. OTA’s relatively low incremental prices for advanced conventional vehicles rest partly on our
assumption that the advanced technologies are competing with baseline technologies that are new models
with newly designed assembly lines; the baseline vehicles are not simply continued production of an
existing technology whose investment costs may have been filly amortized.
. OTA’s relatively high prices for hybrid, fuel cell, and electric vehicles reflect in part OTA’s assumption
that these vehicles are competitive in performance with the baseline, conventional vehicles; other
estimates often reflect lesser performing vehicles, which our analysis concludes would be considerably
less expensive.
. Another source of price differences is OTA’s assumption that vehicle prices must
costs and manufacturer/dealer profits beyond the manufacturing costs for vehicle
price estimates do not reflect these additional costs.
reflect an array of
components. SomeCONCLUSIONS ABOUT TECHNOLOGY COST AND PERFORMANCE
OTA’s evaluation yields results that can be interpreted in either an optimistic or pessimistic
manner. On the one hand, we conclude that reasonable success in technology development can
yield vehicles with superior fuel economy—at least twice that of today’s vehicles, and quite
possibly even higher. Further, there is a good chance that the vehicles can avoid extreme
performance tradeoffs and will be acceptable to most consumers in this regard. On the other hand,
we believe that bringing technology costs down to the point where advanced vehicles can
compete in price with conventional vehicles is a significantly more difficult challenge. Although
we readily admit that projecting the future costs of new technologies is a highly uncertain
business, we conclude that most of the advanced vehicles discussed here will likely cost the
purchaser at least a few thousand dollars more than comparable conventional vehicles.
Higher vehicle prices could be a major stumbling block to commercializing advanced vehicles,
even in exchange for improved fuel economy and lower emissions. In today’s vehicle market, fuel
economy is far less valued than comfort, safety, and performance, and reduced emissions will
likely have little value to vehicle purchasers. Also, vehicle purchasers generally weigh purchase
price far more heavily than fuel costs and, in fact, fuel savings are unlikely to pay for the efficiency
improvements unless gasoline prices rise sharply. Consequently, without government intervention,
the real market for these vehicles may be in Europe, Japan, and other areas where gasoline prices
approach $3 or $4 a gallon, and yearly gasoline costs for a 30 mpg vehicle may be $1,000 or
more.^70 It is worth noting, however, that these high prices have thus far stimulated only a modest
differential in automobile fuel economy between the United States and the high-gasoline-price
nations.
Alternatively, this price increment eventually may be reduced as greater experience is gained
with the technologies or if breakthroughs occur in manufacturing methods or technology designs.
Further, consumers have implicitly accepted price increases of this magnitude before-industry
estimates of the price impact of current emission controls exceed $1,000 a vehicle, yet purchasers
(^70) Assuming 10,000 miles per year. European “per car” driving levels are below U.S. levels but are catching up.