and the electric portion of PHEVs is a critical issue for the upcoming rulemaking, 

and this issue is further discussed in Chapter 7. 

5.3 Input on Non-regulatory Incentives from Stakeholders

In addition to the regulatory incentives and flexibilities discussed in the previous 

section, the agencies recognize that there are many non-regulatory approaches that can 

promote the commercialization of low-GHG light-duty vehicle technologies. These 

approaches are outside the regulatory authority for NHTSA and EPA, but were raised in 

many of our stakeholder meetings (in particular the OEMs and the automotive supply firms) 

as potentially important drivers in the development and commercialization of advanced 

technology vehicles. This section will only identify and briefly discuss those non-regulatory 

strategies which were raised by stakeholders in our recent meetings. This is by no means a 

comprehensive list or discussion of the potential non-regulatory policies and incentives which 

could encourage low GHG/high fuel economy vehicles.

Federal research and development

The federal government performs automotive research and development (R and D) 

that is ultimately transferred to the private sector. Several of the OEMs identified this type of 

R and D support as an important the development of advanced vehicle technologies. The 

Department of Energy (DOE) is the federal lead on automotive R and D with extensive 

programs carried out at its national laboratories. DOE‘s FY2010 budget for the Vehicles 

Technologies Program is $311 million, with major technology focuses on hybrid electric 

systems, advanced engines, lightweight materials, and fuels technologies. Other federal 

agencies have smaller programs, such as EPA which has a FY2010 budget of about $16 

million. One major focus of EPA‘s program has been hydraulic hybrids, which are currently 

being commercialized in heavy-duty vehicles. The Federal Transit Administration (FTA) of 

the Department of Transportation (DOT) has a number of ongoing research and development 

activities focusing on leading edge propulsion systems for buses designed to reduce operating 

costs and harmful emissions. These activities include studies and demonstrations on vehicles 

using plug-in hybrid electric, fuel cell, battery-dominant, and hydraulic hybrid technology.88 

Federal financial assistance for private sector R and D and capital investment

Several of the OEMs and the automotive supply companies suggested that federal 

assistance for R and D programs, as well as for capital investment, can play an important role 

for the introduction of advanced technology vehicles. Historically, the federal government 

has periodically provided financial assistance for private sector R and D through favorable tax 

policies. More recently, the federal government has taken a much more proactive role in 

stimulating private sector investments in new technologies by providing grants and low-
Chapter 5

5-8

interest loans to automakers and suppliers for R and D and capital investment in breakthrough 

technologies with the potential to reduce fuel consumption and GHG emissions. For example, 

DOE has an Advanced Technology Vehicles Manufacturing Loan Program that has received 

appropriations of $7.5 billion for grants and loans to support the development of advanced 

technology vehicles and associated components in the United States.

89

 The FTA has provided 

approximately $100 million and plans to award an additional $75 million in FY 2010 under 

the Transit Investments for Greenhouse Gas and Energy Reduction (TIGGER) Program.90

Through this Program, public transit agencies partner and contract with private sector 

organizations, manufactures, system designers and integrators in acquiring and deploying new 

technologies and systems that reduce energy and greenhouse gases. Additionally, through the 

National Fuel Cell Bus Program (NFCBP), the FTA is leading a $50 million Federal effort 

with the support and leverage of an additional $50 million in local and private contributions 

for the innovative design and demonstration of fuel cell powered vehicles that have zero or 

near-zero emissions. The ultimate objective of the NFCBP is the commercialization of fuel 

cell buses. An additional $13.5 million has been appropriated under the Program in FY 2010.

Economic incentives for low-GHG vehicles

Some automakers told the agencies that the federal and state tax credits and grants 

played an important role in sparking the initial hybrid vehicle market, and could play an even 

more important role in promoting PHEVs and EVs in the future. Advanced technology 

vehicles often have higher up-front costs, due to more expensive components and/or lower 

production volumes, and any strategy that can reduce or offset the higher up-front cost to 

consumers can remove one of the most important barriers to greater consumer demand. The 

Energy Policy Act of 2005 established temporary federal income tax credits for buyers of new 

hybrid, diesel, dedicated alternative fuel, and fuel cell vehicles that meet certain requirements. 

For example, while available, consumers who purchased new hybrid vehicles received federal 

tax credits that ranged from a few hundred dollars to as much as approximately $3,000 for the 

Toyota Prius, the hybrid vehicle with the highest fuel economy. The federal hybrid vehicle 

tax credit has been phased out for many manufacturers who have exceeded the cumulative 

60,000 production cap per manufacturer for hybrids and diesel vehicles. More recently, the 

American Recovery and Reinvestment Act of 2009 extended the tax credits to PHEVs and 

EVs, which are now eligible for a federal tax credit up to $7,500 per vehicle for the first 

200,000 cumulative vehicle production per manufacturer.

Some states, such as California, have also adopted state grants for certain advanced 

technology vehicles. To date, both federal and state tax credits and grants for new vehicle 

purchases have been provided to consumers, but it is also possible for tax credits to be 

directed to manufacturers who sell advanced technology and/or low-GHG vehicles.

Another direct approach for reducing the up-front cost of advanced technology or lowGHG vehicles to consumers would be a state sales tax exemption for buyers of vehicles that 

meet certain requirements. Of course, without limitations such as cumulative production 

caps, federal tax credits and exemptions from state sales taxes could have important impacts 

on government revenues.

Non-economic incentives for owners of low-GHG vehicles
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Some automakers have specifically indicated that high occupancy vehicle (HOV) 

access has been an important incentive for hybrid-electric vehicle owners, and could 

potentially be for EV and PHEV owners as well. By providing two important incentives—

reduced travel time and improved trip time reliability—HOV lane access can be a big 

incentive in some urban areas. The Safe, Accountable, Flexible, Efficient Transportation 

Equity Act (SAFETEA-LU) of 2005 allows an exemption from the HOV occupancy 

requirement for vehicles certified as ―low emission and energy-efficient.‖ Some state and 

local governments have allowed drivers of certain advanced technology vehicles to use HOV 

lanes regardless of the number of vehicle occupants. Analyses have suggested that HOV 

access has been an effective incentive in promoting hybrid vehicle sales in certain urban 

areas.

OO

Economic incentives for electric vehicle recharging systems/installation

One way to promote grid electricity use in EVs and PHEVs would be financial support 

for vehicle recharging infrastructure. The American Reinvestment and Recovery Act 

provides for a 50% tax credit on the installation of home charging equipment, up to a 

maximum cost of $2,000, and on installation of commercial equipment up to a maximum cost

of $50,000. This tax credit expires at the end of 2010. Current home recharging systems cost 

on the order of $2000 or so. These costs are expected to drop as charging systems become 

more widespread and in higher volumes, as discussed further in Chapter 4. Public highvoltage quick charging systems cost much more. Federal grants and/or tax credits to reduce 

this cost would address another barrier to consumer demand. Many automakers have also 

raised the practical challenges involved in the permitting process for charging stations. 

Federal coordination to establish streamlined standards and codes for permitting processes 

could assist in EV and PHEV commercialization.PP Several of the OEMs and automotive 

suppliers suggested that these types of financial incentives for electric vehicle recharging 

systems can play an important role in encouraging the purchase of PHEVs and EVs.

Tax incentives or disincentives

There are a number of tax incentives and disincentives that could be considered as part 

of an overall strategy to promote low-GHG light-duty vehicle technology, such as higher 

gasoline taxes (which would improve the relative economics of other fuels), a gasoline price 

floor (which would preclude the risk of extremely low gasoline prices undercutting other 

vehicle fuels), and reduced or zero alternative fuel taxes (for example, electricity currently 

pays no excise/road tax, and there is uncertainty about whether this would be maintained if 

and when EVs and PHEVS gain greater market share). A few of the OEMs suggested that 

higher fuel taxes could be used to encourage the purchase of high fuel economy/low GHG 

vehicles.

 

OO See, for example, ―Impact of High Occupancy Vehicle (HOV) Lane Incentives for Hybrid Vehicles in 

Virginia,‖ David Diamond, LMI Research Institute, in Journal of Public Transportation, Vol. 11, No. 4, 2008, 

pages 39-58. Accessed at http://www.nctr.usf.edu/jpt/pdf/JPT11-4Diamond.pdf.

PP See discussion in Chapter 4.
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Vehicle Labeling

Several stakeholders have emphasized the need for the federal government to educate 

consumers about the energy and environmental performance of vehicles in general and 

advanced technology vehicles in particular. On August 30, 2010, EPA and NHTSA jointly 

announced proposed changes to the current fuel economy label for MY 2012 and beyond that 

will provide new information (such as tailpipe CO2 emissions) that will help consumers make 

more informed purchase decisions.91 Among other changes, the joint proposal includes 

several potential new label designs for PHEVs and EVs. 

Chapter 5 References

84 75 Fed. Reg. 25435, 25341 (May 7, 2010).

85 49 U.S.C. 32902(d).

86 75 Fed. Reg. 25434, (May 7, 2010).

87 65 Fed. Reg. 36986-36992 (June 12, 2000). See also 49 U.S.C. 32904(a).

88 See, e.g., http://www.fta.dot.gov/documents/HydrogenandFuelCellTransitBusEvaluations42781-1.pdf.

89 http://www.atvmloan.energy.gov/

90 See http://www.fta.dot.gov/planning/planning_environment_11424.html for more information on FTA‘s 

TIGGER Program.

91 Revisions and Additions to Motor Vehicle Fuel Economy Label, Proposed Rule, 

http://www.epa.gov/fueleconomy/regulations.htm#sticker.
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6 Analysis of Scenario Costs and Impacts

6.1 Context

The President‘s May 21 memorandum indicates that today‘s technical assessment 

should inform the rulemaking process, and that the subsequent (to the technical assessment) 

Notice of Intent (NOI) to Issue a Proposed Rule should describe, among other things, 

potential standards that could practicably be implemented for the 2017-2025 model years.

For today‘s technical assessment, the agencies conducted an initial fleet-level analysis 

of improvements in overall average GHG emissions and fuel economy levels. We have 

analyzed a range of potential stringencies for model years 2020 and 2025 (i.e., progressively 

lower GHG targets). We have also analyzed more than one illustrative technological pathway 

by which these GHG targets could be met. We considered these different technology 

pathways in order to address the difficulties in forecasting a single pathway and a single cost 

estimate for the penetration of different advanced technologies into the light-duty vehicle fleet 

at this time. We also believe this approach reflects the diversity in strategies we heard from 

the OEMs during the stakeholder outreach meetings, who at this time indicated they are each 

pursuing a range of technologies which they may use in the 2017-2025 time frame. The 

agencies believe that the analyses presented in this technical assessment permit a reasonable 

initial and approximate evaluation of the relative potential costs and effects of the aggregate 

stringency levels evaluated in this report.

This analyses began with methods and information developed and applied in support 

of the recently-promulgated GHG standards for the 2012-2016 model years, and also reflect 

updates to the forecast of the future light vehicle fleet, as well as updates to the range and 

characteristics of anticipated GHG and fuel-saving technologies (as discussed in Chapter 3). 

However, we note, as discussed further below, that several of the simplifications 

employed here would not be used for purposes of a full Federal rulemaking analysis. This 

includes the requirements for both EPA and NHTSA to promulgate standards which meet 

each agency‘s statutory requirements. The agencies have therefore provided a number of 

caveats to today‘s analysis, discussed at greater length below.

