Light-Duty Vehicle Exhaust
Emission Control Cost Estimates
Using a Part-Pricing Approach
Quanlu Wang
Catherine Kling
Daniel Sperling
Reprint
UCTC No. 206
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Light-Duty Vehicle Exhaust Emission Control Cost
Estimates Using a Part-Pricing Approach
Quanlu Wang
Institute of TransportationStudies
Universityof California at Davis
Davis, CA95616
Catherine
Klirlg
Departmentof Economies
IowaState University
Ames,Iowa 50011
DanielSperling
Civil EngineeringDepartment
Universityof California at Davis
Davis, CA95616
Reprinted from
2oumalof the Air & WasteManagement
Association
November1993, VoI. 43, pp. 1461-1471
UCTCNo. 206
TheUniversity of California TransportationCenter
Universityof California at Berkeley
TECHNICAL
PAPER
Light-DutyVehicle ExhaustEmission
ControlCostEstimatesUsinga
Part-Pricing Approach
QuanluWang
Catherine
Kiing
Instituteof Transportation
Studies
University
of California
Davis,California
Department
of Economics
IowaStateUniversity
Ames,Iowa
DanielSperling
Civil Engineering
Department
University
of California
Davis,California
Thesubstantial
reductions
in motorvehicleemissions
that have
Today’smotorvehicles emit muchless air pollutants than
occurred
sincethelate 1960s
havebeenaccompanied
by continu- vehiclesof twentyandthirty years ago. For example,the U.S.
(the pre-emisousincreases
in vehicleemission
controlcosts,andcostincreases EPAestimatesthat betweenpre-I968modcl-ye~
or decreases
dueto changes
in vehicleperformance
suchas sion controlera) and1992model-year
cars, per-mileemissionsof
d fiveability,power,
fueleconomy,
andvehiclemaintenance,
in this hydrocarbon
(HC)andcarbonmonoxide
(CO)havebeenreduced
paper,a systematic
approach
hasbeendeveloped
to estimate bymorethan90 percent,andnitrogenoxides(NO=)
by morethan
emission
controlcostsfor motorvehicles.Theapproach
accounts 75percent)Thesedramaticemissionreductionsare the result of
for aUemission
controlpartsinstalledonvehicles,
andthecostsof
the development
andapplicationof manynewemissioncontrol
theseemission
partsareestimated
through
their prices.Thispaper technologies
includingimproved
andmorecarefulcontrolof fuel
does
notestiJ~ate
costsof thechanges
in vehicleperformance
and combustion.Thesechangeswerecostly. But howcostly? The
maintenance
caused
by emission
control.
answeris important
for thosecountriesaboutto imitaterules and
Using
infc,mation
onemission
controlpartsandtheir pricesfor technologiesusedin the U.S. andJapan,andfor the U.S. as it
newlight-dutyvehiclessoldin Californiain 1990,per-vehicle beginsto enter a newroundof vehicleemissionreductions.
controlcostsandtotalcontrolcostsfor all new
light-duty
vehicles
Thenewroundof emissionreductionsin the U.S., Europe,and
h..qvebeen
estimated.
Thecostto vehiclemanufacturers
pervehicle elsewherecould be accomplishedby applying morecontrol
f(~r emission
controlranges
from$220to $1,460,depending
on technologies,introducingcleaner-burning
alternativeenergyopw~hicle
sizeandmanufacturer.
Thesales-weighted
average
costto
tions, relying to a greater extent on market-based
regulatory
manufacturers
is $445pervehicle.Thetotal costof emission approaches,
focusingon non-technology
pollutioncontrolstratecontroltechnology
for 1890
fight-duty
vehicles
soldin California
is
gies (includingnewformsof post-purchase
inspections),or some
estimated
to beabout$888million°
combination
of thesestrategies.Thecost implications
of choosing
Thecorresponding
costto consumers
pervehiclefor emission one path over anotherare huge. Unfortunately,knowledge
of
controlranges
from$370to $2,430,
witha sales-weighted
average emissioncontrolcostsfor currentvehiclesis woefully
inadequate
of $748.Thetotal costfor emission
controlof t990lioht-duty to conducta comparative
analysisof thesestrategies.
w,,hicles
soldin California
is about
$1.2billion to consumers.
PerPast studiesof emissioncontrol costs havebeenconducted
vehiclecostsfor vehicles
soldeEsewhere
in theU.S.in 1980are mainlyfor analyzingeconomicimpacts of proposedvehicle
similarsinceemission
standards
weresimilarthat year.
emission
standards
andhave
therefore
tended
togenerate
aggregate
cost estimates, that is, mostcostestimateshavebeenfor a
genericlight-dutyvehiclegroup,ignoringcost differencesacross
|mpile.atl~xts
vehicle modelsand manufacturers.Thosestudies were oRen
neither systematicnor comprehensive,
andresultedin large cost
Thecosts ~f vehicle emissioncontrol havebeen¢ontlnuousl,/
incm~ngsince the |ate 1960swhenvehicte emissionsbegan
disparities.Previous
studiesdonot provide
theinputsneeded
to
to be regu~¢ed.Thestringent vehicle ~ standardsadopted
designandevaluatecost.effectivevehicleemission
controlstratboth in Me1990CleanAir Act Amendmerr~
andin Catifornia will
egies, includingemissiontrading programs.Somepast studies
increasecontTolcosts fucU~er°TheestimatedvehicMemission
will be discussedin detail in the following
section.
con~olCcSLs
[n this study will ~ evaJuate
t~e cost-effectiveIn
this
paper,
a
systematic
approach
is
developed
to estimate
nessof l~e current U.8. vehicleernLssionregulatoryapproach
per-vehicleemissioncontrolcosts byvehiclesize andby manuandaddin the searchfor an altan’mlive a4~roacttto reduce
controtcosts.
m
Copy~ght 1993 - .A.~ & Waste ManagemcmAssociation
AIR& WASTE
¯ VoL43¯ November
1993¯ 1461
TableL Retail-equivalent
prices of selectedemissioncontrolsystems.
Source:Lindgren)
Emissioncomtrol ~+tem
a (1~0$)
Rotallprt©o
Air injectionsystem
EGRsystem
Pelteted
oxidation
catalyst
Monolithic
oxidationcatalyst
Oxygen
sensor
54.80
12.07
109.38
66.49
4.78
originalestimated
priceswerein 1977dollars+
=Undgren’s
Theprices are convertedinto 1990dollars, usingthe
consumer
price indexfor newcars=
facturer. Control costs are estimated using a detailed survey of
prices of emissioncontrol parts.
in principle, the engineeringapproachshouldaccuratelyestimatethe cost of a component.In practice, however,the approach
suffers from overwhelminginformation requirements on design
and manufactureof individual components.
Thefirst majorproblemis that informationon material use and
labor cost of manufacturinga componentare generally known
only by manufacturers’ engineers, and treated as proprietary.
Assumptions
regarding material use and labor cost must be made
on the basis of a researcher’s professional judgement.
Second,in order to estimate the cost differences of the same
componentamongdifferent vehicle modelsand manufacturers,
the differences in the component’s
specifications (e.g., size and
weight) amongmodelsand manufacturersneed to be identified.
