Institute of Transportation Studies University of California, Davis
Automotive Consumers and Fuel Economy?
Ken Kurani, Tom Turrentine, Reid Heffner (with gracious help from Nic Lutsey)
ITS/I-House Energy Seminar Series University of California, Davis
14 February 2007
University of California Energy Institute US Department of Energy The Energy Foundation Toyota Motor Sales
Conclusion
The particular version of economic rationality that has served as the sole model of human behavior in the analysis and formation of transportation energy policy in the US is too rare in the population to be the sole model incapable of accounting for observed behaviors in the market for automobiles and fuels and therefore needs to be improved or replaced.
But with what?
1. Fuel Economy (2003-4)
How do households think about automotive fuel economy?
Household interviews on vehicle purchase and use
In-home, all decision makers Purchased a vehicle (new/used, car/truck) within previous year ~2 hours, with a little homework ahead of time
Make as few assumptions as possible,
Inductive approach Build knowledge one household at a time
Four-step semi-structured interview protocol with an illustrative sample of 57 households.
Specific Illustrative sample
A complex cross-section of personal, social, and geographical variables to explore the variety of decision making if not necessarily the distribution.
1. Pilot interviews (Interview design and testing) 2. Students just graduating (relatively poor, but informed; Davis) 3. Workers in state resource agencies (informed; Sacramento) 4. Off-road enthusiasts (vehicle enthusiasts; fuel consuming hobby; Auburn) 5. Farmers/ranchers (careful business people; rural areas) 6. Computer hard/software engineers (global connected; quantitative skills; EV aware; Roseville, Folsom) 7. Financial services (quantitative financial skills; Auburn, Sacramento) 8. Military personnel (know the personal (non-fuel) costs of oil imports; Sacramento, Wheatland) 9. Recreational industry (lifestyle driven; Sacramento, Truckee) 10. Hybrid buyers (already bought a high mpg car; Santa Cruz, Davis)
2. HEV Buyers (2004-6)
Why do people buy HEVs?
Cars as symbols
In modern consumer culture, products are important symbols.
Symbolism in Vehicle Purchases
Symbolic meaning key to early BEV owners (Gjen and Hrd, 2002) Compact HEVs buyers seek symbolic meaning (OEC, 2003; UCD, 2004) 1/3 of current HEV buyers purchase to make a statement (CNW, 2006)
Methods
Two rounds of interviews with HEV owners in northern California
1. 2. Honda Insight and Civic Hybrid, Toyota Prius (25) Honda Accord Hybrid, Toyota Highlander Hybrid and Camry Hybrid, Ford Escape Hybrid (20)
Two-Hour, Semi-Structured Interviews in Home Setting Situate vehicle purchase in larger context of participants lives
Vehicle history, job and activities, social networks, personal views
A neo-classical definition of rational
Each individual participating in the society is motivated by self-interest and acts in response to it. decision makers are assumed to be purposive individuals whose choices are consistent with their evaluations of their self-interest. it is assumed that these individuals choices could be predicted simply from a knowledge of their preferences and the relevant features of their alternatives.
Starting from this definition, how might one answer this? When will a consumer buy a higher fuel economy hybrid instead of a lower fuel economy ICEV (for example)? In Greek, when
(Phybrid-ICE)t0 t (pgt)(mpgICE)-1(DICE,i,t) t (pgt)(mpghybrid)-1(Dhybrid,i,t)
In English, when an identifiable purchase price premium for the (assumed higher price) higher fuel economy hybrid vehicle is less than or equal to the sum of fuel cost savings generated by the hybrid vehicle over time (where for simplicity of presentation Ive ignored discounting that stream of benefits.)
Many such analyses say Consumers Shouldnt be Buying Hybrids Higher gasoline prices would be needed to make even the mild hybrid economically logical for a typical consumer.
Argonne National Laboratory. (2001)
On straight economics, these vehicles, make little sense at todays prices
Autoweek. June 27, 2005.