6.2 Analytic Approach

This report presents modeling results that provide the technical basis for the analysis 

provided by EPA, NHTSA, and CARB in this chapter. The modeling was performed by EPA 

using the OMEGA model, which EPA utilized in the MYs 2012-2016 light-duty vehicle 

rulemaking. The key inputs for the analysis (e.g., the technology costs and effectiveness) are 

a result of the joint technical assessment of EPA, CARB, and NHTSA, as described in 

Chapter 3 of this report. 

OMEGA is EPA‘s vehicle greenhouse gas cost and compliance model, and it can be 

used to simulate how manufacturers might respond to a specified vehicle CO2 emission 

standard. Broadly, the model starts with a description of the future vehicle fleet, including 
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6-2

different vehicle platforms,

QQ sales, base CO2 emissions, attributes such as vehicle mass and 

the extent to which CO2 reducing/fuel saving technologies are already utilized. 

For the purpose of this analysis, over 60 vehicle platforms were used to capture the 

anticipated important differences in vehicle and powertrain design and utility between now 

and model year 2025. The model is then provided with a list of technologies which are 

applicable to various types of vehicles, along with their cost and effectiveness and the 

percentage of vehicle sales which can receive each technology during the time frame of 

interest. The model combines this information with economic parameters, such as fuel prices 

and a discount rate, to project how technologies could be added to vehicles in order to meet 

various levels of GHG control. The result is a description of which technologies could be

added to each vehicle platform, along with the resulting cost, in order to meet a specified 

GHG performance level.

RR

 We note that for purposes of this Technical Assessment Report, 

NHTSA did not perform modeling using the CAFE model, also referred to as the Volpe 

modelSS, to help analyze potential fuel economy standards as NHTSA has in recent CAFE 

rulemakings. The Volpe model simulates how manufacturers might respond to potential fuel 

economy standards on a yearly basis and supports analysis of fuel economy improving 

technologies, economic effects, environmental effects and safety effects. For today‘s 

technical assessment, the agencies decided to use the OMEGA model. In upcoming joint 

rulemaking, NHTSA and EPA plan to make use of the CAFE and OMEGA models, 

respectively, for purposes of examining potential future CAFE standards and GHG emissions 

standards.

As discussed above, for this technical assessment, the vehicle fleet was analyzed as 

one single industry wide fleet, irrespective of individual manufacturer differences. The size 

and composition of the fleet is otherwise equivalent to our projection of the entire fleet

through model year 2025.92 Treating the entire fleet as a single fleet assumes, for example, 

averaging GHG performance across all vehicle platforms is possible irrespective of who the 

individual manufacturer is for a particular vehicle platform. This can be thought of as 

analyzing the fleet as if there was a single large manufacturer, instead of multiple individual 

manufacturers. Alternatively, it is equivalent to an assessment that assumes there are no 

statutory limits on the ability to transfer credits between passenger car and light truck fleets 

(which is the case under the CAA, but not under EISA), there are no market limits on the 

ability to trade them between manufacturers, and that all manufacturers fully utilize such 

flexibilities and experience no transaction costs in doing so.

 

QQ Vehicle platforms represent aggregations of similar vehicle models built by a manufacturer – for example, the 

Dodge Caliber, Jeep Compass and Jeep Patriot are built from a single platform, and include a mix of passenger 

cars and light trucks.

RR A description of OMEGA‘s specific methodologies and algorithms, as well as a copy of the peer review 

documentation, is on the EPA website at http://www.epa.gov/oms/climate/models.htm.

SS DOT‘s CAFE Compliance and Effects Modeling System (commonly referred to as ―the Volpe model‖) is 

available at http://www.nhtsa.gov/Laws+&+Regulations/CAFE+-

+Fuel+Economy/CAFE+Compliance+and+Effects+Modeling+System:+The+Volpe+Model, which also 

provides model documentation, source code, inputs and outputs from NHTSA‘s MY 2012-2016 rulemaking 

analysis, and links to prior versions and analyses.
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This approach allows evaluation of multiple scenarios in the context of a long-term 

technology-driven assessment. It focuses the analysis on the technology itself, independent of 

the individual manufacturer, and produces a result that indicates how the fleet could 

hypothetically achieve greater GHG reductions and increased fuel economy in the most 

efficient manner. This approach also allows the assessment for this report to be performed 

without consideration of the particular shapes of the passenger car and light truck attributebased curves, which are required by statute for CAFE purposes and will define the future 

federal standards. The unlimited averaging that is modeled may reach the same result 

irrespective of any specific attribute curves, and as long as the curves are calibrated to the flat 

standard that is modeled here (without prejudging the outcome of those curves, which will be 

carefully evaluated as part of the federal rulemaking process), the same fleet average may be 

required. 

We note that while the single fleet analysis approach simplifies some aspects of the 

analysis and does offer some advantages, there are also important limitations which will be 

addressed during the formal rulemaking process. Some of these limitations are statutory – the

requirements for CAFE under EPCA and EISA are more prescriptive than for GHG standards 

under the CAA. Some of these limitations are more informational in nature – for example, a 

simplified analysis leaves the agencies unable to consider certain information about the 

potential effects of standards that the public (and particularly, the regulated manufacturers) 

are accustomed to seeing in NHTSA and EPA analyses. The agencies recognize and 

emphasize again that today‘s analysis, while reasonable at this early stage in developing a 

National Program for post-MY2016 standards, is a first step, and that much more work will 

need to be completed for the upcoming NPRM, including full modeling by both EPA and 

NHTSA that will address each of the limitations, as discussed further below. As with the 

MYs 2012-2016 final rule, the agencies‘ analyses for the NPRM will examine attribute-based 

standards under which each manufacturer is subject to its own individual passenger car and 

light truck CAFE and CO2 requirements, where the standard for each manufacturer is based 

on the production-weighted average of its passenger car and light truck targets, with the 

targets established in the attribute-based curves. In the upcoming rulemaking both EPA and 

NHTSA will also consider more than the overall industry-wide perspective provided in this 

Report, and intend to analyze potential future CAFE and GHG standards in a manner similar 

to that done for the MYs 2012-2016 rulemaking. For further information on the kinds of 

comprehensive analyses performed for the MYs 2012-2016 rulemaking, see 75 Fed. Reg. 

25324 (May 7, 2010).

EPCA as amended by EISA requires separate attribute-based CAFE standards for 

passenger cars and light trucks, for each model year, that are the maximum feasible standards 

for that fleet of vehicles in that model year.TT Today‘s analysis combines the passenger car 

and light truck fleets, considers flat standards, and considers only a single model year out of 

the nine model years that will be covered by the rulemaking.

 

TT 49 U.S.C. 32902.
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EPCA as amended by EISA allows manufacturers to pay fines in lieu of complianceUU

and subject to certain limitations allows manufacturers to earn, trade, and transfer credits (and 

also earn credits for production of alternative-fueled vehicles in addition to simple overcompliance with applicable standards),VV but does not allow the availability of credits to be 

considered in determining what standards would be maximum feasible.WW Today‘s analysis 

combines the passenger cars and light trucks of all manufacturers into a single fleet, which is 

equivalent to assuming fully efficient trading and transfer of credits but is not allowed under 

EPCA, and does not include the additional credit that manufacturers would get under EPCA 

and EISA for alternative-fueled vehicles.

In determining what passenger car and light truck standards would be maximum 

feasible in each model year, EPCA as amended by EISA requires NHTSA to consider and 

balance four statutory factors: technological feasibility, economic practicability, the effect of 

other motor vehicle standards of the Government on fuel economy, and the need of the United 

States to conserve energy. While the tables of information presented below concerning 

technology cost, effectiveness, and lead-time, fuel savings and GHG emissions avoided, and 

other things, would help to inform NHTSA‘s consideration of many of the statutory factors, 

this information alone may not be sufficient for purposes of a full rulemaking analysis. Other 

pieces of information have historically been used to decide what standards would be 

maximum feasible for each fleet for each model year, as discussed below.

By modeling a single fleet rather than separate fleets for different manufacturers, we 

show the most cost-effective hypothetical path for the industry, as a whole, to any specific 

overall average fuel economy level or GHG emission level. Differential impacts on 

individual manufacturers, based on the different standards applicable to them given the 

production-weighted average of their specific passenger car and light truck targets (with the 

targets established in attribute-based curves), are thus not reflected in the current analysis. In 

addition, in representing the market as a single fleet produced by a single manufacturer, 

today‘s analysis exhausts available technologies only when, given input assumptions 

regarding technology applicability and phase-in potential, no further technology can be 

applied to any vehicle model. In contrast, in past rulemakings when the fleet is represented in 

terms of discrete manufacturers‘ separate passenger car and light truck fleets, some 

manufacturers have been estimated to exhaust available technologies in some model years at

stringencies well below those that would cause the aggregated manufacturer of a combined 

fleet to do so. This occurs because manufacturers produce different mixes of vehicles, with 

different levels of baseline technology utilization.

This is information that has historically been relevant to NHTSA‘s determinations of 

whether standards are economically practicable.XX Understanding and recognizing the 

 

UU 49 U.S.C. 32912.

VV 49 U.S.C. 32903, 32905, 32906.

WW 49 U.S.C. 32902(h).

XX For example, in its recent analysis of its final MY 2016 CAFE standards, NHTSA estimated that required 

CAFE levels for passenger cars would average 37.8 mpg, but would range from 34.2 mpg (for Jaguar) to 41.1 

mpg (for Porsche). Additionally, that same analysis estimated that passenger car cost increases (relative to 
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6-5

differential impact of standards on manufacturers is one of the issues with which NHTSA has

grappled in determining maximum feasible standards. While the agency should not key its 

standards to the least capable manufacturer, the agency should be aware of the impacts in 

making its decision, since economic practicability is determined in part by the effects of the 

standards on vehicle manufacturers. The results presented in this report represent what the 

three agencies expect a hypothetical comprehensive-line vehicle manufacturer could achieve, 

given the assumptions made here regarding the composition of the fleet and the availability, 

cost, and effectiveness of various technologies. Note that the results presented here assume 

trading between auto firms, which has not occurred in the past and may not occur in the 

future. Among actual full-line vehicle manufacturers, we expect that a manufacturer-specific 

assessment based on footprint-attribute standard curves will result in costs which are higher 

and lower for the actual full-line manufacturers than a fleet-wide average due to the 

differences among their product offerings. With respect to smaller volume manufacturers and 

very low volume manufacturers (many of whom only produce high-performance luxury 

vehicles), the agencies would expect that, in general, the level of technology they would 

require and the costs they would incur would be higher than presented today, all other things 

being equal. Thus, in future analysis done for the joint federal rulemaking NHTSA and EPA

would expect individual companies‘ projected costs will be higher or lower than the costs 

shown here, depending on their particular fleet mixes. The results of this more detailed 

analysis which will look at individual manufacturers could potentially change NHTSA‘s 

evaluation of what CAFE standards are maximum feasible.

In addition, today‘s analysis includes estimates of cost increases associated with the 

application of additional fuel-saving technology, as well as estimates of the corresponding 

reductions in fuel consumption and CO2 emissions, but does not include estimates of the 

corresponding social benefits. In the rulemaking the agencies will consider a much broader 

ranges of impacts of the standards.YY Estimates of social benefits both reflect and inform 

NHTSA‘s consideration of the four statutory factors, and are often a subject of great interest 

among commenters to CAFE and GHG rules.

