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(3). Section 5.4—Lifetime Cost of Technologies to vehicle Owner-Operator



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(3). Section 5.4—Lifetime Cost of Technologies to vehicle Owner-Operator

641. Comment ARB staff mistakenly concluded that turbocharging in combination with engine downsizing would reduce consumer fuel costs because it failed to account for the fact that, to achieve the engine downsizing assumed, premium fuel would be required, which would cost 20 cents more per gallon. In response to my testimony, the ARB staff told the Board that its estimate of improved fuel economy was not based on the assumed use of premium fuel. As explained in detail below, the computer modeling used to estimate the fuel economy benefits of turbocharging was based on the use of premium fuel and the argument being made in support of the claim that the fuel economy improvement is representative of what can be achieved with regular fuel is not credible.

In the email to CARB, AVL acknowledges that “For the GDI Stoichiometric Turbocharged engine technology, the engine full load curve and maps used for simulation represent 95 RON (premium) fuel operation.” However, AVL then offers the opinion that “AVL believes the assumed technologies (Dual Independent Cam Phasers and Gasoline Direct Injection) would allow operation on 91 RON (regular) fuel without reducing full load output” when “large valve overlap” is used and the cylinder is efficiently purged of “residual gases.”

The explanation for why the same results could have been obtained with 91 RON fuel is opaque. If AVL is saying that it did not account for the use of cam phasers, then presumably the engine on which the engine map is based would have been equipped with exhaust gas recirculation (EGR). External EGR does not increase the octane requirement of the engine; it reduces it. Using cam phasers to eliminate internal EGR does not result is a lower octane requirement than an engine with external EGR (or an engine with no EGR).

Second, the combination of compression ratio and spark timing that can be tolerated at “full load” is not the key issue here. Virtually all passenger cars and light-duty trucks have a high enough power-to-weight ratio so that testing with the driving cycles used for the CAFÉ test procedures involves no operation at full load. Under part load operation, residual gases are required to achieve adequate NOx control. AVL’s explanation for why the premium fuel engine map is representative of regular fuel operation doesn’t apply at part load and it therefore does not justify the use of a premium fuel engine map to estimate the fuel economy of a turbocharged engine using regular grade fuel.

An additional problem with AVL’s analysis is that the fuel economy benefits assigned to the combination of turbocharging and engine downsizing did not account for the reduced launch performance associated with off-idle turbocharger lag. To maintain launch performance, a larger engine would be required and fuel economy would be reduced. (Second Declaration of Thomas C. Austin, Sierra Research)

Agency Response: Staff disagrees with the comment. The commenter fails to take into account the value of direct injection engines. The turbocharged engine scenarios that staff relied upon also included a direct injection engine. Because of the cooling effects of direct fuel injection into a cylinder, compression ratios can be safely increased, and higher specific outputs can be achieved from the engine using regular fuel. A number of direct injection, turbocharged engines are being introduced currently, and the reviews on these engines have been very favorable from a performance standpoint. Also, variable geometry turbochargers in conjunction with 6 speed automatic transmissions can achieve very good launch characteristics when used in conjunction with high compression ratios. Given that AVL consults with numerous manufacturers worldwide regarding advanced engine designs and is involved in their own advanced development efforts, staff believes it is appropriate to rely on their expertise.

642. Comment: Mr. Austin said that the NESCCAF study understated the net costs of vehicles equipped with turbocharger technology because the simulation modeling assumed the use of premium gasoline, while the cost benefit analysis used the cost of regular gasoline. This statement is largely false, for the following reasons.

First, for the NESCCAF technology packages that couple turbocharger technology with direct injection gasoline (GDI) technology, AVL design engineers have determined that the fully estimated greenhouse gas (GHG) reduction benefits can be attained using regular gasoline. Therefore, the benefits and costs assumed for these technology packages in the NESCCAF study are accurate. It is our understanding that all of the turbocharger technology packages utilized by the Air Resources Board in developing their regulation are combination GDI/turbocharger technology packages, which do not presume a requirement for premium gasoline.

Only the NESCCAF technology packages that couple turbocharger technology with conventional MPFI (multi port fuel injection) would require the use of premium gasoline to capture the fully modeled GHG benefits. There were three technology packages that included the MPFI/turbocharger technology combination. The cost benefit analysis for two of the packages concluded that over the life of the vehicles, the net savings to consumers would be approximately $1,600. For the third package including MPFI and turbocharger technologies, the cost benefit analysis showed a net lifetime savings of $1,400. This is assuming the use of regular gasoline at a cost of $1.58 per gallon. Premium fuel costs approximately 10% more than regular gasoline. If the lifetime fuel savings for the three packages is adjusted to account for the use of premium fuel instead of regular fuel, the lifetime cost savings of the three packages would be reduced by approximately $160 for two packages and $140 for one package. As a result, the lifetime savings would be $1,440 for two packages and $1,260 for the third package. This is a modest change, which does not alter the conclusion of the study: these three technology packages provide substantial GHG reduction benefits at a net cost savings to consumers. (Coralie Cooper, Northeast States Center for a Clean Air Future (NESCCAF))

Agency Response: Staff agrees with the comment, which provides information supporting ARB’s previous responses on this issue.

