Course:ECON371/UBCO2010WT1/GROUP7/Article6

Wiki Article #6 (for 18 Nov 2010)

Link to the article: http://www.nytimes.com/2010/10/15/business/energy-environment/15auto.html?_r=1&ref=alternative_fuel_vehicles

Summary: The article brings attention to how the EPA is conducting its fuel efficiency ratings on mass-market hybrid/ electricity plug-in vehicles. The two cars viewed in the article are the Chevrolet Volt and the Nissan Leaf, which, fuel efficiency ratings could in effect influence perceptions of electric vehicles to consumer markets. The Volt can drive 25~50 miles without the gas engines starting and the Nissan Leaf is even lower, which is powered only by a rechargeable battery. The concern that GM and Nissan are facing is the length of time needed before EPA releases the rating info, as the companies need to stagnate production until official numbers are released. The testing that will be conducted on the Volt will take a total of 7 days as opposed to the usual 2 for a basic gas vehicle. The Volt was said, by GM, to have miles per gallon rating of 33.3 However, a year ago, GM speculated the upcoming vehicle would have a miles per gallon rating of 230 (based on a draft proposal)- which was estimated using a new testing method. When the Nissan Leaf was calculated using the new method its miles per gallon came out to 367 while the highest EPA rating belonged to the Toyota Prius with 51 miles per gallon. It is evident there are faults in the new testing method, thus the article suggests that an alteration is needed. The Volt has been classified as an 'electric car' where gasoline propels power in a generator, not the movement of the vehicle. The main topic concerns Volt's placement within the hybrid vehicle category.

Analysis: The main argument I can depict within this article is whether or not the Volt by Chevrolet will be or should be (given present information) a hybrid vehicle? Due to past estimates such as 230 miles per gallon done through inappropriate testing methods, the EPA rating of the Volt is surely to decline. Knowing this, will the consumer demand for the Volt (Chevrolet) deplete while EPA ratings are in the lieu? The high expectations and hopes for the positive impact of introducing the new green car into the market may actually not be as significant as GM was hoping. The time and resources spent awaiting the results of the vehicle's ratings may inhibit its impact on introducing a hybrid vehicle into the consumer market. Also, those consumers who are interested in purchasing these 'hybrid' or 'electricity' cars, are generally concerned about the pollution of the environment. So, if the EPA ratings of the cars show that they are not that efficient in fuel consumption, then their marginal willingness to pay will decrease as compared to purchasing another hybrid or electricity (even a normal car) car.

Prof's Comments

You should be relating the analysis to concepts we have used in class. I do like your last point about the MWTP. How does this relate to efficiency? What other things need to be considered beyond fuel economy? Is this the only thing that consumers will care about, or are there other barriers to the uptake of electric vehicles?