Finally, today‘s analysis does not include an evaluation of potential safety effects of 

new standards. NHTSA has historically considered safety effects along with the four 

statutory factors in determining appropriate levels of CAFE stringency, a practice recognized 

approvingly in case law over several decades. EPA also considered the potential safety 

effects of the 2012-2016 GHG standards in that recent rulemaking. Although today‘s analysis 

 

compliance with the MY 2011 standard) would average $907 in MY 2016, but would range from $126 for 

Toyota to $1,884 for Ford. NHTSA also found that, without using credits, instances of technology exhaustion 

among a number of manufacturers would increase rapidly as stringencies increase faster than 4% annually. The 

aggregated approach of today‘s analysis would have shown almost no technology exhaustion among the 

regulatory alternatives considered by NHTSA in the MY 2012-2016 final rule. See, e.g., 75 Fed. Reg. at 25600 

(May 7, 2010).

YY For example, NHTSA‘s and EPA‘s analysis supporting the MYs 2012-2016 final rule include estimates of 

social benefits associated with fuel costs (setting aside taxes), economic impacts of petroleum dependence, the 

social cost of carbon dioxide emissions (and criteria pollutant emissions), social costs (e.g., additional highway 

congestion) and benefits (the value of additional travel) of additional travel demand induced by fuel economy 

increases, and other factors. 
Chapter 6

6-6

considers significantly greater levels of mass reduction than considered for the MYs 2012-

2016 final rule, it does not yield estimates of the corresponding safety implications. As 

discussed in Chapter 3, NHTSA, EPA, and DOE have undertaken a number of important, new 

safety-focused analyses to inform the future joint Federal rulemaking. NHTSA and EPA will 

include a detailed assessment of safety impacts at that time. 

Section 202(a) of the Clean Air Act, in contrast, provides broad discretion regarding 

how EPA can consider relevant factors in establishing GHG emissions standards for lightduty vehicles. For example, in setting GHG standards, section 202(a) of the CAA allows for 

the consideration of the availability of transferred or traded credits earned for overcompliance, the availability of credits for the use of advanced technologies and for A/C, and 

other credit-generation mechanisms. This broader discretion to reflect anticipated 

manufacturer behavior in response to available compliance flexibilities could allow standards 

established under the CAA to be more stringent than could be established under EPCA as 

amended by EISA, because the CAA allowed analysis would be able to show that more 

stringent standards could be feasible when those flexibilities are taken into account. 

However, as noted in several other locations in this report, there is significant additional 

information and analysis which EPA (and NHTSA) believe are necessary in order to support 

the future federal rulemaking, and EPA intends to develop a detailed analysis similar to that 

performed for the MY2012-2016 standard setting rulemaking, and to consider many of the 

same kinds of factors as it did in that rulemaking.

We emphasize again, however, that the upcoming rulemaking to develop the next 

phase of the National Program will be based on a full analysis that is consistent with both the 

statutory framework that provided under EPCA as amended by EISA, and the flexibilities that 

can be considered under the CAA, just as the detailed analysis for the MYs 2012-2016 was 

conducted. With these explanations and caveats, NHTSA and EPA believe today‘s analysis 

provides a useful means of comparing the scenarios discussed below. 

6.3 Development of Technology Pathways

The analysis for this Technical Assessment Report considers two model years – 2020 

and 2025; four ―technology pathways‖ – ―A,‖ ―B,‖ ―C‖ and ―D;‖ and four potential rates of 

increase in fleetwide average stringency – 3%/year, 4%/year, 5%/year, and 6%/year. This 

section of Chapter 6 discusses each of these elements, 6.4 describes other key inputs 

employed in the analysis, 6.5 presents the results of the analysis., and in 6.6 we present a 

sensitivity assessment related to battery cost estimates.

6.3.1 Model Years Considered

The analysis for this Technical Assessment Report considered two model years, 2020 

and 2025. Vehicles are typically redesigned every 5 years on average, and tend to receive a 

more modest ―refresh‖ between major redesigns. By assessing potential scenarios at a fiveyear increment, we base our assessment on an assumption of the efficient use of capital 
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investments, engineering, financing, and other resources.ZZ This approach predicts that 

manufacturers therefore have the opportunity to redesign vehicles by 2020, and again by 

2025. 

6.3.2 Scenario Stringencies Assessed

For each model year and each technology pathway (described below) we analyzed 

four potential GHG targets representing a 3, 4, 5 and 6% decrease in GHG levels -- that is, 

starting with a 250 gram/mile overall average requirement in MY 2016, the g/mile CO2

scenario fleet-wide target was lowered at the rates of 3% per year, 4% per year, 5% per year, 

and 6% per year.AAA The 3, 4, 5, and 6% annual stringency increases were chosen for 

evaluation because they represent a reasonably broad range of targets for this initial 

assessment and because the rates of increase are consistent with CARB‘s letter of 

commitment in response to the President‘s memorandum. The assessment for each scenario 

is characterized using four broad metrics: per-vehicle cost increase, vehicle technology mix, 

net reduction in GHG emissions, and net reduction in fuel consumption. BBB 

The scenario stringencies are shown below in terms of the specific grams/mile CO2 

values analyzed for MY 2020 and 2025, and like the 250 g/mile standard, include the 

potential usage of air conditioning emissions reductions (Table 6.3-1). Air conditioning 

emissions reduction in the 2025 time frame was estimated at 15 grams compared to a 2008 

baseline system for all four technology paths.CCC,93 The increase in estimated air conditioning 

reductions relative to those projected in the MYs 2012-2016 timeframe is largely due to an 

anticipated increase in the use of alternative refrigerants.DDD Note that EPA has not made any

determination at this time whether reductions due to improvements in air conditioning should 

be treated as a credit or a requirement during the 2017-2025 timeframe.

 

ZZ The MYs 2012-2016 final rule discusses the 5-year vehicle redesign practice in much more detail; see 75 FR 

at 25445 and 25573.

AAA For this assessment these future targets were modeled as a flat, or universal, standard, rather than as 

attribute-based standards. Since the difference between attribute-based and flat standards is that flat standards 

apply the same requirement to every manufacturer in the fleet, while attribute-based standards allow different 

requirements depending on the vehicles that each manufacturer produces for sale, modeling the entire new 

vehicle fleet as if it were a single automotive firm causes flat standards and attribute-based standards to produce 

the same average required stringencies. For the upcoming joint federal rulemaking, NHTSA and EPA will 

propose attribute-based standards.

BBB Additional impacts from fuel economy/CO2 standards such as co-pollutants, the social cost of carbon, or 

energy security premiums could be quantified. While this text does not discuss these topics, as discussed above, 

they are extensively discussed in the recent 2012-2016 final rule and will be discussed in the upcoming joint 

federal rulemaking.

CCC While the air conditioning reductions were modeled in this analysis, their relative cost-effectiveness suggests 

that manufacturers will use them to meet any standard. As the MYs 2012-2016 final rule allowed for a similar 

crediting program, all costs and benefits from the A/C system control are present in the reference case (MY 

2016) as well. A more complete discussion of the potential reductions in leakage from air conditioning systems 

is presented in Appendix D to the Technical Assessment Report. 

DDD In this analysis, EPA anticipates that prior to the MY 2020 timeframe, low GWP refrigerants will be 

approved under the Significant New Alternatives Policy Final Rule (1994). The use of low GWP refrigerants in 

this analysis does not indicate a decision on behalf of EPA. 
Chapter 6

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Table 6.3-1: Modeled GHG Targets 

Scenario Title

CO2 Target (g/mile) 

in MY 2020 (MPG)

CO2 Target (g/mile) 

in MY 2025 (MPG)

3% per year 221 (40) 190 (47)

4% per year 212 (42) 173 (51)

5% per year 204 (44) 158 (56)

6% per year 195 (46) 143 (62)

Note: The targets evaluated were CO2 targets which could be meet through reductions in CO2 as well as 

through air conditioning system hydroflurocarbon reductions converted to a CO2 equivalent value. MPGe is the 

equivalent MPG value if all of the CO2 reductions came from fuel economy improvement technologies. Realworld CO2 is typically 25 percent higher and real-world fuel economy is typically 20 percent lower. Thus, the 

3% to 6% range evaluated in this assessment for MY 2025 would span a range of real world fuel economy 

values of approximately 37 to 50 mpg, which correspond to the regulatory test procedure values of 47 and 62 

mpg, respectively.

The reference case GHG emissions scenario assumes no further improvements in CO2 

emissions from the 2016 final rule standards, which are projected to produce a fleet wide 

average of approximately 250 grams CO2 per mile. This projected fleet wide average is 

assumed to remain in place indefinitely. We also assume that the fleet mix, including market 

segmentation, is unchanged between scenarios, though it does change over time from 2016 to 

2025 as discussed in Appendix A. Additionally, we did not explicitly model any crediting 

schemes in this analysis, other than the air conditioning emission reductions which are a 

fundamental component of EPA‘s MYs 2012-2016 program, and the allowance of unlimited

car-truck credit transfer and inter-manufacturer trading which result from combining 

individual manufacturers into a single industry-wide fleet. 

6.3.3 Technology Pathways Considered

As discussed in the introduction to this Chapter, the use of distinct ―technology 

pathways‖ illustrate that there are multiple mixes of advanced technologies which can achieve 

the range of GHG targets we analyzed. The approach of considering four technology 

pathways for this assessment was chosen for several reasons. First, in our stakeholder 

meetings with the auto manufactures, the companies described a range of technical strategies 

they were pursuing for potential implementation in the 2017-2025 time frame. For example, 

some firms are pursuing an HEV focused strategy and others a mass reduction and next 

generation gasoline/diesel engine focused strategy. Using multiple technology pathways 

allows the agencies to evaluate how different technical approaches could be used to meet 

progressively more stringent scenarios. 

Second, this approach helps to generally capture the uncertainties we see with 

forecasting the potential penetration of and costs of different advanced technologies into the 

light-duty vehicle fleet ten to fifteen years into the future at this time. As discussed in 

Chapter 3, there is significant on-going technology development work occurring at the auto 

companies and in the broader automotive supply base on a large range of advanced 

technologies. The three agencies also have on-going technology cost, safety, and 

effectiveness work which has not been completed. Therefore we believed it is appropriate for 

this initial technology assessment to consider more than one technology pathway.
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What are the four technology pathways?

Pathway A is intended to portray a technology path focused on HEVs, with less 

reliance on advanced gasoline vehicles and mass reduction, relative to Pathways B and 

C.

Pathway C represents an approach where the industry focuses most on advanced 

gasoline vehicles and mass reduction, and to a lesser extent on HEVs.

Pathway B represents an approach where advanced gasoline vehicles and mass 

reduction are utilized at a more moderate level, higher than in Pathway A but less than

Pathway C.

Pathway D represents an approach focused on the use of PHEV, EV and HEV 

technology, and less reliance on advanced gasoline vehicles, mass reduction.

For MY 2025, as will be seen in the following section which presents the results of the 

assessment, as the CO2 stringency scenario increases progressively from 3% per year to 6% 

per year, the extent of electrification of the fleet (the combined penetration of HEVs, PHEVs, 

and EVs) increases for each of the three pathways. However, the degree of electrification is 

highest for Pathways A and D, and the least for Pathway C. This occurs because under 

pathway C, there is a higher degree of mass reduction and a higher penetration of advanced 

gasoline, which means that the penetration of HEV/PHEV/EVs needed to achieve the CO2 

stringency is lower, as compared to Pathways A, B and D. This impact is seen clearly for the 

4%, 5%, and 6% per year stringency scenarios. However, for the 3% per year scenario the 

distinction between Pathways B and C are very small, because the level of stringency is low 

enough that it requires only a modest level of mass reduction and advanced gasoline vehicle 

technology and the degree of electrification needed to meet the CO2 target (190 g/mile CO2 

in MY 2025) for Pathways B and C is minimal. Pathway D has the highest level of EVs, and 

also high levels of HEVs, in particular when compared to Pathways B and C.