643. Comment: In addition to the lifecycle cost analysis presented in the ISOR, CARB staff presented the Board with a revised analysis based on a gasoline price of $2.30/gallon during the public hearing. As shown below, when our analysis is revised to reflect this higher gasoline price, the standards still have a negative net present value to consumers.

In performing the revised analysis, we also updated the discount rate. (Sierra Research Supplemental Analysis of Engineering Costs and Benefits and Cost-Effectiveness, Appendix P, P. 17)

Table 3 shows how the lifetime cost analysis changes when the gasoline price is increased to $2.30/gallon and the discount rate used by Sierra is increased to 10%. The higher gasoline price increases the “base cost” under the no-regulation case and it also increases the value of the fuel savings over the lifetime of the vehicle. Using CARB’s assumptions, the net savings associated with the regulations increases from $1,703 to $2,601. Using Sierra’s assumptions, the net cost increase drops from $3,129 to $2,759. In other words, we still show that the cost of the regulations substantially exceeds their lifetime benefits even when the assumed long-term fuel price is increased to $2.30/gallon. (Sierra Research Supplemental Analysis of Engineering Costs and Benefits and Cost-Effectiveness, Appendix P, P. 20)

Agency Response: Staff disagrees with the comment. As noted in previous responses, Sierra’s lifecycle cost analysis is based on a completely different set of assumptions than those used by the ARB staff. The only similarity between the two analyses is that both assume the same gasoline prices of $1.74 and $2.30 per gallon. In this case, the main source of difference between the two analyses is the assumption with regard to the initial price increase for PC/LDT1. In its analysis, Sierra estimates a price increase of $4,573 for PC/LDT1 due to the regulation while ARB assumes a price increase of $1,064. This represents a difference of $3,750. Sierra also estimates the lifetime savings of $2,161 while ARB estimates the lifetime savings of $3,665, representing a difference of $1,504. ARB continues to believe that Sierra’s analysis is based on a number of erroneous assumptions. See for example responses to comments 247,253,254, and282.

644. Comment: Using our original assumptions, Table 5 shows how our estimate of lifetime gasoline savings for LDT2s, ignoring the rebound effect, compares to the estimate made using CARB’s methodology. Note that the “CARB NPV” column has been substantially modified to correct an error in our September 22, 2004 report. Although our main report contained the correct estimate of fuel savings using CARB’s assumptions, the table in attachment C-1 of our earlier report had numbers in CARB NPV column that did not reflect CARB’s error in the baseline fuel economy estimate described above. The original table showed an NPV value of $899 using CARB’s assumptions; the correct value, as shown in the corrected table, is $2,061. The original estimate using Sierra’s assumptions was shown correctly as a net loss of $540. (Sierra Research Supplemental Analysis of Engineering Costs and Benefits and Cost-Effectiveness, Appendix P, P. 21-22)

Agency Response: For the LDT2 category, the main source of difference between Sierra and ARB analyses is the benefit estimations, rather than the increase in vehicle price. Sierra estimates a lifetime benefit of $873 for LDT2 while ARB estimates a lifetime benefit of $3,090, a difference of $2,217. The significant difference in benefit estimation is the result of noticeable differences in assumptions with regard to lifetime VMT, vehicle life span, operating cost savings, and discount rate that staff has addressed in numerous previous responses (see for example the responses to comments 247,253, and 282. ARB staff continues to believe that the assumptions used by Sierra are erroneous.

645. Comment: Table 6 shows how the lifetime cost analysis changes when the gasoline price is increased to $2.30/gallon and the discount rate used by Sierra is increased to 10%. As with passenger cars and LDT1s, the higher gasoline price increases the “base cost” under the no-regulation case and it also increases the value of the fuel savings over the lifetime of the vehicle. Using CARB’s assumptions, the net savings associated with the regulations increases from $2,061 to $3,056. Using Sierra’s assumptions, the net cost increase drops from $540 to $362. We are therefore still showing that the cost of the regulations exceeds their lifetime benefits even when the assumed long-term fuel price is increased to $2.30/gallon. (Sierra Research Supplemental Analysis of Engineering Costs and Benefits and Cost-Effectiveness, Appendix P, P. 22)

Agency Response: The use of the higher gasoline price, as expected, increased benefit estimations by both ARB and Sierra. However, Sierra’s benefit estimation was partially offset by the increase in the discount rate from 8% to 10%. ARB staff continues to stand by its analysis and believes Sierra’s analysis is based on a number of erroneous assumptions. See response to comments 629 through 642.

