## Thursday, July 06, 2006

### Car fuel economy - a few calculations

http://www.autonews24.de/artikel_410275_1.htm

http://www.auto-motor.at/Tipps-Tests-Autofahrer/Auto-Tests-Testberichte/Tests-Archiv/Autokosten-Vergleich-Benzin-Diesel.html

Based on these links I assume the following figures:

A 6.7 l/100 km petrol engine
B 4.8 l/100 km diesel engine additional cost of 2825 Euros
C 3.5 l/100 km diesel hybrid further addtional cost of 5000 Euros

Using 15000 km per year then gives annual fuel consumption of:

1005 l
720 l
525 l

And savings of
285 l (A-B)
195 l (B-C)
480 l (A-C)

Now assume 10 years worth of fuel consumption. This gives:

0.99 Euros per litre (A-B)
2.56 Euros per litre (B-C)
1.63 Euros per litre (A-C)

This compares to a current retail price of 1.35 Euros per litre and means the diesel option is viable, but the diesel hybrid is not.

It is also noteworthy that a price of 2 Euros per litre would not make the diesel hybrid viable, even though it only costs 1.63 Euros per litre compared to the petrol engine.

The simple diesel option already saves so much fuel that the additional expense of going hybrid then requires 2.56 Euros per litre.

Now look at a US example

12000 miles per year = 19200 km
20 mpg = 11.9 l/ 100 km

Fuel consumption per year 2280 l

On the same assumptions for fuel economy improvement and cost, we'll have to scale by 2280/1005. Because the fuel consumption is so much greater, the percentage savings are worth correspondingly more.

Fuel consumption per year

A 2280 l
B 1630 l
C 1190 l

Savings

650 l (A-B)
440 l (B-C)
1090 l (A-C)

Again assuming 10 years worth of fuel consumption:

0.44 Euros per litre (A-B)
1.13 Euros per litre (B-C)
0.72 Euros per litre (A-C)

Or in Dollars per gallon

2.1 Dollars per gallon (A-B)
5.4 Dollars per gallon (B-C)
3.4 Dollars per gallon (A-C)

This is not entirely realistic, as the lifetime of cars will go down, if they are driven harder. The factor between annual fuel saving and lifetime saving works out as follows (assuming 16 years average life, and annual saving being discounted by 7% per year):

1 100
2 93.45794393
3 87.34387283
4 81.62978769
5 76.2895212
6 71.29861795
7 66.63422238
8 62.27497419
9 58.20091046
10 54.39337426
11 50.83492921
12 47.50927964
13 44.40119592
14 41.49644479
15 38.7817241
16 36.24460196

1010.791401

But of course that'll change, if the lifetime goes down (not to mention that it also depends on the discount rate used).

Even so, the more fuel a car consumes the more can be spent on cutting down. With a car consuming 2000 litres per year, all else equal, it can cost twice as much to double fuel economy than for a car consuming 1000 litres per year.

What this means is that it's much cheaper per litre to save via fuel economy measures in the US than in Europe, where both annual miles and fuel consumption in l/100 km are much lower than in the US.

Diesels should be quite competitive in the US with current fuel prices, but emission regulations and public perception seem to major stumbling blocks. Hybrids achieve similar fuel savings at higher cost, but are more accepted in the US.

There is also another interesting point coming out of these calculations. Lifestyle changes (driving less in smaller cars, which is what Europeans do in response to higher fuel prices in addition to favouring diesels) actually make efficiency appear more expensive. Once people cut down on driving and do it in smaller cars, fuel consumption is already down and therefore the value of fuel saved through higher fuel economy isn't as great anymore.

So for a European doing 15,000 km per year in a 4.8 l/100 km diesel, prices would have to rise above 12 Dollars per gallon to justify going diesel hybrid (from current values above 6 Dollars per gallon) and this would only cut down their fuel consumption by 27%.

For an American doing 12000 miles in a 20 mpg car, paying 10000 Dollars to double fuel economy with a diesel hybrid would pay for itself at \$5.40 per gallon even when compared to just driving a diesel.

When expressed as a cost per tonne of carbon, this has huge consequences. At a gasoline price of \$5.40 per gallon, using a diesel hybrid would mean 0 Dollars per tonne carbon for the sample American driver, but of the order of a 1000 Dollars for the European one illustrated above.