For MY 2020, in contrast, there is little distinction between the technology projected 

for the technology pathways A, B, and C for the 3%, 4%, and 5% per year scenarios, because 

the overall level of stringency for each of these scenarios in MY 2020 is modest, and the 

overall difference between the MY2020 emission target for 3%, 4%, and 5% per year is small 

compared to in MY 2025. For example, the 3% and 4% per year targets in MY 2025 are 17 

g/mile CO2 apart, but in MY 2020, the 4% per year target is only 9 g/mile more stringent than 

the 3% per year scenario (See Table 6.3-1 above). The combination of the less stringent 

targets in MY 2020 and the smaller delta between the emission targets results in only small 

differences between Pathways A, B, and C for the 3%, 4%, and 5% per year targets for 

MY2020. Only with the most stringent scenario analyzed for MY 2020, the 6% per year 

scenario, is there a significant difference in the technology penetrations between Pathways A, 

B and C for MY 2020. Note that due to time constraints we were not able to assess MY2020 

for Pathway D.

All four of these pathways include significant amounts of mass reduction, relative to 

2008 model year vehicles, ranging from 15 to 30% in 2025. The ability of the industry to 
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reduce mass at the higher end of this range is an open technical issue which the agencies are 

carefully evaluating and will continue to as we move forward. In addition, as discussed in the 

joint 2012-2016 NHTSA and EPA final rule, the effects of vehicle mass reduction on safety 

should be analyzed from a societal fatality perspective, which could affect the maximum 

levels used for the future joint federal rulemaking. Although those effects have not been 

included in this Report, the two agencies will consider them for the future joint federal 

rulemaking. As discussed in Chapter 3, NHTSA, EPA, and DOE have a number of on-going 

projects in this area which will inform the future joint federal rulemaking.

The agencies note that these pathways, of course, are meant to represent ways that 

manufacturers could respond to eventual standards, and do not represent ways that they must 

respond to those standards. EPA‘s GHG standards and NHTSA‘s CAFE standards are 

performance-based and not technology mandating – manufacturers have wide discretion to 

apply the technologies that they choose in meeting the standards.

How are the different technology pathways implemented in the analysis?

In order to analyze four distinct technology pathways, we developed maximum 

technology penetration rates which we could implement within the OMEGA model. These 

maximum technology penetration rates are discussed in Chapter 3. These penetration rates 

were informed by the range of technology approaches we heard from different auto 

companies, and represent the three agencies‘ initial assessment of potential technology 

feasibility and lead time considerations for model year 2025.

 A large number of technologies were considered by the agencies and are used in this

analysis (see Chapter 3 for a detailed discussion of all the technologies considered). For the 

purposes of evaluating the four technical pathways, we assessed the impact of approaches 

which placed a different emphasis on broad technology classes. The broad technology classes 

evaluated for purposes of this analysis are defined below. For a more detailed discussion of 

any individual technology, please see Chapter 3 of this report:

Conventional Spark Ignition (SI) - This technology category includes all technologies 

that are not contained in other categories such as gasoline direct injection engines, 

cylinder deactivation, six and eight speed automatic and dual clutch transmissions, and 

start-stop micro-hybrid technology. 

Advanced SI - This technology includes gasoline spark ignition engines which are 

currently under development by OEMs and suppliers and are not anticipated to be 

widely used in the 2012- 2016 time frame. For purposes of this analysis, based on the 

agencies expert judgment to define these advanced SI engines, we modeled a direct 

injection gasoline engine with cooled exhaust gas recirculation, and with a larger 

degree of engine downsizing and higher level of turbocharging as compared to the 

turbo-downsized engines included in our analysis for the MYs 2012-2016 final rule. 

This technology is discussed in detail in chapter 3, and is similar to the technologies 

that many OEMs indicated were underdevelopment and which they anticipate will be 

introduced into the market in the 2017-2025 time frame. 
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Hybrid – While the agencies recognize there are many types of full-hybrids either in 

production or under development, for the purposes of this analysis we have 

specifically modeled two types of hybrids, P-2 and 2-Mode type hybrids. 

Plug-in Hybrid (PHEV) - This technology includes PHEV‘s with a range of 20 and 40 

miles and is discussed in Chapter 3. As discussed in Appendix B, we project that 

PHEV technology is not available to some vehicle types, such as large pickup. While 

it is possible to electrify such vehicles, there are tradeoffs in terms of cost, electric 

range, and utility that would reduce the appeal of the vehicle to a narrower market. 

Electric Vehicle (EV) - This technology includes vehicles with actual on-road ranges 

of 75, 100, and 150 miles. The actual on-road range was calculated using a projected 

30% gap between two-cycle and on-road range. These vehicles are powered solely by 

electricity and are not powered by any liquid fuels. As with PHEVs, and as discussed 

in Appendix B, we assumes that EV technology is not available to some vehicle types, 

such as large pickup. While it is possible to electrify such vehicles, there are tradeoffs 

in terms of cost, range, and utility that would reduce the appeal of the vehicle to a 

narrower market. These trade-offs are expected to reduce the market for other vehicle 

types as well, and for this analysis we have considered this in the development of the 

maximum technology penetration rates we use for the three pathways as discussed in 

Chapter 3. Note that for this assessment, we modeled EVs and did not consider fuel 

cell vehicles (FCVs). An assessment could be done considering FCVs in addition to 

EVs. However, such an assessment would need to carefully consider the availability 

of the necessary infrastructure to support FCV penetration.

Mass Reduction - This technology includes material substitution, smart design, and 

mass reduction compounding. The actual amount of reduction from the 2008 baseline 

was determined based on CBI provided by vehicle manufacturers, assessments 

provided by material suppliers, and existing studies in the literature, including the 

2010 report from Lotus Engineering. As discussed above as well as in Chapter 1 and 

Chapter 3, NHTSA and EPA intend to conduct a thorough assessment of the levels of 

mass reduction that could be achieved which is both technologically feasible and 

which can be implemented in a safe manner for the joint federal NPRM.

Chapter 6.4 discusses additional key inputs used in our technical assessment, and Chapter 

6.5 presents the results of the assessment.

6.4 Other Key Inputs to the Analysis 

In addition to the technology effectiveness and cost estimates detailed in Chapter 3, 

and the development of the four technology pathways discussed above, key inputs to today‘s 

analysis are summarized below, and are discussed in more detail in Appendix E.

Vehicle Sales – The vehicle sales projection is based upon output from the National Energy 

Modeling System (NEMS) which is maintained by the Department of Energy‘s Energy 

Information Administration. As in the MYs 2012-2016 Final Rule, the car and truck split was 

drawn from NEMS, while market segmentation was drawn from CSM Worldwide‘s 
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forecasting tool. Total market size is estimated in 2025 at 17.0 million vehicles (58% cars). 

Cars, in the context of NEMS, are defined using the pre-MY 2011 CAFE definition. For this 

analysis the DOT Volpe Center produced a custom run of NEMS. This run generated the 

same overall vehicle sales as the Reference Case for the Energy Information Administration‘s 

Annual Energy Outlook (AEO) 2010,94 but a different sales split between cars and light 

trucks. A detailed discussion on this topic is presented in Appendix A.

On-road Fuel Economy Shortfall – The ―on-road gap‖ is the difference between the fuel 

economy experienced and the CO2 emissions emitted in actual driving, as opposed to the 

higher fuel economy and lower emission level experienced on the specified emissions tests

(the FTP and the HFET). The gap includes the real-world effects of wind, road grade, air 

conditioning usage, and a variety of other factors. As in the MYs 2012-2016 final rule, we 

assume a 20% gap from certification results, similar to today‘s vehicles for internal 

combustion engines, as determined in EPA‘s 2006 fuel economy labeling rulemaking.95 

Based on engineering judgment, the 2006 labeling rule analysis, and Confidential Business 

Information, we estimated a larger, 30% gap from test results for power consumed by electric 

motors in PHEVs and EVs in-use compared to the emissions test procedure. 

Fuel Prices – The gasoline and electricity prices used in today‘s analysis are drawn from the 

Reference Case Scenario AEO 2010.96 The gasoline fuel prices were $3.49 in 2025 including 

all taxes.EEE Electricity prices are projected at approximately $0.11 in 2025 and gradually 

increase beyond that point. Beyond 2035, fuel prices were extrapolated, and the details are 

discussed in Appendix E. 

Vehicle Miles Traveled Assumptions, Survival rates– VMT schedules and survival rates 

are available in Appendix E. Expected lifetime VMT is approximately 207,000 miles for cars 

in the 2025 time frame and approximately 246,000 miles for trucks in the 2025 time frame. 

While long term trends for VMT growth are uncertain, these schedules reflect the same 

projection methodology used in the MYs 2012-2016 final rule.97 As in the 2012-2016 final 

rule, these values derive from assumptions made in AEO 2010.

VMT Rebound - Chapter Four of the Joint Technical Support Document to the recent MYs 

2012-2016 final rule surveys previous studies, summarizes recent work on the rebound effect, 

and explains the basis for the 10 percent rebound effect EPA and NHTSA are using in the 

current technical analysis.98 The use of a 10 percent rebound effect in this analysis reflects an 

assumption that the rebound effect applicable to the MYs 2012-2016 vehicles will remain 

applicable throughout future time periods.FFF The agencies plan to conduct new analysis of 

the expected rebound effect in this time frame in a future rulemaking. 

Upstream Emissions – The upstream emission factors for gasoline is the same as that used in 

the MYs 2012-2016 final rule (2,478 g CO2eq / gallon). 99 For the present report, we rely 

 

EEE Note fuel taxes are included when models select technology options and when conducting payback analysis. 

However fuel taxes are not used for calculating social benefits.

FFF It should be noted, however, that CARB, when adopting its initial GHG standards for MYs 2009-2016, relied 

on a study that found that a rebound effect on the order of 3 percent was appropriate. 
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upon the electricity emission factors produced by the EPA Office of Atmospheric Programs 

for an analysis of the American Clean Energy and Security Act of 2009 (H.R. 2454).

100

 This 

scenario assumes no new power sector regulations, but does assume construction of new 

plants to replace older retired plants. In 2025, it is assumed that electricity generation at the 

plant is equivalent to 558 g CO2 eq/kwh. This value should be adjusted upwards for feedstock 

gathering, transmission losses, and losses while charging the vehicle. After adjustment, the 

2025 electricity emission factor is approximately 703 g CO2 eq for each kW-hour consumed 

from the battery pack. 

Global Warming Potentials –The global warming potentials (GWP) used in this analysis are 

consistent with the MYs 2012-2016 final rule and with the 2007 Intergovernmental Panel on 

Climate Change (IPCC) Fourth Assessment Report (AR4). These GWP values are 1430 for 

HFC, 298 for NO2, and 25 for CH4. 

101

 At this time, the 1996 IPCC Second Assessment 

Report (SAR) global warming potential values have been agreed upon as the official U.S. 

framework for addressing climate change and are used in the official U.S. greenhouse gas 

inventory submission to the United Nations climate change framework, which is consistent 

with the use of the SAR global warming potential values in current international agreements. 

There are slight differences between SAR and AR4 values, most notably a 10% increase in 

the value used for HFC. 