646. Comment The Auto Clubs are concerned about the potential for and likelihood of additional costs to consumers for the purchase of new vehicles. We understand that it is expected that the new regulations would result in lower operating costs for these vehicles than would otherwise be the case if the regulations were not in force. As a result, the overall evaluation of the cost impact to consumers must balance the benefit to the consumers of the operating cost savings with the increase in new vehicle purchase prices for the vehicles. (California State Automobile Association and the Automobile Club of Southern California)



Agency Response: The staff analysis demonstrated that even for the mid-term technologies, consumers would payback their investment in less than 5 years through reduced operating costs. For the near term, the payback typically occurs in less than 3 years. Since this payback calculation was predicated on gasoline at a much lower price than in the market today, the payback would be even sooner at today’s fuel prices. Since most purchasers finance their vehicles, staff calculated there would be a net reduction in monthly expenses for vehicles financed over a typical 5-year period due to reduced operating costs of vehicles meeting our proposed requirements.

647. Comment: Automobile operation, maintenance, and repair represent major costs to consumers that the regulation is likely to impact. The CARB analysis focused on the expected potential for reductions in vehicle operating costs as a result of less fuel consumption on a per mile basis. In addition, CARB indicated that it expects that there will be reductions in operating costs related to the air conditioning system.

The Auto Clubs are concerned about the cost impact that increasing per gallon gasoline prices has upon the automobile user. To the extent that automobiles can be more fuel-efficient, the operating costs to consumers can be reduced. As a result, the potential savings in operating costs from successful implementation of these regulations may represent a significant financial benefit to the consumer. (California State Automobile Association and the Automobile Club of Southern California)

Agency Response: Staff agrees with the comment. The staff analysis demonstrated that the regulations will result in lower vehicle operation costs for consumers. To the extent that fuel prices increase in the future, which seems likely in light of recent market forces, the savings will be more even more significant than estimated by staff.

648. Comment: We encourage CARB and the automobile manufacturers to work together to keep both new purchase and operating costs affordable and economical to consumers. In fact, the authorizing legislation (AB 1493) requires that the new regulation be “economical to an owner or operator of a vehicle, taking into account the full life-cycle costs of a vehicle.” (California State Automobile Association and the Automobile Club of Southern California)

Agency Response: As noted in numerous previous responses, ARB believes that the regulations have met the intent of AB 1493 in that they are economical to the consumer when accounting for the full life-cycle costs of a vehicle.

649. Comment: On October 19, 2004, CARB’s website listed a Notice of Public Availability of Modified Text, including Attachment II: Additional Supporting Documents and Information. One of those documents was entitled “Estimation of Average Lifetime Vehicle Miles of Travel” and included a review and discussion of CARB staff’s methodology for estimating average vehicle lifetime and a critique of several aspects of the methodologies described by Sierra Research in the pertinent part of Sierra’s written testimony to CARB (Attachment C-3 to Sierra’s September 22, 2004 report, “Mileage Accrual and Full-Life Mileage of Vehicles”).

CARB’s main conclusions are as follows:



  • • “The method used by ARB staff still results in the best available estimate of average lifetime VMT (vehicle miles traveled). Though staff examined other approaches for making this estimate, we did not arrive at a method that is superior to that presented in the staff report.”

  • • “…the alternative method presented by SRI (Sierra) is likely to result in a significant underestimation of lifetime VMT.”

  • • “…we believe that the method used in the staff analysis results in a reasonable estimate of average lifetime VMT, and that no change to the MAC credit is necessary.”

  • • “ARB does not find that SRI provides compelling evidence that our (ARB’s) estimates of average lifetime VMT are substantially overestimated.”

  • • CARB has not demonstrated that its estimate of VMT is the “best available” and CARB has failed to make any downward adjustment for what it acknowledged was a clear error in its methodology for calculating lifetime average VMT.

  • • Five independent data sources all show that CARB’s lifetime average VMT estimates are substantially inflated and that the true lifetime average VMT value for cars and trucks is approximately 155,000. These sources are (1) a snapshot of rollover-adjusted Smog Check data; (2) California’s Roadside Pullover data; (3) data from CARB’s pilot scrappage program in Los Angeles; (4) scrappage data collected by the California Bureau of Automotive Repair; and (5) Kelly Blue Book data on sales offerings of cars in Los Angeles.