Fewpeople are able to identify such differences amonghundreds
of vehicle models.Therefore,it is difficult andtime-consuming
to
estimate emissioncontrol costs for eachof hundredsof individual
vehicle models. The design and manufactureof vehicle components are usually improvedover time. At best, costs can be
estimatedfor only a small numberof vehicle models.In addition,
Alternative
Cost-Estimating
Approaches
Emissioncontrol costs maybe categorized as follows: emission control hardwarecosts, changesin operatingcosts associated
with the use of hardware,and monetaryvalue of reducedvehicle
performancesuch as driveability and power. Changesin operating costs are mainlydue to reduced fuel economyas a result of
using certain hardware. The changesin vehicle operating costs
and the reductions in vehicle performanceresulting from the use
of emission control hardwarein today’s gasoline-poweredvehicles are minor(for example,Bresnahanand Yao2 estimatedthat
mainlydue to use of fuel injection systems, emission control
helped increase performanceof 1981model-yearcars), although
the changes and reductions were larger in the past and maybe
large in the future withthe use of alternative energyand the next
roundof catalytic controls. This paper addresses only emission
control hardwarecosts.
Thepast estimatesof vehicleemissioncontrol costs are categorized here into four approaches:an engineer:ragapproach,to account
for the material and labor cost of manufacturinga component;a
Delphiapproach,relying on experts’ estimation of vehicle component costs; a vehicle-pricingapproach,to derive emissioncontrol
costs fromthe differentials in vehicle prices; and a part-pricing
approach,reiyingonmanufacturer’s
suggestedretail prices of major
emissionparts. Thefirst three approacheswerefollowedin previous
studies by others. The part-pricing approachis developedand
applied in this paper. The four approachesare described here,
includingresults fromearlier studies.
T~,bleII. Per-vehicleemissioncontrolcosts for newvehicles,1968to
t+ 2.
1984.Sources:White,t+ Kapplerand Gutledge,
Bresnahan
and Yao
(Costsare in 1990dollars).
TheEngineering
Approach
Usingdetailed informationon the function of a component,the
process to manufactureit, material inputs, and physical dimensions, one estimates the amountof materials (such as steel,
aluminum,oleo) and the amountof labor needed to manufacture
each component.Withper-unit prices of the neededmaterials and
appropriatewagerates, the material and labor cost of manufacturing the component
is estimated. Thenthe costs of vehicle assembly and engine modificationsneededfor incorporating the component into the vehicle system are estimated. Next, various
overheadcosts (space, administrative, research and development,
etc.) and profit marginsare estimated. Thetotal cost of components is calculated by addingtogether manufacturingcosts (material and labor costs), costs of vehicle assemblyand engine
modifications, overheadcosts, and profit margins°
The engineering approach was developedby Lindgren for the
3 TableI presents Lindgren’sestimated retail-equivaU.S. EPA.
lent prices for someemissioncontrol systems.
’ Includes
hardware
and fuel economy
penaltycoststo consumers.
White’s
originalcostswere
presented
in 1981
dollars.Kappfer
and
Gutledge’s
originalcostswerepresented
in 1972
dollars.Thecosts
were
converted
into 1990
dollarsusingtheconsumer
priceindexfor
newcars.
b The
substantial
increase
in thec~stfor 1973-1974
mo~l-year
vehicles
wasdueto a reduc~on
in fuel economy
which
resulted
from~ firsttimeus+of NO=
centre[technoicgy.
Costdecreamm
in the1975-1976
rnedelyear
were
dueto hardware
cost
reductions
andthetaeFeeonomy
benefitof mpladng
some
control
hardware
witho~ddatlon
catalysts.
+ Nonpecuniary
costis thedollarvalueof reduced
ddve~bility
and
z~,celeration
andincreased
difficullyin s’au~ng
coklengines,
all of
which
areassocizted
withernisslon
controlTheoriginalcostswere
presented
in 1981
dollars.Thecostswere
converted
into1990
dollars
usingthecortsumer
priceindex~ernew
cars.
Thene~ativa
number
means
thatthecomptlanca
withemission
standards
in thatyearhelped
improve
vehicle
performance.
1482- ~ovember
1993¯ Vol. 43 * AIR& WASTE
Emlnlom
e.~tmi Pomp
Model-year
Wtd~
1968
38.7
38.7
1969
1970
~o5
1971
64.5
1972
477.3
b
1973
1225.5
~
1225.5
1974
~
1975
825.6
=
825.6
1876
1977
903.0
1978
90~0
903.0
1979
"t980
12~.0
1981-1982 18~.0
1983
n/a
1984
Wa
Hon~ec.Ma~
Costof
~mlulon Co~F
K=ppler
and
8rssaatwn
G~ed+e
andYso
75.1
121.6
~98.9
269.6
33L5
437.8
570.2
837.6
769.1
742.6
773.5
762.5
932.6
1381.3
1421.0
1394.5
0.0
n/a
n/a
nJa
~a
1115.9
n/a .
625.7
n/a ¯
6~9.2
n/a
Na
n/a
=
-167.6
n/a
eda
TableIlL Emissionpansgroups."
Em|ulan
Control~alom
EmCselo~
Pert
Emlz=l~ Q~groi ~em
I. Dedfeel~f
TE#l~lpe
Emlafon
CoMml:
1) O~g,en
Sensor
(t) oxygen
sensor
2)Ca~.~11c
Converter
(1)cata~lc
converter
3) PCV
(1) PCV
(pos;lh~
crankcase
ve~latlon)~
4) EGR
:System
(1) EGR
(exhaust
gasreeircutatloa)
(2) EGR
~mpemture
sensor
(3) EGR
amplifier
(4) EGR
thermo
switch
(5) EGR
¢hermo
~iva
(6) EGR
frequency
valve
(7) EGR
checkvz~
(8) EGR
dutycy~eva~
(9) EGR
pressure
resenmlr
(10)EGR
pressure
sensor
(11)pressure
feedback
ebclxonEc
EGR
valve
(12)Efectrontc
vzcuum
regu~ztor
(13) EGRvalve semor
(14) tenant
v’acuum
gener~or
(;5) EGR
so~e~d
S)A~rinjection
System
(1)air pump
(2) ~0n-rezum
va~
(3)air inhceon
(4) air In~n cheek
(5) air Injection~mffv~ve
(6) air In~lonswitch-ever
va~
(7)air Injection
sokmold
~t~
(el air ~eoavacuum
de~retare
O)airflowmeter
(2) air mass
meier
(3)manifold
air pressure
sevamr
(4)altitudesensor
(5) atmo~M~ldc
pressure
server
(el air te=per~
swft~
(7) air~empera~re
v.ave
(8)airbleed
valve
(g)airr,~ntroi
valve
(10) ~ va~
(1) extmeetgassensor
(2) ~pot c~eck va~
(3) ffeq~en~solen~ va~
(4) vacuum
switch
2. F, mel~g’Ml~
EmleMen
eeMmL"
(1) Canmer
System
(1)canister
(2) purgewIw
(3)airbooster
valve
(@two-way
va~e
(S)frequency
valve
(e) swee~ver
~a~ve
(7}f~mk
venlilaffon
valve
(8) thence
semo~
(9) =nkrdlef~lovervalve
to estimate vehicle emission control costs, the engineering approach requires constant updating of component design and
manufacturing information.
Third, this method is not suited to estimatecosts of some
e~ectronic o~mponent.s. The problem is that even though the
amount of material and hbor used for making these electronic
componentsmaybe small, the cost of the componentsmaybe high
because of the high cost of the processing equipmentinvolved, it
is difficult to account for the differences in processing equipment
used in manufacturing components.
