U.S. Fuel Economy and Fuels Regulations and Outlook An Industry Perspective Mike Hartrick Fuels2018 May 23, 2018
Topics Market Perspective Regulatory Perspective What Could Changes in Fuel Economy Regulations Mean Parting Thoughts
Market Perspective
U.S. Powertrain Technology Production Share (2012 vs. 2017) 99.8 96 54.6 68.8 61.1 8.4 23.3 22.4 16.3 16.3 11.6 8.1 0.6 18.5 9.1 20.9 0.1 0 2.3 2.2 Turbo GDI VVT VVL Cyl. Deac. Stop Start >5 spd ATX Non HEV CVT Mild HEV Strong HEV 2012 2017 Source: Novation Analytics; 2017 based on mid year data
Fuel Efficiency Availability High Mileage Vehicles Plug In and Hydrogen Vehicles 30+ MPG (Highway) 40+ MPG (Highway) 50+ MPG (Highway) PHEV BEV FCV 394 42 6 32 21 2 MODELS MODELS MODELS MODELS MODELS MODELS Source: FuelEconomy.gov (May 18, 2018)
Fleet Average Fuel Economy Combined City / Highway Adjusted Fuel Economy 25.2 Miles per Gallon 13% 22.3 2011 2012 2013 2014 2015 2016 2017 Source: U.S. EPA 2017 Fuel Economy Trends Report
Regulatory Perspective
Three Agencies One National Program ARB Advanced Clean Cars U.S. EPA NHTSA One National Program GHG (GHG and Fuel Economy) GHG (GHG, Fuel Economy) CAFE (Fuel Economy, GHG) LEV III (Ozone, criteria Emissions) Tier 3 (Ozone, Criteria Emissions) ZEV (Ozone, GHG, Fuel Economy)
Future Light Duty Vehicle Greenhouse Gas Standards Equivalent Miles per Gallon 52 50 48 46 44 42 40 38 7% 2020 2021 Average 4% per year 2018 2025 51.4 36 34 36.0 Actual values will vary depending on future fleet mix 2018 2019 2020 2021 2022 2023 2024 2025 Source: Based on U.S. EPA 2015 2025_Production_Summary_and_Data_with_Definitions.xlsx Nov. 2016 (most recent available)
Recent Events in the U.S. 2010 Greenhouse gas and fuel economy requirements set for 2012 2016 (up to six years into future) 2012 Greenhouse gas and fuel economy requirements set for 2017 2025 (up to 13 years into future) CAFE standards for 2022 2025 not considered final until a new rulemaking scheduled for 2018 GHG standards subject to a midterm evaluation scheduled for 2018 2017 EPA concluded midterm evaluation over a year in advance of schedule under Obama administration NHTSA rulemaking not coordinated to EPA efforts Trump administration withdrew the midterm evaluation to continue data acquisition and assessment 2018 EPA concluded 2022 2025 standards are not appropriate and initiated rulemaking to coordinate with NHTSA fuel economy efforts Stakeholders and public will have an opportunity to comment on all regulations prior to finalization
Recent Events in the U.S. 2010 Greenhouse gas and fuel economy requirements set for 2012 2016 (up to six years into future) 2012 Greenhouse gas and fuel economy requirements set for 2017 2025 (up to 13 years into future) CAFE standards for 2022 2025 not considered final until a new rulemaking scheduled for 2018 GHG standards subject to a midterm evaluation scheduled for 2018 The process for setting standards for 2022 2025 has only just started Automakers have not even seen a draft of the rule 2017 All will have opportunity to comment on proposed rules EPA concludes midterm evaluation over a year in advance of schedule under Obama administration NHTSA rulemaking not coordinated to EPA efforts Trump administration withdrew the midterm evaluation to continue data acquisition and assessment 2018 EPA concluded 2022 2025 standards are not appropriate and initiates rulemaking to coordinate with NHTSA fuel economy efforts Stakeholders and public will have an opportunity to comment on all regulations prior to finalization
Upcoming Rulemaking Equivalent Miles per Gallon 52 50 48 46 44 42 40 38 Automaker Positions: Continue year over year improvements Align standards more closely to market Include California A potential range of standards is under consideration 36 34 U.S. EIA AEO2016 basis Actual values will vary depending on future fleet mix 2018 2019 2020 2021 2022 2023 2024 2025 Source: Based on U.S. EPA 2015 2025_Production_Summary_and_Data_with_Definitions.xlsx Nov. 2016 (most recent available); various media reports on potential proposed rule content
Q. What impacts might changes in U.S. standards have on technology adoption and fuels? A. Perhaps not as much as you might think * Views reflect those of the author and are not necessarily reflective of the Alliance of Automobile Manufacturers or its members.