Most Hybrid Vehicles not as Cost-Effective as they Seem, Reports Edmunds.com
Edmunds.com. June 1, 2005 Also, Consumer Reports, National Research Council, Wall Street Journal
t, payback period
30
20
10
0 One Two Three Four Five Years How soon, in years, would the fuel savings have to pay back the additional cost to persuade you to buy the higher fuel economy option? (ORCI for NREL, 2002. N = 1,000) Six >6 Don't know
Hypothetical sub-distributions based on interviews
Finance Period 30 Optimists 20 Magic number 10 Wrong question Guessing Length of Ownership
Percent
0 One Two Three Four Five Six >6 Don't know
What do consumers say?
Consumers do not have the most basic information.
Travel distances, summed distances, fuel prices, fuel costs, summed fuel costs, and certainly not the prices of vehicles they did not buy or future streams of any of these; few know the mpg of their vehicles.
Buyers of hybrid vehicles have not compared their hybrids to
the vehicles analysts commonly assume.
Hybrids are often the only vehicle in the choice set.
Going back to our equation:
(Phybrid-ICE)t0 t (pgt)(mpgICE)-1(DICE,i,t)
t gt hybrid -1 hybrid,i,t)
xx x (p x x )(mpg x
x ) (D x
A Framework for Thinking about People and their Vehicles
1. Symbols can cause Action 2. Action can be constructed from social interaction, that is,
the transmission or exchange of symbols (communication)
3. People act to create, sustain, or change self-identity; Selfidentity is constructed as a narrative
4. In modern consumer societies, consumption is tied to these
identity narratives.
a) Investment in consumption outputs b) Symbols and accessible attributes of alternatives
1. Symbols can cause car buyers to act
Gasoline prices
From Sequoia to Prius: from deliberative to impulsive
Hes no longer buying just a car
Hybrids electric vehicles
prompted purchases, one vehicle choice sets, and plot lines
Vehicle Purchase incentives
Zero percent financing
2. Socially transmitted purchases
Imitation: Actions of strong social referents may be
repeated by others in their network
They can buy anything they want, and they bought a Prius. They would have investigated this car very carefullyHer husbands an engineer ya know. Supporting Group membership
3. Creating, sustaining identity narratives
Actions are taken to create or support self-identity
Mustang, Mustang, Mustang, Mustang Well buy a boatsomeday
Actions are taken to avoid being someone
Why some people wont compare a Corolla to a Prius
Who am I?
Honda Civic, pimped Chevy Silverado, BMW 5 series sedan, Honda Accord Hybrid,
4a. (Novel) Consumption Outputs
The thing I like best about my Prius is that it shuts off when you stop. When Im sitting in the line of cars at school, seeing all those other cars and giant SUVs idling, I wonder why everybody doesnt [buy a Prius].
Reducing pollution at her grandchildrens school Other novel consumption outputs
Investing in energy efficient driving Investing in lower resource consumption, including driving less
4b. Symbols and accessible attributes of perceived alternatives Relevant measures of attributes
News of differencea vehicle with non-incrementally higher fuel economy can symbolize goals other than dollar savings
Highdoubling, triplingMPG allows hybrid buyers
to:
Lower resource consumption: Live lighter Limit financial payments to oil producers Represent themselves as a smart consumer, saving money
Some examples
1. One HEV-owning households semiotic territory 2. Rational analytic and symbolic time 3. Narratives and symbols in marketing
Insight Further from Fossil Fuel and Those Who Produce It
Hybrid
Civic Hybrid
Civic too subtle Prius Closer to Alternative Source of Power Electric Drive Stealth Mode Obviously a Hybrid
Techno-marvel Idling in traffic as gross Not Wasteful More Efficient Latest Technology Old technology as stupid; resisting innovations as stupid Smart Whole other thing Whole other space
Lower Emissions
Use Less Gasoline So much is out of our control Oil Control, companies as Empowerment, market Independence manipulators bloodsuckers, warmakers Not Paying Sending Oil Message to Companies Automakers
Reduce Impact on Environment
Embracing Different New Technology
Technology Cachet
Technology lifestyle Prius as geek-a-rific
Preserving the Environment Think differently
Lifestyle Commitment
Good for Future (Mine and Kids)
Seeking Independence
Failing Democracy
about life, how their lives impact environment and community Community Fits Personal Involvement Values
Not a Performance Car Not About Image
What are all the meanings we heard?