Despite these difficulties, Lindgren’s methodhas been widely
used by the U.S. EPAand other organizations to estimate the costs
of vehicle emission control, safety improvements, and fuel
’-~
economy improvements.
3. Mn~o=eTeehee/etF
(1)|die SPeed
Control
Eml=Je.
Part
(1)~llespeed
cot~ol
v’~ve
(2)kfleswitc~
(3)idlea{rregulator
(’2) Fee!Ass~sffng
System (1l coast
~elc~toffvalva
(2)throttleair control
bypass
valve
(3) colaenrichment
breaker
system
(4) coklmixture
he~ng
s,p~m
(5) auxi,ary
accessory
emk::hmen~
sy~ern
4. Ele~nl~Co~boICempolren~:
(1) on-b~zr~
mlcrecomputer
(2);dr temperature
sensor
(3) coolant
temperature
sensor
(4) ~rmo
sensor
(5) Zhenno
va~
(6) sw~ch
v’ave
(7)profileign~t~on
l~Ickup
sensor
(8)~rottlebody
temperature
sensor
(9) r, ranksh~
sensor
(I0) ssmsh~
01)distanss
sensor
(12)vacuum
O)~rotUebody
(Z)~n/,~or
O) Uvonis ~ sens~
(4) tueHnjectlon
com)~
(1) ~la~yair valve
(2) preheat nt~
co va
b~
(3) i~nm.controlunit
(4) cool=ntt~rmo~Z
(5)fuelp re~ure
r@ulator
(el co~tort v-ava
~ern~ ~m sw~
(8) Imo~~ sensor
(9)reference
sensor
(10)speed
sensor
(~’~)fuelpump
(t 2}dlstdbutor
(13)co~start ~’ctor
a Soma
emisaion
putsa~e,~.b~tltutes
for others.A
partlcuear
vehlde
b ~uI~
wf~onlysome
of theemisd~
parispresented
in b’~efable.Dffferent
manutra~
turersrnayusedifferent
names
for t~same
part;whenever
postal~e,
b~erno~
common
naJ~
for a part ~sus~.
Using Lindgren’s estimates of emission control component
~ study estimated a per-vehicle cost to consumcosts, a 1983 EPA
ers of controlling light-duty vehicle hydrocarbon (HC) emissions
to be $156to $175(1990 U.S. $). (Virtually all studies cited in this
paper presented costs or prices in current dollars of different
years. The current dollars were converted into 1990 constant
dollars, using the consumerprice index for newcars. Therefore,
all costs or prices in this paper are presented in 1990 constan~
dollars.) In another application of the engineering cost estimation
method funded by EPA, the estimated per-vehicle emission
control cost to manufacturers (which included the dollar value of
fuel economybenefits or penalties due to use of some components) varied from $91 to $355 for 1982 model-year cars, depend~°
ing on manufacturer and vehicle s~e.
AIR & WASTE
¯ Vol. 43 ¯ November
1993- 1483
TheDelphiApproach
Thisapproach
relies on experts’estimatesof vehicleemission
control costs basedon their knowledge
of automotiveengineering. Althoughan individual expert mayexplicitly or implicitly
use an engineeringapproachto estimate vehicle component
costs,
the estimating methodsused by individual experts in this approach maynot be exclusively based on detailed information on
componentdesign and manufacture.
Thoughthe Delphi approach is a quick way of obtaining
vehicle componentcosts, it heavily dependson an individual
expert’s personaljudgements,is highly subjective, and the results
are not amenableto documentation.Lindgren’s engineering approachsuffers fromsubjective personal judgementsas well, but
to a lesser extent than the Delphiapproach.Since the component
costs estimated at different times and by different experts may
havebeensubject to different underlyingassumptions,addingthe
component
costs together as total vehicle emissioncontrol costs
creates large potential errors.
Theresults fromtworecent Delphistudies illustrate the flaws
of this approach.In one study, the California Air ResourcesBoard
(CARB)
estimatedthe future cost of electrically heatedcatalysts
to be $120to $200per vehicle,u In contrast, using the undocumented Delphi method, the AutomotiveConsulting Group, Inc.
(ACG)of AnnArbor, Michiganestimated the retail cost of
electrically heatedcatalyst to be over $850,tz five times that of
CARB’sestimate. Because the method and assumptions are
subjective and are not documented,the results cannot be replicated or explained.
Historicul Cost Estimates Using Engineering and Delphi Approaches.Overthe courseof the last twenty-fiveyears, the costs
of individual emission control componentshave been estimated
TableIV. Manufacturers
surveyed.
Manufac~m~
~io. of Engine
"1990Vehicle
¯Famlile=
Sales
b
Projection
Me.o[
Dealers
In $urve~
1
Audi
6
7=000
BMW
5
1
22,000
Chrysler
23
101,O00
2
Ford
38
1
307,OOO
~
General
Motors
44
452,000
12
Honda
14
173,000
2
Mazda
18
86,000
Mercedes-Henz
7
80,000
2
Mitsubishi
12
82,000
1
Toyota
24
3
207,000
Volkswagen
2
8
26,000
Volvo
5
2
27,000
Total
204
1,5~,000
35
2~These
a From
CARB.
aretheengine
familiescertifiedin P.,aJiforn[a
in
1990.
b These
aresales
for 1990
model
yearin Caffomla
projected
bymanufacturers.
ThesalesprojecUons
includepassert~er
carsandLDTs.
¢ Thenumber
includes
dealers
thatpa~cipated
in boththefirst- andt~
secor~l-ro.nd
su~ey.
Thesame
dealerpa~ipzted
in bothsurveys
for
fourmanufacturers.
Forsome
European
~hict~,manufacturers
were
contacted
for pricesof some
emission
parts,in thesecases,the
manufacturers
werecounted
as"deniers."
Thelargernumber
el GM
andMazda
dealers
pa~dpatino
Is misleading.Because
of tirneconstraints
resu~ng
from
d~culties
in recruiting
dealers
fromthesetwocompanies,
a phons
survey
wasused
in which
pricesfor onlyabout
10-15
partswere
requested
fromeachdealer.
14~- November
1983¯ Vol. 43 ¯ AIR & WASTE
either with the engineeringapproachor with the Delphiapproach.
~3
Drawinguponvarious historical regulatory documents,White
~’ estimatedtotal emissioncontrol costs
and Kapplerand Gutledge
for vehicles manufacturedfromthe late i960s throughthe early
1980s(Table ll). Thesecost estimates havebeenused in various
regulatory proceedings. The two studies did not explain why
certain componentswereincluded° There are large discrepancies
betweenthe two s~udies.
All studies to date havemajordrawbacks.First, the estimate
cannot account for the cost reduction due to improvementsin
designing and manufacturingindividual componentsover time.
Costs of particular components
are usually estimated at the time
whenthe technologyusing the componentsis first proposedor
adopted. By not considering improvementsover time in design
and manufactureof emission control components,vehicle emission control costs tend to be overestimated°
Second,componentcost estimates in historical regulatory
documentswere conductedeither with the engineering approach
or withthe Delphiapproach,by different authors, and at different
times. The assumptions used vary greatly from one study to
another. Estimatingthe total cost by addingcomponent
costs from
different studies creates large potential errors.