6.5 Results of Analysis

This section presents the results from our modeling assessment of future stringency 

scenarios using the four technology pathways described in Chapter 6.3. The inputs are 

discussed in Chapter 3 of this technical report, and a detailed description of the analytic 

methodology is provided in Appendix F. In addition, all of the modeling input and output 

files used for the assessment are available on the web.GGG

This section presents the assessment results for model year 2020 and 2025. First, we 

present results at a ―fleet-wide‖ level, that is at an aggregated level for the new model year 

fleet in 2025, for the four technology pathways we analyzed. The four technology pathways 

are discussed in detail in Chapter 6.3. Second, we present results at a car-fleet and truck-fleet 

level, in order to show the range of costs and impacts at a more detailed level. This is 

followed by the fleet-wide level results for the MY2020 assessment.

The following tables show summaries of per-vehicle increases in costs, as well as fleet 

wide reductions in fuel consumption and GHG emission reductions. The costs, fuel savings, 

and GHG emission reductions are calculated against the reference fleet of MY 2025 vehicles 

complying with the MY 2016 standards. The listed reductions in GHG emissions and fuel 

consumption are cumulative over the lifetime of the selected model years, and are the delta 

between the GHG emissions and fuel consumption under the MY 2016 reference case and the 

selected emission control/fuel economy scenario. 

 

GGG The input files, modeling tool, and output files used for this Technical Assessment Report are available at 

http://www.epa.gov/oms/climate/models.htm
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In the assessment of potential future ranges of stringency presented in this report, we 

based our compliance analysis on the tailpipe emissions from all vehicles – thus EVs were 

evaluated at a 0 gram/mile CO2 level and PHEVs were evaluated as 0 gram/mile for the

electric drive portion of the vehicles operation. For the purposes of the GHG impacts, we 

have included the resultant increase in upstream CO2 from the use of PHEVs and EVs in our 

overall calculation of the net CO2 reductions for each of the scenarios evaluated. As a result, 

a single stringency scenario may have a range of CO2e impacts depending on the 

electrification of the fleet.

Based on our initial assessment in this report, we see that the conventional vehicle 

technologies are typically more cost effective than any of the other technology options, 

followed by advanced spark-ignition (SI) engines, hybrids, electric vehicles, and PHEVs (see 

Table 6.5-2 for example).

HHH

 Mass reduction, which is generally highly cost effective, is 

often among the first technologies chosen. In our modeling assessment, vehicle technologies 

are applied in a ranked manner that values cost-effective reductions in fuel consumption and 

CO2 emissions.

The cost of the MY 2025 scenarios for the entire new vehicle fleet ranges from $773 

(3%, Path C) to $3,455 (6%, Path A) per vehicle, as shown in Table 6.5-1. Technology 

pathway C, which relies upon advanced gasoline technology and greater mass reduction as 

compared to Pathway A and B, demonstrates the lowest costs. Pathway A and B show a 

greater electrification of the fleet and somewhat higher costs. 

The GHG reduction over the lifetime of the MY 2025 vehicles ranges from 343 

million metric tons (MMT) CO2e avoided in the 3% scenario to between 531MMT and 593 

MMT CO2e in the 6% scenario. The range in CO2 emission reduction is due to differing 

degrees of fleet electrification under the technology pathways. MY 2025 vehicles, over the 

course of their lifetimes, will reduce between 0.7 billion barrels of gasoline consumption 

under the 3% scenario to 1.3 billion barrels under the 6% scenario. For reference, the 

NHTSA & EPA National Program in MY 2016 is projected to reduce 0.6 billion barrels of 

fuel and 325 MMT CO2e over the lifetime of MY 2016 vehicles.

Table 6.5-1: Assessment Projections for Model Year 2025 Vehicles by Technology Path

New Fleet Target

Per-Vehicle Cost increase

($)

Scenario CO2 MPGe* Path A Path B Path C Path D

3%/year 190 46.8 $930 $850 $770 $1,050

4%/year 173 51.4 $1,700 $1,500 $1,400 $1,900

5%/year 158 56.2 $2,500 $2,300 $2,100 $2,600

6%/year 143 62.1 $3,500 $3,200 $2,800 $3,400

 

HHHWe did not assign an explicit monetary value to driving range, and as a consequence, the model typically 

chose shorter range electric vehicles (EV75) over longer range electric vehicles (EV150), as each produced the 

same statutory CO2 reduction. The agencies will consider this issue in the context of a future rulemaking.
2017-2025 Technical Assessment

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Lifetime

CO2e Reduction (MMT)

Lifetime

Gasoline Reduction (Billion Barrels)

Scenario Path A Path B Path C Path D Path A Path B Path C Path D

3%/year 340 340 340 340 0.7 0.7 0.7 0.7

4%/year 440 440 440 405 0.9 0.9 0.9 0.9

5%/year 520 520 530 440 1.1 1.1 1.1 1.1

6%/year 530 550 590 470 1.3 1.3 1.3 1.3

Note – these costs, CO2 reductions, and fuel savings are relative to the 2016 EPA GHG standards

* MPGe is the MPG equivalent to the CO2 target if all CO2 reductions occur from fuel economy improvement 

technologies. Real-world CO2 is typically 25 percent higher and real-world fuel economy is typically 20 percent 

lower. Thus, the 3% to 6% range evaluated in this assessment would span a range of real world fuel economy 

values of approximately 37 to 50 mpg, which correspond to the regulatory test procedure values of 47 and 62 

mpg, respectively. For the technical assessment, we have estimated a reduction of 15 g/mile CO2 equivalent 

from air conditioning system improvements, which would not actually translate into MPG improvements.

The penetration of HEVs, EVs, and PHEV in MY 2025 varies considerably depending 

on the technology pathway and scenario, as can be seen in Table 6.5-2. As discussed in 

Chapter 6.3, Technology Pathway A places greater focus on HEV technology and less 

emphasis on mass reduction and advanced gasoline engine technology. Thus, in the 3%/year 

scenario, Path A results in 11% HEV penetration, and the most stringent 6% scenario 

increases HEV penetration to 68% for Path A, all with approximately a 15% reduction in 

mass for the new vehicle fleet. 

Pathway C places greater emphasis on mass reduction and advanced gasoline vehicle 

technology, and therefore the penetration of HEVs ranges from 3% up to 44% of the new 

vehicle fleet. The penetration of gasoline and diesel vehicles for each of the stringency 

scenarios is highest for Pathway C, and the degree of mass reduction is also the highest 

among the four pathways, ranging from 18% to 26%.

Pathway B shows a technology approach in between Paths A and C, with advanced 

gasoline technology and mass reductions higher than for Path A but lower than Path C, and 

HEV penetrations lower than Path A but higher than Path C. This trend is not as strong for 

the 3% per year stringency scenario because the level of stringency does not require enough 

advanced technology to show much of a difference between Pathways B and C.

Pathway D places a greater emphasis on PHEV and EVs than the other three 

technology paths. As a consequence, there are lower penetrations of advanced gasoline 

engines and of mass reduction, but more electric vehicles than in the other three pathways.

Table 6.5-2: Assessment Projections for Model Year 2025 Vehicles

New Fleet Technology Penetration Estimates

Scenario Technology 

Path

New Vehicle Fleet Technology Penetration
Chapter 6

6-16

Gasoline & diesel 

vehicles HEV PHEV BEV

Net Mass 

ReductionIII

3%/year Path A 89% 11% 0% 0% 15%

Path B 97% 3% 0% 0% 18%

Path C 97% 3% 0% 0% 18%

Path D 75% 25% 0% 0% 15%

4%/year

Path A 65% 34% 0% 0% 15%

Path B 82% 18% 0% 0% 20%

Path C 97% 3% 0% 0% 25%

Path D 55% 41% 0% 4% 15%

5%/year

Path A 35% 65% 0% 1% 15%

Path B 56% 43% 0% 1% 20%

Path C 74% 25% 0% 0% 25%

Path D 41% 49% 0% 10% 15%

6%/year

Path A 23% 68% 2% 7% 14%

Path B 44% 47% 2% 7% 19%

Path C 53% 44% 0% 4% 26%

Path D 29% 55% 2% 14% 14%

Table 6.5-3 present estimates of payback period and net lifetime savings. Payback 

period is the number of years it takes for the higher initial cost of the vehicle to be off-set by 

the vehicle‘s fuel savings. As discussed in Chapter 6.4, we used AEO 2010 reference case for 

fuel prices, including fuel taxes, and we discounted the fuel savings using a 3 percent discount 

rate. The net lifetime savings is the total lifetime fuel savings for the vehicle discounted at 3 

percent minus the initial vehicle cost increase. As can be seen in Table 6.5-3, all MY 2025 

scenarios, regardless of technology pathway, have a positive net lifetime fuel savings between 

approximately $4,900 and $7,400, and for MY 2025 all of the scenarios and technology 

pathways pay back in 4.2 years or less.

 

III Please note that we show net mass reduction relative to model year 2008 vehicles. In the case of PHEVs and 

EVs, the batteries increase the weight of the vehicle. This battery weight increase is combined with the mass 

reduction technology to calculate net mass reduction for those vehicles.
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Table 6.5-3: Estimated Consumer Payback and Lifetime Savings

For Model Year 2025 Vehicles (3% Discount Rate)

Payback (years) Net Lifetime Savings ($s)

Scenario Path A Path B Path C Path D Path A Path B Path C Path D

3%/year 1.6 1.5 1.4 1.9 $5,032 $5,084 $5,174 $4,882

4%/year 2.5 2.2 1.9 2.9 $5,862 $6,041 $6,198 $5,329

5%/year 3.1 2.8 2.5 3.6 $6,450 $6,705 $6,959 $5,532

6%/year 4.1 3.7 3.1 4.2 $6,162 $6,564 $7,379 $5,705

Note – these estimates are relative to vehicle which comply with the 2016 EPA GHG 

standards

The following discussion presents information regarding the assessment projections of 

technology application and per-vehicle cost increases at the car-fleet and truck-fleet level for 

MY 2025. We categorized passenger cars and light trucks using the same category definitions 

as contained in the 2012-2016 National Program final rule. The results are presented 

sequentially by technology pathway (i.e., Pathway A, Pathway B, Pathway C, and Pathway 

D). The costs and CO2 emission levels discussed in this section reflect the same parameters 

as the previous fleet level summaries (Section 6.5.1.1). The cost increases are relative to the 

same vehicles under the MY 2016 standard, and the CO2e and MPGe levels include 

improvements to the vehicle air conditioning system, but exclude outlet electricity. 

Car and Truck Fleet Information for Technology Path A for MY 2025

Table 6.5-4 presents vehicle segment level results for Technology Pathway A showing 

the CO2e target level by segment, the MPG-equivalent level by segment, and the average pervehicle cost increase by segment for the four scenario stringency levels. Table 6.5-5 presents 

the corresponding vehicle segment level technology penetration rates and mass reductions for 

model year 2025 under the Technology Pathway A. The results show that as would be 

expected, the smaller size vehicles (e.g., the subcompact/compact segment and the midsize 

car segment), which start off at a lower average CO2 level, also generally have the lowest 

CO2 levels under the four stringency scenarios. 