After reviewing CARB staff’s response, including rationale, we conclude that: (Sierra Research Supplemental Analysis of Engineering Costs and Benefits and Cost Effectiveness, page 2. A similar, related comment is found as item #10 in the Second Declaration of Thomas Austin, dated November 5, 2004)

Agency Response: Staff disagrees with the comment. During the September 23, 2004 Board hearing on the proposed AB 1493 regulation, Sierra Research, Inc. (SRI) provided both oral and written comments asserting that ARB staff had overestimated the miles traveled (VMT) in a vehicle’s average lifetime. Sierra also stated the overestimation of VMT had in turn resulted in overestimation of lifetime fuel savings and the payback period for vehicle owners. ARB staff responded to these assertions in the document Estimation of Average Lifetime Vehicle Miles of Travel, which was included as an attachment to the 15-day notice package (available at http://www.arb.ca.gov/regact/grnhsgas/vmt.doc).

In the above comment, SRI purports to list ARB staff’s main conclusions. However, SRI failed to include one very important conclusion dealing with the impact on operating cost savings. The following paragraph is found on page 3 in Estimation of Average Lifetime Vehicle Miles of Travel:

In staff’s September 24 presentation to the Board in response to the SRI comments, we provided the results of a sensitivity analysis for the lifetime operating cost savings and payback period. Using the SRI estimate of 155,000 miles for average lifetime VMT, we calculated lifetime operating cost savings of $2,142 (based on gasoline price of $1.74/gallon in 2004 dollars) and a payback period of 5.9 years. These figures compare to the results presented in the staff’s August 6, 2004 Initial Statement of Reasons (ISOR), showing lifetime operating cost savings of $2,691 and a payback period of 5.6 years for light duty vehicles subject to the regulation. Thus, even with SRI’s low estimate of lifetime miles traveled, the regulation is very cost effective to consumers and has a reasonable payback period.

Thus, the issue of which estimate of lifetime VMT to use is not critical to the outcome of determining the cost effectiveness and payback period for the regulation.

ARB staff continues to acknowledge that our estimates of lifetime VMT are biased high, but as the above analysis of cost effectiveness and payback period shows, this does not alter the conclusion that the regulation is highly cost effective for consumers.

We also note that SRI’s various analyses of lifetime VMT continue to show bias toward underestimation. SRI has used both BAR and ARB scrappage data in estimations of lifetime VMT. As expressed in “Estimation of Average Lifetime Vehicle Miles of Travel,” ARB staff has concerns with using this data to determine end of life mileage, since vehicles must be in running condition when scrapped. SRI defends their method by inferring that all scrapped vehicles only “marginally” meet the requirements, and therefore are at end of life. However, these requirements were written with the express purpose of ensuring that the vehicles scrapped are not vehicles at end of life, but rather vehicles that would continue to be repaired and driven unless an economic incentive to replace them is provided to their owners.

In their analysis of BAR scrappage data, SRI states that “…we (SRI) have removed from the data set a relatively small number of vehicles with reported odometer values greater than 500,000 miles.” SRI offers no explanation as to why these high mileage vehicles were removed from the analysis. SRI offers no evidence that these high mileage vehicles are not valid and should be removed from further consideration. Removing valid vehicles with greater than 500,000 miles from the analysis results in an underestimation of lifetime VMT.

In discussing the BAR scrappage data, SRI states, “Furthermore, because of its importance in the scrappage program, greater care should have been taken to correctly transcribe odometer readings at the time of scrappage than is usually taken by Smog Check technicians. Therefore, we believe, all other factors being equal, that Sierra’s assessment of ending odometer readings for the scrappage program, with rollover accounted for, is more reliable than CARB’s assessment.” However, there is no evidence, anecdotal or otherwise, to show that odometer readings for scrappage are handled any differently than odometer readings for Smog Check inspections. ARB staff disagrees with SRI’s assertion that its odometer data are more reliable than those used by ARB.