Third, previous estimates of componentcosts were usually
motivatedby the regulatory practice of imposinguniformemission standards on all vehicles, and were thus not sensitive to
differences across vehicle classes and manufacturers;the studies
wereconductedfor a generic vehicle class. It is impossibleto
estimate the per-vehicle control costs for individual vehicle
models and manufacturers using componentcosts for generic
vehicleclasses.
TheVehide-Prlcing
Approach
In principle, an attractive methodthat respondsto the drawbackscited is one that analyzeschangesin vehicle prices before
and after the impositionof newregulations. Byselecting different
vehicle pairs over a long period of time during whichvehicle
emissionstandards are tightened, vehicle emissioncontrol costs
at different emissioncontrol levels can be estimated.
Thedrawbackswith this approachare the difficulty of finding
vehicle pairs that are identical other than in emissioncontrol
changes.By deriving emission control cost fromvehicle prices,
the approach assumesthat vehicle prices reflect the cost of
producing vehicles. However,manyfactors besides production
costs determinevehicle prices. Suchfactors include the tendency
of manufacturers
to price vehicles on the basis of competitiveness
as well as cost consideration,and the aggregationof per-vehicle
emissioncontrol costs. Thecost of individual emissioncontrol
components
cannot be estimated with this approach.Nostudy has
estimated emissioncontrol costs with this approach.
Bresnahanand Yaoz developeda similar approach, using the
prices of used cars to estimate consumers’willingness to pay to
avoid nonpecuniary disamenities associated with automobile
emissionstandards(including reduceddriveability and acceleration and increased difficulty in starting cold engines). They
constructed car demandfunctions to estimate the "cost" of reducedcar quality due to emission standards. Their estimated
nonpecuniarycost of emissionstandards is shownmTableII. The
nonpecuniarycost of 1981model-yearcars was negative, indicating that compliancewith emission standards helped improve
vehicle performance
that year. This wasa result of the introduction of fuel injection systems and electronic control units on
vehicles in the late 1970sand early 1980s.
ThePa~Pricing
Approach
Therelativelyfewattemptsto estimate emissioncontrol costs,
despitethe hugecosts involved,indicates the difficulty of the task.
Thenewr~ethod presented here has drawbacksas do the others
but it is systematic,rigorous,amenable
to continuingrefinements,
needs less assumptionsthan the engineering approach, is less
subjective than the Delphiapproach,and has greater potential for
achievingaccurate cost estimates. Thepart-pricing approachuses
the manufacturer-suggestedretail prices (MSRPs)of vehicle
emissionparts to estimate vehicle emissioncontrol costs.
Thisapproachentails severalsteps. First, emissioncontrolparts
Mstalledon individualvehiclemodelsare identified. Thisinformation is avail!ableon emissioncertification applicationformssubmitted by veh icle manufacturersto CARB
and EPAfor each engine
family(an enginefamilyusually containsseveral vehiclemodels).
The application form contains detailed information on emission
parts, technical specifications, operationparametersfor emission
tests, and vehicle modelscontainedin an enginefamily.
Next, the MSRPs
of these parts are collected. Vehicledealers
provided MSRPsfor the names and part numbers of vehicle
emissionparts for each engine family.
Third, MSRPs
are discountedfromretail prices backto manufacturer costs, using the profit and cost markupsof dealers and
manufactu:rers.
Fourth, manufacturercosts for replacementparts are convetted to manufacturer
costs for initial parts. Thisstep is necessat3, because the MSRPs
obtained from vehicle dealers are for
replacementparts, and prices of replacementparts charged by a
manufacturerfor after-market supply are usually higher than the
prices chargedby the manufacturerfor the sameparts suppliedto
vehicle assemblers(reflecting productionrun orders, lowermarketing costs, long-termcontracts, etc.). Initial parts costs are
neededfor this analysis becauseemissioncontrol costs incurred
in the manufactureof a vehicle are estimatedhere°
Fifth, the cost of enginemodificationsmadesolely to incorporate emissionparts into a vehicle systemand the assemblycost
associated with incorporating emission parts into the vehicle
system am estimated.
Finally, the costs of individual emissionparts installed on a
vehicle modelare addedtogether to obtain the total emissioft
control cost per vehicle.
Theformulafor estimating control cost with the part-pricing
approachis:
n
ECC= Y [MSRP/(I+DMF)/(I+MMF)/(PJI)
x (I+AC,)]
i=1
Where:
ECC = emission
controlcost(S/vehicle)
= total number
of emission
controlpartsinstalledonan
individualvehicle
retail pricefor part i
MSRP
i = manufacturer-suggested
OMF = dealermarkup
factor on emission
parts
(differs bymanufacturer
dealer)
MMF = manufacturer
markup
factor onemissionparts
(assumeci
to besame
for all manufacturers)
R/[ ° = ratio of replacement
partspricesto initial partsprices
part [ into thevehiclesystem
AC, = costof assembD[ng
(asa fractionof thepartcost)
Theadvatntageof the part-pricing approachis that is doesnot
need engineeringinformation on vehicle parts design and manufacture as the engineeringapproachdoes. Also, the part-pricing
approachneeds information on vehicle systemdesign and emission control strategies to a muchlesser extent than the engineering
approach.Muchless expert judgements,if any, are involvedin the
part-pricing approachthan in the Delphi approach. The partpricing approachestimatesthe costs for individual control corn-
TableV.Dealermarkup
factors: results of dealersurvey."
Manufacturer
DealerMarkup
Factor(percent)
Audi
BMW
Chrysler
Ford
GeneralMotors
Honda
Mazda
Mercedes-Benz
M~ubishi
Toyota
Volkswagen
Volvo
35-40
38
40
40
40
40
60
38
~
40
40-65
35-40
40
a Thedifferencebetween
retail price anddealercost
varies among
emission
pails. Thepresented
results
are average
for emission
parts. Usuallyparts with
lowersalesvolume
havea highermarkup
factor.
b Afactorof 40percentwasassumed
for Mitsubishi
because
Mitsubishidealersdid not providea markup
factor.
portents as well as the total emissioncontrol cost per vehicle,
while the vehicle-pricing approachprovides only total emission
control cost per vehicle. Withthe part-pricing approach, the
assumptions regarding emission control componentsand thek
costs are explicitly presented.
The principal disadvantageof this approachis that it uses
implicit (and often subjective) assumptionsmadeby individual
manufacturers in accounting for various cost componentsthat
determinethe price of parts. Differences in accountingassumptions amongmanufacturers result in differences in estimated
costs.
Whilethe methodof using emission parts MSRPs
is useful to
estimateemissioncontrol costs ofexistingvehicles, it suffers the
additional drawback
of beinginappropriatefor estimatingcosts of
newly-developed
control technologies, simply becausethe parts
(andtheir prices) are unavailable. To estimate the cost of a new
emission control technology, the engineering approachor the
Delphi approachcould be used.
Thepart-pricing approachcan accountfor the cost of emission
control hardwareonly. The approachcannot take into consideration effects of installed hardware
on vehicleoperationcosts (e.go,
effects on fuel economyand on vehicle maintenanceschedule).
Toconsiderthese effects, additional efforts must be made.
TableVI. Costof assemblyand engineandvehiclemodificationsfor
emissionparts as percentageof tota| manufacturing
costs (basedon
Lindgren).
Emission
Part,
Valve
andorifice
Air [njeaJonsystem
EGRsystem
Oxygen
sensor
CataJ#cconverter
TotalAssembly
Cost
(as parcent
of TotalManufacturing
Cost)
25
10
18
15
5
AIR& WASTE
* Vol. 43 ¯ November
1993¯ 1465
TableVH.S~les-weightetl
vehtcleemissioncontrolcosts to manufacturers
($ per vehicle).