Wave One HEV interviews Denotations Connotations
Orientation; Intelligence / Awareness
Preserve the Environment: Ethics; Concern for Others; Community Oppose War: Ethics Manage Finances: Maturity / Sensibility; Ethics;
Intelligence / Awareness
Reduce support to Oil Producers: Personal Independence;
National Independence
Embrace New Technology: Individuality;
Advocate to Manufacturers
Supply Curve Analysis of Vehicle Strategies to Reduce GHGs
125 100 75 50 25 0 0 Improved -25 -50 -75 GHG Emission Reduction in 2025 (million tonne CO2 eq./yr.)
In-use factors HFC 152a Advanced HEV Efficiency (38% CO2 g/mi) EtOH (20% by 2020)
Rational Analytic Time Symbolic Time 200 400 600 800
Incremental Efficiency (~25% CO2 g/mi)
QuickTime and a TIFF (LZW) decompressor are needed to see this picture.
Conclusions
Policy Analysis and Design
Use more models of what it means to be a human
being
As regards automotive fuel economy, consumers dont have even the basic building blocks of a rational choice
Fuel economy policy: initiate and sustain a national
conversationdiscourseabout energy, energy efficiency, carbon-free energy, and global warming, automobility
Alternative fuels, electric-drive vehicles, car-use reduction, land use changes, and other strategies are subject to similar re-interpretation
Automotive consumers and fuel economy Non-incremental options allow and foster nonincremental thinking, i.e., creation of new symbols.
Early hybrid buyers didnt buy just (or even importantly) lower private fuel cost. They bought symbolic as well as real fuel cost savings They bought a piece of the future. They bought a less-consumptive lifestyle. They bought the car of a smart, tech-savvy consumer. They bought into a system to produce cleaner air, lower oil consumption, and less terror. They bought a better story about themselves.
Thank you.
Expert model of fuel efficiency and fuel economy
Fuel Efficiency Useful energy out of the crankshaft to unit energy input (from fuel stored onboard) Torque/Horsepower Towing Acceleration Top speed Weight/Size/Shape Passenger room Cargo room Safety (real or percieved) Other Onboard Energy Four-wheel drive, lighting, HVAC, Entertaiment,... Fuel Economy Fuel consumption/ Range Legal: MPG... Political/market:$ per mile
Lay models of fuel efficiency/economy
1. Fuel efficiency = fuel economy
a. Classes and measures: Fuel efficiency defines classes or types of vehicles; fuel economy is a number, a numeric measure of fuel use.
2. Fuel efficiency = how much gasoline the engine uses. (MPG)
Fuel economy = money, sometimes per unit of mobile lifestyle.
3. Efficiency and economy are related by an underlying
distribution on quality.
Economy/low quality Efficiency/high quality
What is the correct inference?
$500 $0 $500 $1,000 $1,500 $2,000
$8,000 $6,000 $4,000 $2,000 $0 ($2,000) ($4,000)
Toyota Prius - Camry LE Civic Hybrid - Civic LX Escape Hybrid - Escape XLT Toyota Prius - Corolla LE Accord Hybrid - Accord EX V-6
Even if consumers accurately answer the question on the left, we risk
making incorrect inferences about the real world.
One of the conclusions of our fuel economy work is that it is unlikely that
any more than a decreasingly small minority of consumers
Understand the question, Have ever asked themselves the question before Have ever applied this logic to any vehicle purchase