As can be seen in Table 6.5-5, mass reduction is very cost effective across all vehicle 

categories, and under all stringency scenarios is at or near the maximum 15% we allowed 

under Pathway A. The penetration of HEV technology is significantly higher in the truckfleet for the 3% and 4% per year scenarios, and more evenly distributed between the car and 

truck fleets for the 5% and 6% per year scenarios. EVs first penetrate the new vehicle fleet in 

the 5% per year stringency scenario at a low level, and for the 6% per year scenario EVs 

represent 10% of all passenger cars, and only 2% of all light-duty trucks. PHEV technology 

is generally selected last in our assessment, and does not enter the new fleet until the 

assessment of the 6% per year category.
Chapter 6

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Table 6.5-4: Technology Path A, Assessment Projections for Model Year 2025:

CO2, MPG, and Per-Vehicle Costs for Car and Truck Fleets

Scenario Vehicle Segment CO2e Level 

(g/mile)* MPGe Level*

Per-Vehicle 

Cost Increase ($)

3%/year All Cars 174 51.2 $659

All Trucks 225 39.5 $1,485

Fleet 190 46.7 $927

4%/year All Cars 162 54.9 $1,184

All Trucks 197 45.0 $2,792

Fleet 173 51.3 $1,705

5%/year All Cars 141 62.9 $2,231

All Trucks 192 46.4 $3,106

Fleet 158 56.4 $2,515

6%/year All Cars 117 75.9 $3,629

All Trucks 198 45.0 $3,095

Fleet 143 62.0 $3,455

*note, the CO2e value includes 15 grams/mile of CO2-equivalent reduction from air conditioning 

related GHGs (CO2 and HFC reductions), and the MPGe level is equivalent MPG value if all CO2 

reductions come from fuel economy improvements. Real-world CO2 is typically 25 percent higher and 

real-world fuel economy is typically 20 percent lower.

Table 6.5-5: Technology Path A, Assessment Projections for Model Year 2025:

New Fleet Technology Penetration for Car and Truck Fleets

Scenario Vehicle Type

Net Mass 

Reduction 

(%)

Net Mass 

Reduction 

(lbs)

HEV 

(%)

PHEV 

(%)

EV

(%)

Adv. SI

(%)

3%/year

All Cars 15% 491 6% 0% 0% 23%

All Trucks 15% 673 24% 0% 0% 49%

Fleet 15% 550 11% 0% 0% 31%

4%/year

All Cars 15% 491 20% 0% 0% 46%

All Trucks 15% 673 65% 0% 0% 18%

Fleet 15% 550 34% 0% 0% 37%

5%/year

All Cars 15% 491 60% 0% 1% 27%

All Trucks 15% 673 74% 0% 0% 14%

Fleet 15% 550 65% 0% 1% 23%

6%/year

All Cars

14% 467 71% 3% 10% 15%

All Trucks 15% 665 61% 1% 2% 35%

Fleet 14% 529 68% 2% 7% 22%
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Car and Truck Fleet Information for Technology Path B for MY 2025

Table 6.5-6 presents vehicle segment level results for Technology Pathway B showing 

the CO2e target level by car-truck fleet, the MPG-equivalent level by car-truck fleet, and the 

average per-vehicle cost increase by car-truck fleet for the four scenario stringency levels. 

Table 6.5-7 presents the corresponding car-truck fleet technology penetration rates and mass 

reductions for model year 2025 under the Technology Pathway B. 

As can be seen in Table 6.5-7, mass reduction is very cost effective across all vehicle 

categories, and under all stringency scenarios is at or near the maximum 20% we modeled 

under Pathway B. The penetration of HEV technology is generally more focused in the truckfleet, and increases overall as the level of stringency increases. In general, when compared to 

Pathway A, the penetration of HEVs in Pathway B is lower.

EVs first penetrate the new vehicle fleet in the 5% per year stringency scenario, 

though at a low rate of 1% for the fleet. This increases to approximately 7% of the fleet under 

the 6% per year scenario, with most of these concentrated in the passenger car vehicles. 

PHEV vehicles are only seen in the 6% per year scenario, and represent 2% of the vehicle 

fleet for Pathway B.
Chapter 6

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Table 6.5-6: Technology Path B Assessment Projections for Model Year 2025:

CO2, MPG, and Per-Vehicle Costs for Car and Truck Fleets

Scenario Vehicle Type CO2e Level 

(g/mile) MPGe Level

Per-Vehicle 

Cost Increase ($)

3% All Cars 170 52.4 $753

All Trucks 233 38.2 $1,047

Fleet 190 46.7 $849

4% All Cars 160 55.7 $1,070

All Trucks 202 44.1 $2,465

Fleet 173 51.3 $1,522

5% All Cars 146 61.0 $1,748

All Trucks 183 48.6 $3,335

Fleet 158 56.3 $2,263

6% All Cars 130 68.5 $2,698

All Trucks 171 52.0 $4,327

Fleet 143 62.1 $3,227

*note, the CO2e value includes 15 grams/mile of CO2-equivalent reduction from air conditioning 

related GHGs (CO2 and HFC reductions), and the MPGe level is equivalent MPG value if all CO2 

reductions come from fuel economy improvements. Real-world CO2 is typically 25 percent higher and 

real-world fuel economy is typically 20 percent lower.

Table 6.5-7: Technology Path B, Assessment Projections for Model Year 2025:

New Fleet Technology Penetration for Car and Truck Fleets

Scenario

Vehicle 

Type

Net Mass 

Reduction 

(%)

Net Mass 

Reduction 

(lbs) HEV (%) PHEV (%) EV (%)

Adv. SI

(%)

3%/year

All Cars 17% 572 4% 0% 0% 46%

All Trucks 19% 848 2% 0% 0% 66%

Fleet 18% 658 3% 0% 0% 52%

4%/year

All Cars 20% 655 5% 0% 0% 72%

All Trucks 20% 897 45% 0% 0% 45%

Fleet 20% 733 18% 0% 0% 63%

5%/year

All Cars 20% 654 30% 0% 1% 62%

All Trucks 20% 897 72% 0% 0% 21%

Fleet 20% 733 43% 0% 1% 49%

6%/year

All Cars 19% 630 27% 2% 9% 60%

All Trucks 20% 887 88% 1% 2% 9%

Fleet 19% 712 47% 2% 7% 44%
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Car and Truck Fleet Information for Technology Path C for MY 2025

Table 6.5-8 presents car-fleet and truck-fleet level results for Technology Pathway C, 

specifically the CO2e target levels, the MPG-equivalent target levels, and the average pervehicle cost increase for the four scenario stringency levels. Table 6.5-9 presents the 

corresponding car-fleet and truck-fleet technology penetration rates and mass reductions for 

model year 2025 under the Technology Pathway C. The results show that as with Pathways A 

and B, the car fleet, which start off at a lower average CO2 level, also has a lower CO2 levels 

under the four stringency scenarios as compared to the truck fleet. The per-vehicle cost 

increase difference between the car-fleet and truck-fleet is on the order of $300 to $350 for 

the 3% and 4% per year scenarios, but increases to approximately $2,000 for the 5% per year 

scenario and $1,600 for the 6% per year scenario. 

As can be seen in Table 6.5-9, mass reduction is very cost effective across both the car 

and truck fleets, and is on the order of 18% for the 3% per year scenario, and between 25 and 

27% for the high stringency scenarios. The penetration of HEV technology is similar between 

the car and truck fleets for the 3% and 4% scenarios, but in the 5% and 6% per year scenarios 

is more weighted towards the truck-fleet. Technology Path C has the overall highest use of 

the advanced gasoline technologies, and as can be seen the mix between the car fleet and the 

truck fleet is very dependent upon the level of stringency, with higher levels under the 3% , 

5% and 6% per year scenario in the car-fleet, but similar levels between cars and trucks in the 

4% per year scenario.

EVs penetrate the new vehicle fleet only in the 6% per year stringency scenario for 

Pathway C, and overall are concentrated in the passenger cars fleet, representing 5% of all 

passenger cars, and only 1% of all light-duty trucks. PHEV technology is not required in this 

assessment under Technology Pathway C.
Chapter 6

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Table 6.5-8: Technology Path C Assessment Projections for Model Year 2025:

CO2, MPG, and Per-Vehicle Costs for Car and Truck Fleets

Scenario Vehicle Type

CO2e Level 

(g/mile) MPGe Level

Per-Vehicle 

Cost Increase ($)

3%

All Cars 169 52.6 $674

All Trucks 233 38.1 $980

Fleet 190 46.8 $773

4%

All Cars 154 57.9 $1,255

All Trucks 213 41.8 $1,604

Fleet 173 51.4 $1,368

5%

All Cars 148 60.1 $1,420

All Trucks 178 49.9 $3,412

Fleet 158 56.3 $2,066

6%

All Cars 130 68.3 $2,316

All Trucks 170 52.4 $3,909

Fleet 143 62.2 $2,833

*note, the CO2e value includes 15 grams/mile of CO2-equivalent reduction from air conditioning 

related GHGs (CO2 and HFC reductions), and the MPGe level is equivalent MPG value if all CO2 

reductions come from fuel economy improvements. Real-world CO2 is typically 25 percent higher and 

real-world fuel economy is typically 20 percent lower.

Table 6.5-9: Technology Path C Assessment Projections for Model Year 2025:

New Fleet Technology Penetration for Car and Truck Fleets

Scenario Vehicle Type

Net Mass 

Reduction 

(%)

Net Mass 

Reduction 

(lbs)

HEV 

(%)

PHEV 

(%)

EV 

(%)

Adv. SI

(%)

3%/year

All Cars 17% 569 4% 0% 0% 32%

All Trucks 19% 839 2% 0% 0% 76%

Fleet 18% 653 3% 0% 0% 46%

4%/year

All Cars 25% 809 4% 0% 0% 96%

All Trucks 25% 1,122 2% 0% 0% 98%

Fleet 25% 909 3% 0% 0% 97%

5%/year

All Cars 25% 818 8% 0% 0% 91%

All Trucks 25% 1,143 60% 0% 0% 39%

Fleet 25% 922 25% 0% 0% 74%

6%/year

All Cars 27% 868 31% 0% 5% 65%

All Trucks 26% 1,180 71% 0% 1% 28%

Fleet 26% 970 44% 0% 4% 53%
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Car and Truck Fleet Information for Technology Path D for MY 2025

Table 6.5-10 presents car-fleet and truck-fleet level results for Technology Pathway D, 

specifically the CO2e target levels, the MPG-equivalent target levels, and the average pervehicle cost increase for the four scenario stringency levels. Table 6.5-10 presents the 

corresponding car-fleet and truck-fleet technology penetration rates and mass reductions for 

model year 2025 under the Technology Pathway D. The results show that as with the three 

other pathways, the car fleet, which starts off at a lower average CO2 level, also has a lower 

CO2 levels under the four stringency scenarios as compared to the truck fleet. The pervehicle cost increase difference between the car-fleet and truck-fleet is on the order of $500 to 

$1,000 depending on the stringency of the scenario, with the exception of the 3% per year 

scenario, where there is little cost difference between the car fleet and truck fleet. 

As can be seen in Table 6.5-10, mass reduction is very cost effective across both the 

car and truck fleets, though the level of mass reduction is no higher than the 15% we 

considered for this Pathway. The penetration of HEV technology is similar between the car 

and truck fleets in the 6% scenario, but in the 3%, 4%, and 5% scenarios are weighted more 

heavily towards the car fleet. Advanced gasoline engines were not allowed in this scenario, 

as we were trying to assess a hypothetical industry approach in which no advancements in 

gasoline powertrain systems are pursued beyond MY2016, and all of the industry resources 

are concentrated on HEV, PHEV, and EV technology.