Dedicated
tall- Mul~|purpeca
EJechlznic FuelhtJectJon
Totalcost
pipeemission te©hnolegy
conb’o~
syltam system
group
control
Group
gm~p
group
[(a)+1/30))
(a)
(b)
(c)
(d) +1/3(c)+1/4(~)I
Manufacturer:
AudJ
420
8MW
505
Chrysler
143
253
Ford
183
GeneralMotors
384
Honda
Mazda
402
Mercedes-Benz 1,228
Mitsubtshi
323
Toyota
338
Volkswagen
407
Volvo
500
t97
81
0
21
0
20
47
62
0
33
26
50
ManufacturerGroup:
American
203
European
843
Japanese
360
7
63
26
313
195
130
77
80
182
2t 8
178
253
248
202
172
554
225
139
151
276
167
403
590
399
281
484
548
728
654
22t
323
278
493
591
1,456
507
501
604
711
market;someparts are indeed proprietary
(for example, the palladium-only catalytic converterdesignedand used by Ford
MotorCompany);someparts maybe specific to certain parts suppliers and some
successful product differentiation may
exist; and parts prices charged by manufacturer dealers are usuallyhigherthan the
prices chargedby independentparts dealers. Theseeffects maymakemanufacturers realize somemonopoly
profits, therefore distorting the competitivenessof the
parts market. Althoughthese distortions
are probablyrelatively minor,there is no
definitive evidenceavailable.
AppficaUen
of the Part-PricingMethod
Followingthe steps outlined earlier,
the application of the pan-pricingmethod
to vehicles sold in California in 1990is
presentedin detail in the following.
Determining
Emission
Partsfor individual
Engine
Families
Emissionparts installed on individual
enginefamilies can be specified using the
emission part information contained on
Vehicle
C|ass:
emission certification application forms
4 cylinder
170
250
426
301
20
supplied by manufacturers to CARB
and
5&6cylinder
279
479
358
21
132
EPA.This study uses the CARB
database
92
805
401
8&12cylinder
289
14
for 1990light-duty vehicles, the latest
year available whenthe study began.
[nduzdryAverage: 324
20
144
269
445
Emissionparts informatfonis usually
presentedin two lists on the application
form:a high-costpart warrantylist and aa
emissionpart warrantylist. (Prior to 1990,
CARB
required manufacturersto include an emission part warThepart-pricing approachimplicitly assumesthat the function
ranty list on emission application forms. ThoughCARB
abanof a vehiclepart is relatively independentfromthat of another. In
practice, vehicles are nowdesignedas an integrated system, and
donedthis requirement after 1990, manufacturers voluntarily
include this information. In contrast, EPAdid not require the
vehicle parts are interacted with each other. Vehiclesystemsare
designedand engines are calibrated to maximizeemission, power,
emissionpart warrantylist for the rest of the nationprior to 1990,
driveability, and fuel economy,in the emission control cost
but required the emissionwarrantylist after I990.) Thehigh-cost
warranty list contains emission parts whoseprices are abovea
estimate the part-pricing approachcannot take into account the
implicit costs of emissioncontrol-related vehicle systemdesign,
given limit. The price limit is determinedby EPAand CARB.
Althoughthere are general guidelines provided by EPAand
vehicle part packaging,and engine calibration.
for manufacturers to determine which parts should be
Anuncertaintyin estimatingcosts with the part-pricing method CARB
included in the emissionpart warrantylist, it is manufacturers
concernsthe implicit assumptionthat the vehicle parts marketis
relatively competitive.In a competitivemarket,the retail price of
whodetermine which parts are included in the emission part
warrantylist. In general, manufacturers
include the vehicle parts
a part represents its cost to manufacturers(cost of research and
development,
engineeringdesign, facility use, retooling, material
that directly control or affect vehicle emissions.Though
there is
general agreementconcerningthe inclusion of manyparts, there
use, labor expenditure, and overheads) plus normalprofits for
are somedifferences amongmanufacturers° For example, some
manufacturersand dealers. Since in the U.S., emissionparts are
include the fuel meteringsystemand the ignition system, while
manufacturedby both independentparts suppliers and by vehicle
others do not.
manufacturers, the assumption of competitiveness seems warIn order to create a consistent part list amongmanufacturers,
ranted at least for U.S. manufacturers.Acompetitiveparts market
decisions had to be maderegardingwhichparts wouldbe included
especially exists for non-proprietaryparts, the parts that can be
in this study. Whenever
possible, the decisions were discussed
made without patents or special technology which not all
with manufacturers’ representatives. To aid in the decision,
manufacturersmayhave. Additional evidenceof the competitiveness of the U.S. vehicle parts marketcan be found in a survey
emission parts were divided into six groups, dependingon the
primarypurposeof individualparts (see TableIIl). Thearbitrary
reporting that vehicle parts are three times moreexpensivein
Japanthan in the U.S.is Theless expensiveprices of vehicleparts
division of emissionparts into different groupshelps calculation
of per-vehicle emissioncontrol costs. Thedecision about which
in the U.S. suggeststhe existenceof a relatively competitiveU.S.
parts market.
parts belongto whichgroupsis subject to personaljudgementsof
However,the market-competitiveness assumptionmaynot be
the relationships betweenvehicle parts and vehicle systems.
Emissionparts in the dedicated tailpipe emission control
alwaysaccurate. For example,one of the three precious metals
used in catalytic converters, rhodium,is not traded in an open category(Group1) are installed on vehiclessolely for controlling
85
189
223
1466¯ November
1993¯ Vol. 43 * AiR& WASTE
215
515
282
288
1,056
513
tailpipe emissions.Thefull costs of these parts wereaccountedfor
in estimating vehicle emission control costs. The parts in the
evaporative emission control category (Group2) are used for
controlling evaporativeemi~ions(currently, hot soak and diurnal
evaporativeemissions mustbe controlled). Becauseof a lack of
informationon evaporative emission parts for somemanufacturers, evaporative emissionparts werenot included in estimating
emissioncontrol costs.
Theparts listed underthe multipurposetechnologycategory
(Group3) help reduce emissions,as well as improvefuel economy,
vehiclestartability, andvehicledriveability. One-thirdof the cost
of these parts wasallocated to emissioncontrol, basedon dividing
the part costs evenly among
the three vehicle attributes of emissions, fuel economy,and performance.
Electronic controlsystemsandrelated sensors(Group4) are now
used on virtually all motorvehicles to optimizeemissioncontrol,
fuel economy,and performance.In estimating emission control
costs, one-thirdof these costs wasallocatedto emissioncontrol.
Fuel injection systems(Group5) help reduce emissionsmainly
by precisetycontrollingthe air/fuel ratio. Theyalso help increase
fuel economy
and engine output power.Virtually all newvehicles
are fuel-injected. Althoughfuel injection systemshavebeenused
by some’.European manufacturers since the 1960s to achieve
higher engine power,their extensiveuse beginningin the early
1980swasprimarily due to stringent vehicle emissionstandards.
