Chart of the Month: June 2005

While posting last month's chart, I noted that

... much of the technology improvements in the past 25 years have been used up in improving vehicle performance rather than fuel economy.

The chart(s) for this month indicate where the improvment in efficiency has gone if it has not improved the fuel economy. You will often hear me say that Americans have been driving bigger, heavier and faster vehicles. So the charts that follow show how each one of these has increased over the last 25 years.
This first chart below shows normalized values of passenger car fuel economy and performance. The performance is measured as a multiplication of vehicle interior volume in cubic feet, inertia weight in tons and miles per gallon. The figure shows that while performance as measured here has increased by ~34%, the fuel economy has increased by only 14%.


Click on the chart for a larger image.



The second figure (courtsey of EPA) shows light-duty vehicle weight and accelartion between 1976 and 2004. Click on the chart for a larger image.
As you can see from the figure, vehicle accelation held steady and vehicle weight dropped during 1976-1985 period when CAFE standards went in to effect. After 1985, however, vehicle weight has increased steadily, and accelaration performance has improved as shown in reduction in 0-60 accelartion time.

How much exactly have the improvements in performance hurt the fuel economy? According to EPA estimates,

...had the new 2003 light vehicle fleet had the same average performance and same distribution of weight as in 1981, it could have achieved about 33 percent higher fuel economy.

Thus, it is important to remember that fuel economy of today's vehicles is low at least in part because consumers (you and me) have demanded bigger, heavier, and faster vehicles. If we want to see better fuel economy, we may have to give up any further increase in performance, or even thinking about downsizing and/or downweighting our vehicles.

P.S.: Chart of the Month Archive is available on the right hand column.

I come back from my trip to this?

This is from last week's Automotive News

Ford Motor expected industrywide SUV sales to slide. But the depth of this year's decline is jarring. Ford Motor executives blame gasoline prices that soared to $2.30 a gallon this spring.

'With gas at $1.80 per gallon, like it was a little over a year ago, we'd have a very different picture here at Ford,' says Steve Lyons, Ford Motor group vice president of marketing, sales and service. 'Our share would be up, and we'd have quite a different financial picture as well.'

The plunge in SUV sales is one of several head winds blowing the comeback off course. CEO Bill Ford calls it a 'perfect storm of external factors.' With sinking retail share, spiking commodity costs and ever-fiercer price competition...

"Perfect storm of EXTERNAL FACTORS"! Does that mean that considerations for an increase in steel prices, stronger competition, or increasing gasoline prices are not an endogeneous part of Ford's decision making process? I thought that managers learned something called as scenario analysis from experience of Shell during the oil embargo more than thirty years ago, and planned accordingly. Should I be outraged, or should I laugh at my naiveness?

On Travel

Initial reports of summer travel season indicate that Americans have been unfazed by high gasoline prices. This should confirm that gas prices remain a small component of overall travel budget, and that even at $2.20 a gallon, there is unlikely to be a significant change in driving habits.

On another note, I will be travelling until the 24th of June. So, unless something comes up, I am unlikely to make any posts here until then.

"Fool Efficiency"

All of a sudden, there seem to be quite a lot of articles about how Hybrid cars are not getting the miles per gallon they promised, and how EPA's test cycles can be gamed. This is not really a news to anybody who is seriously looking at the issue. The main points here are:
* EPA's test cycle does not mimic the on-road conditions all that well. As a result the actual fuel economy values for standards ICE gasoline vehicles are about 15% lower than EPA test values.
* The difference may be more for some hybrid vehicles. This is further compunded by the fact that many hybrid owners may be realizing that the benefits of a hybrid powertrain are much lower in highway driving mode than in city mode.
* Finally, even with gas prices at $2.20 a gallon, the price premium for hybrid vehicles today will not justify purchase of a hybrid vehicle on as a rational choice. Many who are buying hybrids today, I feel, are buying because they are the so called early adoptors who want to do their share in reducing fuel consumption.
Having said that, I remain bullish on hybrid vehicles. More on that later.

While I was Away...

...not much has changed! This sometime leads me to think about futility of maintaining a blog about this topic, because change seems so slow and hard. For example, take this discussion about fuel economy standards and vehicle safety. Same point repeated over and over for past many years.

Over these past few weeks, crude oil dipped below $50 a barrel for a few days before making a new run in the last few days. There have been some calls which claim that the next upward target will breach the $60 a barrel mark, but it won't be easy. Meanwhile, proceedings of a UK conference on peak oil from April were released. There were a few interesting presentations. Check them out.

GM continue to think that the way to get out their current soft patch is to offer more streamlined incentives.

As hybrid sales are zooming there have also been some complaints about Prius stalling on highways. Check GCC for more. Honda continues to demonstrate its FCX in different conditions, which I think is a very good startegy.

Finally, there was a piece in the Wall Street Journal a couple of weeks ago talking about the proposed changes in the CAFE standards. We can expect NHTSA to come out with an ANPRM on proposed revisions to the light-truck CAFE rules any time this summer. With gasoline prices projected to stay around $2.20 a gallon for next several months, there will definitely be some attention paid to these revisions. Although, as I said above, we can expect little or no action amidst all the noise.