Relative to the other Technology Pathways, Technology Pathway D features a higher 

penetration of EVs and HEVs. The relatively high penetration of HEVs in the 3% scenario is 

due to the complete lack of advanced gasoline engines (that is, no improvement in gasoline 

engines and transmissions beyond what will be used in MY 2015). More stringent scenarios 

require relatively higher penetrations of EVs and HEVs. The penetration of PHEV 

technology remains relatively low, appearing only in the 6% scenario.
Chapter 6

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Table 6.5-10: Technology Path D Assessment Projections for Model Year 2025:

CO2, MPG, and Per-Vehicle Costs for Car and Truck Fleets

Scenario Vehicle Type

CO2e Level 

(g/mile) MPGe Level

Per-Vehicle 

Cost Increase ($)

3%

All Cars 166 53.4 $1,026 

All Trucks 238 37.4 $1,096 

Fleet 190 46.9 $1,049 

4%

All Cars 143 62.2 $2,215 

All Trucks 235 37.8 $1,203 

Fleet 173 51.4 $1,887 

5%

All Cars 127 69.8 $2,940 

All Trucks 222 40.0 $1,917 

Fleet 158 56.2 $2,608 

6%

All Cars 115 77.4 $3,555 

All Trucks 201 44.2 $3,061 

Fleet 143 62.3 $3,395 

*note, the CO2e value includes 15 grams/mile of CO2-equivalent reduction from air conditioning 

related GHGs (CO2 and HFC reductions), and the MPGe level is equivalent MPG value if all CO2 

reductions come from fuel economy improvements. Real-world CO2 is typically 25 percent higher and 

real-world fuel economy is typically 20 percent lower.

Table 6.5-11: Technology Path D Assessment Projections for Model Year 2025:

New Fleet Technology Penetration for Car and Truck Fleets

Scenario Vehicle Type Net Mass 

Reduction 

(%)

Net Mass 

Reduction 

(lbs)

HEV 

(%)

PHEV 

(%)

EV 

(%)

Adv. SI

(%)

3%/year All Cars 15% 491 30% 0% 1% 0%

All Trucks 15% 673 14% 0% 0% 0%

Fleet 15% 550 25% 0% 0% 0%

4%/year All Cars 15% 489 54% 0% 6% 0%

All Trucks 15% 673 13% 0% 1% 0%

Fleet 15% 549 41% 0% 4% 0%

5%/year All Cars 15% 482 59% 0% 13% 0%

All Trucks 15% 669 29% 0% 3% 0%

Fleet 15% 542 49% 0% 10% 0%

6%/year All Cars 14% 467 55% 2% 19% 0%

All Trucks 15% 657 57% 2% 4% 0%

Fleet 14% 528 55% 2% 14% 0%
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MY 2020 Results

We present here the fleet-wide results for our MY2020 assessment. The cost of the 

MY 2020 scenarios for the entire new vehicle fleet ranges from $289 (3%) to $1,057 (6%, 

Path A) per vehicle, as shown in Table 6.5-12. Technology pathway C, which relies upon 

advanced gasoline technology and greater mass reduction as compared to Pathway A and B, 

demonstrates the lowest costs. Pathways A and B show greater penetration of HEVs and 

somewhat higher costs. 

The GHG reduction over the lifetime of the MY 2020 vehicles ranges from 172 

million metric tons (MMT) CO2e avoided in the 3% scenario to between 306 MMT CO2e in 

the 6% scenario. MY 2020 vehicles, over the course of their lifetimes, will reduce between 

0.4 billion barrels of gasoline consumption under the 3% scenario to 0.6 billion barrels under 

the 6% scenario. For reference, the NHTSA & EPA National Program in MY 2016 is 

projected to reduce 0.6 billion barrels of fuel and 325 MMT CO2e over the lifetime of MY 

2016 vehicles.

Table 6.5-12: Assessment Projections for Model Year 2020 Vehicles by Technology Path

New Fleet Target

Per-Vehicle Cost increase

($)

Lifetime

CO2e Reduction 

(MMT)

Lifetime

Gasoline Reduction 

(Billion Barrels)

Scenario CO2 MPGe* Path A Path B Path C Path A Path 

B

Path 

C

Path A Path 

B

Path 

C

3%/year 221 40.2 $289 $289 $289 172 172 172 0.4 0.4 0.4

4%/year 212 41.9 $399 $399 $399 215 215 215 0.5 0.5 0.5

5%/year 204 43.6 $577 $583 $565 262 262 262 0.5 0.5 0.5

6%/year 195 45.5 $1,057 $1,035 $865 306 306 306 0.6 0.6 0.6

Note – these costs, CO2 reductions, and fuel savings are relative to the 2016 EPA GHG standards

* MPGe is the MPG equivalent to the CO2 target if all CO2 reductions occur from fuel economy improvement 

technologies. Real-world CO2 is typically 25 percent higher and real-world fuel economy is typically 20 percent 

lower. Thus, the 3% to 6% range evaluated in this assessment would span a range of real world fuel economy 

values of approximately 32 to 36 mpg, which correspond to the regulatory test procedure values of 40.2 and 45.5 

mpg, respectively. For the technical assessment, we have estimated a reduction of 15 g/mile CO2 equivalent 

from air conditioning system improvements, which would not actually translate into MPG improvements

The penetration of HEVs, EVs, and PHEV in MY 2020 varies little depending on the 

technology pathway and scenario, as can be seen in Table 6.5-13. 

Pathway C places greater emphasis on mass reduction and advanced gasoline vehicle 

technology. Therefore, the degree of mass reduction is also the highest among the four 

pathways, ranging from 11% to 18%.

Pathway B shows a technology approach in between Paths A and C, with advanced 

gasoline technology and mass reductions higher than for Path A but lower than Path C, and 

HEV penetrations lower than Path A but higher than Path C. This trend is not as strong in the 

MY 2020 results because the level of stringency does not require enough advanced 

technology to show much of a difference between Pathways B and C under most stringencies.
Chapter 6

6-26

Table 6.5-13: Assessment Projections for Model Year 2020 Vehicles

New Fleet Technology Penetration Estimates

Scenario

Technology 

Path

New Vehicle Fleet Technology Penetration

Gasoline & diesel 

vehicles HEV PHEV BEV

Net Mass 

ReductionJJJ

3%/year

Path A 97% 3% 0% 0% 11%

Path B 97% 3% 0% 0% 11%

Path C 97% 3% 0% 0% 11%

4%/year

Path A 97% 3% 0% 0% 14%

Path B 97% 3% 0% 0% 14%

Path C 97% 3% 0% 0% 14%

5%/year

Path A 97% 3% 0% 0% 15%

Path B 97% 3% 0% 0% 15%

Path C 97% 3% 0% 0% 15%

6%/year

Path A 85% 15% 0% 0% 15%

Path B 87% 13% 0% 0% 15%

Path C 97% 3% 0% 0% 18%

Table 6.5-14 present estimates of payback period and net lifetime savings for MY 

2020 vehicles. Payback period is the number of years it takes the cost increase of the vehicle 

to be off-set by the vehicle‘s fuel savings. As discussed in Chapter 6.4, we used AEO 2010 

reference case for fuel prices, including fuel taxes, and we discounted the fuel savings using a 

3 percent discount rate. The net lifetime savings is the total lifetime fuel savings for the 

vehicle discounted at 3 percent minus the initial vehicle cost increase. As can be seen in 

Table 6.5-14, all MY 2020 scenarios, regardless of technology pathway, have a positive net 

lifetime fuel savings between approximately $2,600 and $4,300, and for MY 2020 all of the 

scenarios and technology pathways pay back in 2.2 years or less.

Table 6.5-14: Estimated Consumer Payback and Lifetime Savings

For Model Year 2020 Vehicles (3% Discount Rate)

Payback (years) Net Lifetime Savings ($s)

Scenario Path A Path B Path C Path A Path B Path C

3%/year 1.0 1.0 1.0 $2,632 $2,632 $2,632 

4%/year 1.1 1.1 1.1 $3,249 $3,249 $3,249 

5%/year 1.4 1.4 1.3 $3,854 $3,792 $3,823 

6%/year 2.2 2.2 1.8 $4,082 $4,105 $4,281 

Note – these estimates are relative to vehicles which comply with the 2016 EPA GHG 

standards

 

JJJ Please note that we show net mass reduction relative to model year 2008 vehicles. In the case of PHEVs and 

EVs, the batteries increase the weight of the vehicle. This battery weight increase is combined with the mass 

reduction technology to calculate net mass reduction for those vehicles.
2017-2025 Technical Assessment

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6.6 PHEV and EV Battery Cost Sensitivity Assessment 

The agencies judged that there is uncertainty in the cost for EV and PHEV largeformat lithium-ion batteries in the 2025 time frame. As discussed in Chapter 3, the 

development of these batteries for automotive applications is occurring at a very rapid rate 

and the market is far from mature, thus our ability to accurately predict the costs for these 

technologies for the 2025 time frame is difficult. The cost of the battery pack is the single 

largest incremental cost difference between a gasoline vehicle and either a PHEV or an EV. 

Depending upon the vehicle range (and thus the size of the battery) and the time frame (e.g., 

today or the 2025 time frame), the battery pack cost can represent on the order of 60 to 80% 

or more of the incremental cost of a PHEV/EV. Given the uncertainty in the costs of lithiumion batteries in the 2025 time frame, and the significant portion of the PHEV and EV 

incremental costs the battery represents, the agencies believe it is appropriate to include a 

sensitivity analysis on battery pack costs.

As discussed in Chapter 3, the agencies used a battery costing model developed by 

Argonne National Laboratory (ANL) which provides unique battery pack cost estimates for 

EV and PHEVs based on various variables such as production volume, battery cell chemistry 

material, battery capacity and power, useable fraction of the state-of-charge range, etc. There 

are also many economic projections used in the ANL model, such as cost of capital 

equipment, plant area, labor cost, etc. Based on 500,000 units per year production volume, 

and using an assumption there will be incremental improvements in battery cycle life such 

that the battery performance is maintained for the useful life of the vehicle, EPA derived a 

battery pack cost projection for 2025 EVs of approximately $160/kW-h for EV75, $150/kW-h 

for EV100, $140/kW-h for EV150, and of 2025 PHEVs of $180/kW-h for 40-mile PHEVs 

and $250/kW-h for 20-mile PHEVs assuming the use of LiMn2O4-spinel/graphite cell 

chemistry. We note that this cost is lower than the cost estimates projections obtained from 

our meetings with the OEMs, where the majority of the estimates were in the $300 to 

$400/kW-h range for 2020 and $250 to $300/kW-h range for 2025.

Because of uncertainty in future battery costs, the agencies conducted a sensitivity 

assessment on the battery costs for 2025 by increasing all of the PHEV and EV battery-pack 

costs by $100/kW-hr. We also examined the potential impact of lower battery costs by 

reducing all of the PHEV and EV battery-pack costs by $50/kW-hr. The $100/kW-hr higher 

cost is comparable to commodity pricing for high-volume LiCoO2 cells for consumer 

applications. The $50/kW-hr lower cost assumes a breakthrough in battery design that would 

approximately triple cell energy density.