Withoutfire urgencyof meetingemission standards, manymanufacturers claimthat they wouldnot haveintroducedfuel injection
systemsso quickly. Therefore, fuel injection systemswere ineluded in the estimate of emissioncontrol costs. [To precisely
accountfor the cost of a fuel injection systemin an emission
control cost estimate, the cost difference betweena carburetor
systemand a fuel injection systemshould be considered,because
a vehicle must have a fuel injection management
system. However, costs of hypotheticalcarburetorsystemsfor the individual
enginefamilies involvedin this study werenot available. Thecost
of fuel injection systems,rather than the cost difference, is used
here. Thesmaller fraction of fuel injection systemcost (onefourth) use.dhere for calculatingemissioncontrol costs intendsto
minimizethe problemof using the cost of fuel injection systems.]
Since the primaryfunction of fuel injection systemsis to manage
vehicle fuel systems, one-fourth of their cost was arbitrarily
allocated:Io emissioncontrol.
Non-emission
parts (Group6) werenot includedin the estimate
of vehicle emissioncontrol costs, althoughthey are providedby
somemanufacturers
in the emissionpart warrantylist. Thecost of
these part:; wasnot includedbecausethey are used pr/marily for
other purposes(for example,engineprotection and vehicle performancemaintenance),althoughtheir use also reduces emissions.
Thereiis no single definitive methodto determinewhichparts
are emission control parts and whichare not because vehicles
haveincreasingly becomeinte~’ated systems in whichemissions,
fuel economy,and other vehicle performance parameters are
optimized through on-board electronic control units. The approachof allocating a certain percentageof the costs of parts to
ernissio~ control is crude. Regulatoryagenciesand manufacturers
mighthaste different reasons to include or not include certain
vehicle parts in estimatingvehicle emissioncontrol costs.
Obtaining
MSRPs:
Surveys
of Vehicle
Dealers
Namesand numbersof emissionparts were collected from the
emissionparts warrantyHst on engine family application forms.
Parts numbersare assigned to vehicle parts by vehicle manufacturers so pans can be identified by dealers and medianica.Alist
of emission pans (with their correspondingparts numbers)was
created for each of the manufacturers.A survey formcontaining
the name.,; and numbersof all emissionparts for a manufacturer
wascreated and sent to the manufacturer’sdealers in Northern
California to obtain MSRPs
of emissionparts. Thirteen manufacturers were originally selected for inclusion in the study. However, the parts numbersfrom the application forms for Nissan
engine families did not match the parts numbersfrom Nissan
dealers, so Nissanwasdroppedfromthe study. TableIV presents
summaryinformation on the remaining twelve manufacturers.
Tworounds of the mail survey were conducted. In the first
round, dealers were asked to provide the MSRPs
for the survey
parts basedon the part numbersprovided. This generatedusable
information from a numberof dealers. However,in somecases,
the part numbersobtained frommanufacturers’application forms
did not matchthe numbersdealers had separately obtained from
manufacturers;consequently,dealers wereunable to locate prices
for someparts° This inconsistencyin numbersis probablydue to
changesin part numbersbetweenthe time of vehicle certification
and actual vehicle production (there is about a one year lag
betweencertification and actual production).
In order to obtain MSRPs
for the remainingparts, a second
survey formwas designed and administeredthat provided informationon the emissionpart names,the vehicle modelsusing the
parts, and specifications of the vehicle modelsto dealers. When
the sameparts were used on several vehicle models,’the most
popular modelwas used. This additional information was obtained fromthe enginefamily application formsand the executive
orders by CARB
for individual engine families.
Sincedealers hadto gothroughseveral steps to find part prices
in the second-roundsurvey, it was quite time consumingand
manydealers wereunwilling to completethe entire second-round
survey. Consequently,the survey formfor somemanufacturerswas
divided into sections and one dealer wasaskedto completeeach
section. Thisresulted in morethan one dealer participating in the
second-round survey for many manufacturers. Since each
manufacturer’s dealers obtain the same MSRPs,
the prices are
consistentfor different dealers of the samemanufacturer.TableIV
TableVIII.Vehiclecharacteristicsandemissionrates.
AmeacanEuropeanJapanese
a
Vehicle
Character~stics
Weight
(Ib)
s)
Engine
displacement
([n
Horse-power
Seconds
for 0-60rnph
$,392
196
136
12.1
3,284
154
149
11.2
2,862
119
115
12.2
b
Certifiedemissions
at 50,000miles(grams
perm|le)
HC
CO
NO~
0.20
2.55
0.30
0.19
128
0.17
0.19
1.82
0.20
n Theseare for 1990model-year
’ FromHeavenrich
MurrelL
carsandnationwfde
sales-weighted
averages.
=~ Theseare sales-weighted
FromCARB.
average
emissions
for the1990
Cafifomia
newlight-dutyvehicles.Three
vehicle
typesareincluded:
passenger
cars,light-dutytrucks1 (gross
vehicleweight
lessthanor equalto 3,999
Ibs), andtight-duty
trucks2 (grossvehicleweightgreaterthan3,999
Ibs butless
than6,000Ibs). Passenger
carsin that yearweresubjectto
grams-per-mile
emission
standards
of 0.41for I-IC, 7.0for
CO,and0.4for HO,;light-dutytrucks1 to OA1,9.0,
and004;
andlight-~utytrucks2 to 0.5, 9.0, and1.0.
AIR& WASTE
¯ Vol. 43 ¯ November
1993¯ 1467
presentsthe number
of dealerswhoparticipated in the emission timesas muchas suppliercosts (( t +(J.2+0.2)x ( 1 +0.4)]. Comparpart price survey.
ing the relative prices of replacementparts with those of initial
In responding
to the emissionpart price survey,mostdealers parts, the ratio of replacement
parts pricesto initial parts prices is
providedthe MSRPs
of emissionparts, the prices dealers usually
about2.3. Thatratio wasused in this study to convertreplacement
charge to individual customers.A fewdealers providedwholesale parts pricesto initial parts prices.
prices, the prices dealers usuallychargeto mechanicalshops. When
wholesaleprices were provided,the dealers were askedthe price
Costs
of incorporating
Emission
Partsintoa Vehicle
System
difference betweenretail and wholesale. Basedon the 15 to 25
To accountfor the full cost of an emissionpart, the cost of
percentdifference, retail prices werecalculated.Theemissionpart
incorporatingthe emissionpart into a vehicle systemin terms of
price survey was conductedbetweenOctober1990and July 199 i.
assemblyand engine and vehicle modifications (assemblycosts)
needsto be included.Lindgren’sstudy estimatedthe assemblycost
DealerandManufacturer
Markup
Factors
as well as the manufacturing
cost of majoremissionparts. Usingthe
The emissionparts prices obtained in the surveys are retail
cost information
in that study,assembly
cost as a percentage
of total
prices to individual consumers.Retail prices werediscountedto
manufacturingcost wascalculated for someemissionparts (Table
manufacturingcosts by first subtracting profit and cost markups VI). Assemblycosts of emission parts for today’s vehicles are
for dealers and their manufacturers.
probablylowerthan those for vehicles producedin the late 1970s
TwostudiesTM conductedby Lindgrenand Jack Faucett Assobecauseemissionparts are designed, manufactured,and assembled
ciates (JFA.) for ErA reported a manufacturer markupfactor
as part of the integratedvehiclesystem.