Manufacturer Performance to Standards 2012 2017 Overall Fleet Passenger Car Equivalent Miles per Gallon 36 35 34 33 32 31 30 2012 2013 2014 2015 2016 2017 (proj.) Performance Standard Eq. Miles per Gallon Eq. Miles per Gallon 42 40 38 36 34 32 31 30 29 28 27 26 25 2012 2013 2014 2015 2016 2017 (proj.) Light Truck 2012 2013 2014 2015 2016 2017 (proj.) Source: EPA 2016 GHG Compliance Report; 2017 projection by Novation Analytics based on mid year data
Automaker World Wide Goals for Electrification BMW: 100,000 Electric Vehicle Sales Volvo: Every new model launched with an electric motor Mazda: Adding a hybrid vehicle to its lineup and introduce a battery driven car Mazda/Toyota: Joint plant to develop and assemble electric vehicles & technology Ford: 13 New Electric Vehicles (approximate year) Mitsubishi: 12 new electric models Toyota: Electric car powered by a new type of battery BMW: 12 all electric cars and 13 hybrids BMW: 80 electric vehicles 2017 2019 2020 2021 2022 2025 JLR: New Jaguar Land Rover vehicles launched will be offered with an electrified powertrain GM: 10 electric and gasoline electric hybrid vehicles in China BMW: Mass Produce Electric Vehicles Ford: First all electric car built to be electric from the ground up FCA NV: Half of the lineup to be electrified VW: 80 models of EVs to be available Mercedes Benz: Electric model of all of its vehicles GM: Annual NEV sales are expected to reach 500,000 units Source: Manufacturer press releases
Electric / Plug in Hybrid Vehicle Sales And Model Availability 60 2017 EV & PHEV Sales Represent A Very Small Slice Of All Sales Total Models 50 40 30 20 16,944,752 90,839 189,981 99,142 All Other Sales Electric Sales Plug in Hybrid Sales 10 0 2011 2012 2013 2014 2015 2016 2017 Source: Wards Automotive
Fuels From a Fuel Economy Perspective Higher Octane Fuels Enable higher compression ratio Indifferent to pathway (e.g. ethanol or other) assuming other properties not adversely effected Fuel and vehicles should be regulated as a system How much still a question Low Carbon Fuels Useful for on road improvements to greenhouse gas emissions Automaker support may depend on EPA regulatory treatment for compliance Alternatives Charging infrastructure critical to support growing market of electrified vehicles Hydrogen fuel cells are on the market already, but with nascent infrastructure in limited locations * Views reflect those of the author and are not necessarily reflective of the Alliance of Automobile Manufacturers or its members.
Parting Thoughts It appears change may be coming to the U.S. fuel economy and GHG standards, but how much and what type is still a question Drive to innovate and improve efficiency will continue, regardless of standards Internal combustion engines will remain important for many years Electrification is here to stay Regulatory pressures will continue to increase during the transition to a low or zero carbon transportation future * Views reflect those of the author and are not necessarily reflective of the Alliance of Automobile Manufacturers or its members.
Parting Thoughts It appears change may be coming to the U.S. fuel economy and GHG standards, but how much and what type is still a question Drive to innovate and improve efficiency will continue, regardless of standards Internal combustion engines will remain important for many years Electrification is here to stay Regulatory pressures will continue to increase during the transition to a low or zero carbon transportation future The U.S. light duty vehicle standards may change, but automakers commitment to fuel economy improvements and to One National Program have not * Views reflect those of the author and are not necessarily reflective of the Alliance of Automobile Manufacturers or its members.
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