We selected the 5% per year and 6% per year targets under technology Pathway B for 

2025 as the scenario on which to assess the potential impact of these changes in Li-ion battery 

costs. The results show that for the higher battery cost estimates, the projected 2025 Pathway 

B costs for the 5% per year targets would increase by $36 per vehicle and for the 6% per year 

targets would increase by $397 per vehicle. For the lower battery cost estimates, the projected 

2025 Pathway B costs for the 5% per year targets would decrease by $18 per vehicle and for 

the 6% per year targets would decrease by $199 per vehicle. This impact on the fleet-wide 

average cost assessment is relatively modest because PHEVs and EVs represent on the order 

of 1% of the new vehicles under the Pathway B 5% per year scenario, and 9% under the 
Chapter 6

6-28

Pathway B 6% per year scenario. However, the impact on actual PHEVs and EVs can be 

large. For example, for a midsize EV passenger car with a real-world range of 100 miles (an 

EV100), the sensitivity analysis done by adding $100/kW-hr to the battery pack costs 

increased the cost of the midsize car EV100 on the order of $5,700, and the impact of 

lowering the EV100 battery pack costs by $50/kW-hr reduced the costs of the midsize car 

EV100 by $2,800.
2017-2025 Technical Assessment

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Chapter 6 References

92 Documented in Appendix A to this report.

93 See Appendix D to this report.

94

 Energy Information Administration, Annual Energy Outlook 2010, Reference Case (May 2010 2009), Table 

12. Available at http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html

95 EPA. 2006, Final Technical Support Document. Fuel Economy Labeling of Motor Vehicle Revisions to 

Improve Calculation of Fuel Economy Estimates. EPA-HQ-OAR-2009-0472-0281

96 Energy Information Administration, Annual Energy Outlook 2010, Reference Case (May 2010 2009), Table 

12. Available at http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html

97 EPA. Final Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate 

Average Fuel Economy Standards. Joint Technical Support Document. Chapter 4. EPA-420-R-10-901 

http://www.epa.gov/otaq/climate/regulations/420r10901.pdf. Additional details on the projections used here can 

be found in Appendix E of this report.

98 Sorrell, S. and J. Dimitropoulos, 2007. ―UKERC Review of Evidence for the Rebound Effect, Technical 

Report 2: Econometric Studies‖, UKERC/WP/TPA/2007/010, UK Energy Research Centre, London, October 

and Greening, L.A., D.L. Greene and C. Difiglio, 2000. ―Energy Efficiency and Consumption – The Rebound 

Effect – A Survey‖, Energy Policy, vol. 28, pp. 389-401.

99 EPA. Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy 

Standards; Final Rule Regulatory Impact Analysis Chapter 5.

100 EPA. Analysis of H.R. 2454 in the 111th Congress. 

http://www.epa.gov/climatechange/economics/economicanalyses.html

101 EPA. Final Rulemaking to Establish Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate 

Average Fuel Economy Standards. Joint Technical Support Document. Chapter 4. EPA-420-R-10-901. 

http://www.epa.gov/otaq/climate/regulations/420r10901.pdf. Original data found in Intergovernmental Panel on 

Climate Change. Chapter 2. Changes in Atmospheric Constituents and in Radiative Forcing. September 2007. 

http://www.ipcc.ch/pdf/assessmentreport/ar4/wg1/ar4-wg1-chapter2.pdf. Docket ID: EPA-HQ-OAR-2009-0472-

0117

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7 Other Key Factors

7.1 Potential Impacts on the Economy and Employment

The primary impacts of the use of advanced vehicle technologies on the economy are 

the net benefits that they produce. Positive net benefits result in improvements in economic 

welfare in the aggregate. Measures of net benefits, though, are not necessarily correlated with 

the effects of technologies on employment or on the auto manufacturing base in the U.S. This 

report does not provide a quantitative assessment of these effects. Instead, this section 

discusses the potential impacts of advanced technologies on the auto industry in general and 

employment in the auto sector. 

7.1.1 Impacts on Auto Manufacturers, Suppliers, and Auto Industry Employment

The automotive market is becoming increasingly global. The U.S. auto companies 

produce and sell automobiles around the world, and foreign auto companies produce and sell 

in the U.S. As a result, the industry has become increasingly competitive. Staying at the 

cutting edge of automotive technology while maintaining profitability and consumer 

acceptance has become increasingly important for the sustainability of auto companies. 

Trends in the world automotive market suggest that investments in improved fuel 

economy and advanced technology vehicles are a necessary component for maintaining

competitiveness in coming years. For instance, most companies are expanding hybrid-electric 

vehicle production to stay competitive while meeting more stringent fuel economy and 

emissions regulations. Fuel economy requirements in other developed countries are generally 

higher, and greenhouse gas (GHG) emissions standards tighter, than in the U.S. As 

automakers seek greater commonality across the vehicles they produce for the domestic and 

foreign markets, improving fuel economy and reducing GHGs in U.S. vehicles should have 

spillovers to foreign production, and vice versa, thus yielding the ability to amortize 

investment in research and production over a broader product and geographic spectrum. 

Auto companies are already conducting major research and investment activities in 

advanced technologies and improvements to conventional technologies to improve fuel 

economy and reduce GHG emissions. In addition, as discussed in Chapter 2, in recent 

meetings with auto firms, all expressed plans to increase significantly their offerings and sales 

of advanced technology vehicles in coming years. Successful research and investment 

activities can contribute to long-term gains in many directions. Companies that develop new 

technologies not only get the advantages of using them, but also the opportunity to license 

those technologies to other companies. Those technologies may have spinoffs into other 

sectors. For instance, research into new battery technologies may lead to improvements in 

other battery-intensive uses, such as storage of wind or solar energy when the quantity of 

electricity demanded is lower than the amount produced. 

The effects of the use of advanced technologies on U.S. auto sector employment 

depend on how the standards affect several factors: the number of vehicles produced 

(discussed below), the labor intensity of vehicle production, and any changes in market shares 

between domestically produced and imported vehicles and auto parts. 
Chapter 7

7-2

Productivity in the auto industry has been increasing over time, as automakers have 

improved process efficiency and enhanced vehicle quality.102 Improved productivity has the 

great benefit of providing better vehicles at lower prices to consumers; it also means fewer 

worker-hours needed per dollar of vehicle value. Higher productivity leads to more efficient 

vehicle manufacturing, which could result in less expensive and/or improved quality vehicles. 

Either outcome would likely give consumers greater purchasing power, and thus lead to 

higher vehicle sales. Even though higher productivity implies that worker-hours per vehicle 

may go down, increased vehicle sales may lead overall employment in the auto industry to 

increase, as it did in the 1990s (a time of both high productivity increases and employment 

increases). At this time it is not possible to predict the effect of production involving 

advanced vehicle technologies on labor needs. It is possible that the smaller-volume 

production likely in the early years for advanced technology vehicles may be more laborintensive than mass production, if scale economies of production are not exhausted. 

Another variable affecting auto sector employment is where production takes place. 

The location of production will depend on how domestic production costs, especially for 

advanced technologies, compare to foreign production costs, and on the cost of transporting 

vehicles and parts between the U.S. and other countries. Investments in advanced technology 

production facilities, such as battery manufacturing and vehicle electrification projects, 

supported by the Recovery Act (for example) reduce the need for importing these parts from 

overseas.

103

 These investments by the Department of Energy have created immediate jobs in 

building this capacity, and they also help ensure that these components can be produced in the 

U.S. Tax breaks and other manufacturing incentives provided by a number of local and state 

governments for advanced vehicle technologies, such as in Michigan, have also contributed 

incentives for domestic production. 

7.1.2 Impacts on Vehicle Sales

The effect of advanced technologies on vehicle sales depends on the attractiveness to 

consumers of the new technologies and improved fuel economy relative to the increased 

vehicle price. In the light-duty greenhouse gas/fuel economy rule covering 2012-2016, the 

very large fuel savings were estimated to recover the up-front technology costs in under three 

years. If consumers considered at least three years‘ worth of fuel savings when purchasing a 

vehicle, then that rule was predicted to increase vehicle sales.104 The use of advanced 

technologies can be expected, as in that rule, to improve fuel economy and increase vehicle 

costs. Chapter 6 of this report shows that more stringent standards will provide fuel savings 

that exceed vehicle cost increases in four years or less. The weights that consumers put on 

these two factors will affect total vehicle sales.105 

7.1.3 Summary

With increased globalization of auto markets, increased competitiveness in the 

industry, and higher fuel economy/lower GHG standards becoming the norm around the 

world, auto companies have already begun to invest in new technologies that will meet future 

standards. These new technologies will increase the purchase prices of new vehicles, at the 

same time that they reduce their fuel costs; the net effect on auto sales depends on how 

consumers trade off those attributes. The net effect on employment will be affected not only 
2017-2025 Technical Assessment

7-3

by the effects of the proposed standards on auto sales, but also on the effects on productivity 

and location of production. These investments will help the U.S. auto sector to stay on the 

cutting edge of auto technology.

For the forthcoming notice of proposed rulemaking for 2017-2025 GHG and CAFE 

standards, EPA and NHTSA will further investigate the impacts of the proposed standards on 

the auto industry, employment. Further analysis requires information on the effects of the 

proposed standards on vehicle sales, on expected expenditures in the auto sector, and on any 

predictions of changes in location of manufacturing due to the specific standards in the 

forthcoming proposal.

7.2 Upstream GHG Emissions

In the assessment of potential future ranges of stringency presented in Chapter 6 of 

this report, we based our analysis on the tailpipe emissions from all vehicles – thus EVs were 

evaluated at a 0 gram/mile CO2 level and PHEVs were evaluated as 0 gram/mile for the 

electric drive portion of the vehicles operation. For the purposes of the GHG impacts 

presented in Chapter 6, we have included the resultant increase in upstream CO2 from the use 

of PHEVs and EVs in our overall calculation of the net CO2 reductions for each of the 

scenarios evaluated. As discussed in Chapter 6, the upstream CO2 emission factors from 

powerplants is based on a future business as usual case, 

The issue of upstream emissions will be considered in the MY 2017-2025 light-duty 

vehicle joint federal rulemaking. EPA has not considered upstream fuel-related emissions 

issues in the past with respect to the non-GHG emissions standards for motor vehicles. 

As discussed in Chapter 2, many stakeholders have expressed opinions on this topic, 

with most automakers supporting the tailpipe only or zero grams per mile approach and 

environmental groups typically supporting a net upstream GHG emissions accounting.

EPA will be fully evaluating this issue for the MY 2017-2025 light-duty vehicle GHG 

emissions proposal based on the status of commercialization of EVs, PHEVs, and FCVs, the 

potential of these technologies to provide long-term GHG emissions savings, the status of and 

outlook for upstream GHG control programs, and other relevant factors.
Chapter 7

7-4

Chapter 7 References

102 Baily, Martin N., et al., ―Increasing Global Competition and Labor Productivity: Lessons from the US 

Automotive Industry,‖ McKinsey Global Institute, November 2005, 

http://www.mckinsey.com/mgi/publications/us_autoindustry/index.asp , accessed 8/17/10.

103 ―Recovery Act Awards for Electric Drive Vehicle Battery and Component Manufacturing Initiative‖ and 

―Recovery Act Awards for Transportation Electrification,‖ 

http://www1.eere.energy.gov/recovery/pdfs/battery_awardee_list.pdf

104 This result led to questions why private market interactions between auto producers and consumers had not 

led to incorporation of these technologies into vehicles in the absence of the rule. This issue was discussed in the 

Preamble for that rule, Federal Register 75(88) (Friday, May 7, 2010), in Section III.H.1, pp. 25510-25513, and 

IV.G.6, pp. 25651-25657.

105 Though a number of studies have included examination of the role of fuel economy in consumers‘ purchases, 

the results appear to be highly varied. See Greene, David L., ―How Consumers Value Fuel Economy: A 

Literature Review,‖ Report EPA-420-R-10-008, Office of Transportation and Air Quality, U.S. Environmental 

Protection Agency, March 2010. EPA-HQ-OAR-2009-0472-11465.