(difference betweencost to parts or vehicle manufacturersand
The data in Table VI wereused to estimate the assemblycost
cost to dealers) of 19 to 20 percent,and so 20 percentwasaccepted of emissionparts. Unfortunately,Lindgren’sstudy included neifor this study.
ther electronic control units and related sensors, nor information
Lindgren~ and IFA*+ differed on dealer markups, however.
on fuel meteringsystems(i.e., fuel injection systems). Assembly
Lindgren’sstudy used a markupfactor of 40 percent for dealers,
cost for an electronic control unit is assumedhere to be the same
while JFA estimated only 5.7 percent. JFA estimated dealer
as that for an oxygensensor becausean electronic control unit
markupby considering dealers’ interest expense, profit markup, includes manysensors whosemanufactureis similar to that of an
and sales commission,all of whichare costs that dealers must oxygensensor. Therefore, assemblycost for electronic control
recoverfromsales. Theestimateddealermarkup
in the I985study units is assumedto be 15 percent of the manufacturingcost.
is probablya conservative estimate. To resolve the discrepancy, Assembly
cost for fuel injection systemsis also assumedto be 15
dealers wereaskedfor the price difference betweenretail prices
percent, the medianvalue of the costs in TableVI.
and dealer costs for emissionparts; the results are presented in
Calculating
Emission
Control
Costs
TableV. Thesedealer markupfactors are consistent with Lindgren
and are used in subsequentcalculation here.
Emission
control costsfor eachenginefamily wereseparately
estimated for each of four emissioncontrol systemgroups. Total
RaUa
of Replacement
PartsPrices
to l~ltlal PartsPrices
emissioncontrol costs werecalculated by accountingfor all dediTheprices calculated in the previousstep are for after-market cated taitpipe emissioncontrol costs, one-thirdof the multipurpose
replacementparts, whichare moreexpensive than initial parts
technologycosts, one-thirdof the electronic controlunit costs, and
3 estimated that parts
manufacturedfor use in newcars. Lindgren
one-fourth of fuel injection systemcosts. Costs of evaporative
supplier costs for vehicle assemblerswereone-fifth to one-fourth emissioncontrol systemswerenot included becauseof incomplete
of the retail prices for after-market replacementparts, meaning cost data for somemanufacturers.Usingvehicle sales projectedby
that retail prices of after-marketreplacementparts are about 4.5
manufacturers,sales-weightedaveragecosts by manufacturer,by
times as muchas supplier costs. He calculated retail prices of
engine size, and by manufacturergroupwere calculated.
initial parts fromparts supplier costs by assuminga corporation
Since a standard set of emissionparts is used for aa engine
allocation factor of 20 percent, a manufacturermarkupfactor of
family, vehicle modelswithin an engine family havevirtually the
20 percefit, and a dealer markupfactor of 40 percent. (The
sameemissioncontrol systemsand, therefore virtually the same
corporation allocation factor represents the expense of a
emission control costs. Althoughsomeadditional emissionparts
manufacturer’sadministrative, supervision, and space supportfor
maybe installed on someof the vehicle modelswithin the engine
parts production. This expenseis included here as part of parts
family, these parts werenot accountedfor becausetheir contribuproductioncost because real resource consumptionis involved.)
tion to total emissioncontrol costs is minimal.All vehiclemodels
His assumptionsimplythat retail prices of initial parts are 1.96
within an engine family were assumedto have the sameemission
control cost.
TableIX, Comparison
of vehicleemissioncost estimatesby different
authors(hardwarecost per vehicleto consumers,
I990dollars)°
Study
MY Vehicles
+
JFN
1982
Thisstudy
1990
TM
White
1981
~4 1984
KapplerandGutledge
C~
Estimating
Approach
337
748
775
1,161
Engineedng
Part-pricing
~
Mixed
b
Mixed
’ Hardware
costonly.
Costdatawerefromdifferentstudieswhichmightusedifferent approaches.
1488¯ November
1993¯ VoL43 ¯ AIR& WASTE
Results
TableVII reports the sales-weightedaverageemissioncontrol
costs to manufacturers.Theemissioncontrol costs reported in the
table are by manufacturer,manufacturergroup, and vehicle class.
Thefinal rowin the table reports the industryaverages.Costswere
calculated for each of four parts categories---dedicatedtailpipe
emission control, multipurposetechnology, electronic control
systems, and fuel injection system--andallocated to total emission control costs aa indicatedearlier: 1O0percentof the dedicated
taiipipe emission control costs, one-third of the multipurpose
t.echnologycosts, one-thirdof the electronic control systemcosts,
and one-fourthof the fuel injection systemcosts.
Asindicated in TableVII, the manufacturers’cost for controlling emissions is about $445 per vehicle, about two-thirds of
wtuchare accountedfor by dedicated tailpipe emissioncontrol
TableX. Averagecertified emissionsof 1990model-yearlight-duty
vehiclessold in California(gramspermileat 50.0~X)
miles)?
lechnology($324). Costs vary greatly betweenmanufacturersbut
~lot betweenvehicleswithdifferent enginesizes. Chryslerhas the
Manufacturer
HC
C0
lowestaveragetotal control cost ($22~ per vehicle),and MercedesNO=
Benzthe highest($1,456per vehicle). Thesubstantial cost differ1.90
ences amongmanufacturers reflect differences in engine-out
Audi
0.26
0.20
0.21
1.36
0.16
emissions,level of control, economiesof scale, technical exper8MW
1ise, use of different materialsto produceparts, mixof vehicles,
Chrysler
0.26
2.35
0.30
andrisk-takingstrategies.
Ford
O.19
2.39
0.31
Among
the three manufacturergroups, AmericanmanufacturGeneraE
Motors
0.20
2.70
0.29
ers havethe lowest cost, Europeanmanufacturershave the highHonda
0.17
2.00
0.20
,:st, and Japanesemanufacturersare in between.
1.86
Mazda
0.19
0.t8
The higher emissioncontrol costs for Europeanmanufacturers
1.02
Mercedes-Benz
0.15
O.18
are duein large part to the large portionof luxurycars in their mix.
Mitsubishi
0.25
1.88
0.21
Luxurycars, with higher performancegenerate higher engine-out
Toyota
1.64
0.21
O.18
emissions,;:esulting in higher cost to meetemissionstandards.
Volkswagen
0.18
1.71
0.11
Also, the highercost of luxurycars translates in variouswaysinto
Volvo
0.26
2.06
0.20
higher emission control costs--through higher overheadcosts,
lower productionvolumes,and higher quality.
= Emissions
presented
in this tablearesales-weighted
average
Meanwhile,Japanesemanufacturersalso have relatively high
emissions
for 1990Californianewlight-dutyvehicles,which
costs -- almost twice that of Americanmanufacturers ($513
consistof threevehicletypes:passenger
cars, light-duty
versus $288) -- even though, as shownin Table VIII, Japanese
trucks1 (gross
vehicle
weig
ht lessthanor equalto3,999
I bs),
cars tend to be smaller than other vehiclesand haveless powerful
and
light-duty
trucks
2
(gross
vehicle
weight
greater
than
engines. This apparent anomalyis explainedmostlyby the risk3,999Ibs butlessthan6,000ibs). 1990passenger
carswere
averse strategy adoptedby the Japanese;during interviews, they
subject
to grams-per-mile
emission
standards
of 0.41,7.0,
emphasizedtheir abhorrenceof bad publicity, for example,recalls of versicles in violation of emissionstandards.’7 Thusthey
and0.4for HC,CO,andNO,;light-dutytrucksI subjectto
0.41,9.0,
and0.4; andlight-dutytrucks2 subjectto 0.5, 9.0,
invest more:in emissioncontrol in order to reduceemissionsfar
belowthe allowablelimit and thereby reduce the possibility, of
and1.0.
recal|s t. Emissioncertification data presented in Table VIII
supports this explanation. Americancars have higher emission
Note:There
aretwotypesof coststhat manufacturers
enrates than Japanese cars. Since Europeancars also have lower
counter
when
meeting
emission
requirements:
in~aJvehicle
emission rates, Europeanmanufacturersseemto take the same
control
cost(up-front
initial costto manufacturers)
andthe
risk-averse strategy as Japanesemanufacturersdo.
costof recaIIs.Thisstudy
estimates
theup-front
cost.While
Anotherreason for higher costs with Europeanand Japanese
Japanese
carshavehigherup-front
costthanAmerican
cars,
manufacturersthan with Americanmanufacturersis probablythe
theformer
have
lowerpotential
recallcostthanthelatter.
economyof scale to produce vehicles that meet U.S. emission
Bothrisk-taking
andrisk-averse
strategies
may
minimize
the
standards."]7aree U.S.companies
can certainly devotethe majority
sum
of theup-front
costandtherecallcost.
of their production
lines to producing
vehiclesto be sold in the U.S.,
whileEurol~anand Japanesemanufacturershaveto diversify their
productionlines to producingvehiclesto be sold at homeand in the
U.S.wherevehicleshaveto meetverydifferent emissionstandards.
The correspondingcontrol costs to consumersare $544 per
Therefore, as the three U.S. companieshave the opportunity to
vehicle
for dedicatedemissioncontrol, $748for total per-vehicle
reduce productioncost with the economy
of scale, Europeanand
costs, and $1.2 billion for all consumers
in California in 1990.
Japanese companiesmaynot have such an opportunity.
This study found little difference in control costs between
Discussion
small and large vehicles (measuredby numberof engine cylinCostComparison
Among
DifferentStudies
ders). In fact, as indicated in TableVII, costs werehigher for 4cylinder vehicles than for muchlarger 8-cylinder vehicles. This
TableIX presents emissionhardwarecosts (excludingindirect
apparently counter-intuitive result occurs because most large
effects on performanceand fuel consumption)estimated in four
vehicles ate sold by three U.S. mar~ufacturers,and the emission studies. Thecosts are at the consumerlevel and in 1990dollars.
control costs of large vehicles producedby domesticcompanies Notethat the costs estimated by JFA,TM White,u and Kapplerand
~ are for U.S. cars producedbetween1981and 1984, and
are lower~hanthe costs of small vehicles producedby foreign
Gutledge
companies(as explained with respect to Japanese cars). The
that the costs estimatedby this studyare for Californialight-duty
straight-dr erageemissioncontrolcosts (withoutusing sales as the
vehicles producedin 1990. U.S. cars producedbetween1981and
weighing/’actor)for the three vehicleclassesshowthat the cost is
1984weresubject to grams-per-mileemissionstandards of 0.41
5437for small vehicles, $491for imermediatevehicles, and $508 for HC,3.4 for CO,and 1.0 for NO=,California cars producedin
for large vehicles. Thus,as expected,the averageemissioncontrol
1990weresubject to standardsof 0.41, 7.0, 0.4. Vehicleemission
costs of large vehicles are higher than those of the medium
and
standards and emission control technologydid not vary greatly
smaII vehicles producedby a given manufacturer.
betweenthe U.S. and California, nor over time betweenthe early
1980s and 1990.
Usingvehicle sales data and the estimatedper-vehicle emisAscan be seen, the per-vehiclecost estimatedby JFAwith the
sion control costs, the total emissioncontrol cost to manufacturers
for 1990 model-year light-duty vehicles sold by the twelve
engineeringapproac.his the lowest, and that estimatedby Kappler
andGutledgeis the highest. Thecosts estimatedby this study and
manufacturers
in Californiais estimatedto be $508millionif only
by White are comparable. This comparison suggests that the
dedicatedcontrol costs are included, and S698million if total
emissioncontrol costs are included.
engineering approachunderestimatescosts.
AIR& WASTE
¯ VOte43 * November
1993¯ 1469
TailpipeVersus
Evaporative
Emission
ControlCosts
conducted in this paper, and follow-up cost studies, are at the
very heart of pnticy analyses needed to guide those irnportanl
Vehicle emisshm
control costs estimatedin this study do not
include costs of vehicle evaporative emission control systems. ’ initiatives.
Currently. diurnal and hot soak evaporative emissions are reguAcknow|edgment
andDisclaimer
lated by EPAand CARB.Running loss evaporative emissions
will begin to be regulated in 1995 in California, and will probably
Weare grateful to the California Institute for Energy Effibe regulated in the rest of the nation. To control vehicle evaporaciency and the University of California Transportation Center for
tive emissions, carbon canister systems are installed on gasoline
financial support of this study. Wethank the Emission Certificavehicles. A canister system includes a canister, vapor lines from
tion Section, Mobile Source Division, California Air Resources
the fuel tank to the canister and from the canister to the engine
Board for providing access to manufacturers’ application forms.
system, and vapor purge control valves. The manufacturer’s cost
Wealso thank various vehicle dealers in Northern California for
of such a canister system could range from $15 to $40 per vehicle.
participating in the emission part price surveys. Anearly version
of this paper was presented at the 72rid Annual Meeting of
Up-FrontCost VersusRecall Cost
Transportation Research Board (TRB) held in Washington D.Co
Whenmeeting vehicle emission requirements, vehicle manu=
in January 11-14, 1993. Weacknowledge helpful commentsfrom
facturers encounter two types of costs: initial vehicle control cost
these individual reviewers: three anonymous reviewers from
(up-front initial cost) and the cost of recall. This study estimates
TRB, two anonymous reviewers from this journal, Thomas
the up-front cost only. The cost of recall is what a manufacturer
Cackette of California Air Resources Board, Karl H. Hellman of
has to spend "for fixing vehicles that fail to meet emission stanthe U.S. EPA, LeRoy H. Lindgren of Rath & Strong, Inc., and
dards during their useful lifetime (currently defined as 5 years or
Daniel L. Millerick of Ford Motor Company.However, the views
50,000 miles, whicheveris reached first). To ensure that vehicles
expressed in this paper are solely ours, and do not necessarily
meet emission standards during their useful lifetime, manufacturrepresent the views of financial sponsors, survey participants, or
ers lend to design vehicles to produce emissions below emission
individual reviewers.
standards, creating a marginof safe ty. As indicated by Khazzoom,t’~
manufacturers may reduce the sum of the up-front cost and the
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About
the Authors
At thetimeof writing,Q. Wang
waswiththe Instituteof
Transportation
Studies,
University
of California,
Davis,
CA85616.
Wang
is now
withtheCenter
for Transportation
Research,
Argonne
National
Laboratory,
Argonne,
IL 60439-4815.
D. Sperling
is with
theCivilEngineering
Department,
Division
of Environmental
Studiesand
Institute
of Transportation
Studies,
University
ofCalifornia,
Davis,CA95616.
C. Klingis withtheDepartment
of Economics,
IowaStateUniversity,
Ames,
Iowa50011.
During
thisstudy,
K[ing
wasaffiliatedwiththeDepartment
of Agricultural
Economics,
University
of California
atDavis.
Thismanuscript
was
submitted
for
peerreviewonJanuary
21, 1993.Therevised
manuscript
was
received
onApril21,1993.