SRI did an analysis of lifetime VMT using data collected from a website supported by Kelley Blue Book. This website offers national listings of vehicles for sale. SRI used data taken from this website to correlate vehicle price and vehicle odometer reading in the Los Angeles area for nine specific make and model of vehicles. SRI used this data to construct regression lines to project odometer reading at scrappage. ARB staff has examined this website and is concerned that it overwhelmingly reflects late model vehicles offered for sale by dealerships. ARB staff queried for listings in Los Angeles for the Toyota Corolla, the same vehicle model used by SRI as an example in their analysis. Staff found roughly 900 listings for the Corolla, of these, over three-fourths were for 2000 – 2005 model year used vehicles being sold by new car dealerships, primarily Toyota dealerships. Since dealerships tend to auction off higher mileage vehicles, and only offer the more desirable, low mileage vehicles for resale, the listings found on this website will be biased toward lower mileage vehicles. This would skew the regression analysis toward underestimation of lifetime VMT. ARB staff also found that for the 1999 and older vehicles that fully one-third to one-half of the sales listings did not include the odometer mileage. Again this would bias the data toward the newer, low mileage vehicles which almost always had the odometer mileage listed.

650. Comment: ARB staff overestimated the fuel savings associated with the proposed standards for light-duty trucks by failing to account for the fuel economy improvements required under the 2007 federal CAFE standards. (Second Declaration of Thomas C. Austin, Sierra Research)

Agency Response: Staff disagrees with the comment. See response to comment 251.

c.

ISOR Section 6—Climate Change Emission Standards

(1).

Section 6.1—Determination of Maximum Feasible Emission Reduction




Standard

651. Comment: The regulations drafted by CARB as reflected in the 15-day notice meet the requirements of AB 1493 that the regulations achieve the “maximum feasible and cost-effective reduction of greenhouse gas emissions from motor vehicles.” (Eric Haxthausen and Kate M. Larsen, Environmental Defense)

Agency Response: ARB appreciates the comment. No further response is required.

652. Comment: The Auto Clubs are pleased that the regulation follows the language and intent of the legislation in preserving consumer choice. The Auto Clubs encourage involved parties to ensure that the regulation does not result in a reduction in classes of vehicles or reduction in vehicle attributes that have positive utility to consumers. Consumers should continue to have a wide range of options for new automotive vehicles so that they can make choices according to their individual preferences and situations. (California State Automobile Association and the Automobile Club of Southern California)

Agency Response: Consistent with other emission programs adopted in the past, ARB took great care in selecting technologies that can reduce emissions while maintaining the vehicle performance to which consumers are accustomed. During the implementation phase, ARB will endeavor to work with the automotive industry to assure that consumers will continue to have the wide choice of vehicles that they have today.

653. Comment We are concerned that staff estimates of the timeframes necessary for companies to integrate new technology into their systems are overly optimistic. Testimony to date has indicated that the current report timeframes are unrealistically short for a company to adapt a new technology, design it, test it, perfect it, and rebuild factories to manufacturer it as part of a product offering supported by warranties. (Robert W. Lucas, California Council for Environmental and Economic Balance)

Agency Response: The technology paths outlined by staff include components that are already in production in numerous models, with most of the new technologies being provided by suppliers rather than vehicle manufacturers. Most of the work of the vehicle manufacturers will involve integration of new technology. Given that the endpoint of the proposed requirements is a decade away, there is plenty of time to incorporate new technologies as part of the process when new models are being designed and tested. Staff also addressed the issue of the cadence of technology rollout in response to comments 302 through 306.

654. Comment: To be competitive in the automotive industry today, it is necessary for manufacturers to ensure that their products and production corresponds to shifting customer demands and federal and state requirements. This is leading to shorter product life cycles requiring a high degree of flexibility, low-cost/low-volume manufacturing skills, and short time to market. Continuing improvements and emission reductions to comply with CARB’s adopted regulation will benefit from this trend toward greater agility, making CARB’s analysis of costs and necessary lead-time for manufacturers a conservative estimate. (Eric Haxthausen and Kate M. Larsen, Environmental Defense)

Agency Response: ARB agrees with the comment.

655. Comment: We encourage CARB to work towards realistic, achievable emissions standards in the development and implementation of its greenhouse gas emissions standards. The focus that CARB has taken on “off-the-shelf” technology is a preferable method than the “technology-forcing” approach that CARB has used with other regulations in the past. As we have seen with some regulations, such as the zero-emissions mandate, the technology forcing approach does not necessarily result in a benefit to consumers in the marketplace that is commensurate with the costs of research and development that are often passed on to the consumer. (California State Automobile Association and the Automobile Club of Southern California)

Agency Response: While the cost of battery electric vehicles has not declined to the point that they are competitive with conventional vehicles, the ZEV mandate resulted in numerous advancements that made the requirement successful. For example, component development that took place in response to the mandate, such as advanced electric motors, electronic controls technology, continuously variable transmission concepts, and even battery and ultracapacitor technology, have been key to emergence of hybrid electric vehicles that are increasingly attractive to consumers. These vehicles also will serve as the platform for future hydrogen fuel cell zero emission vehicles. Therefore, ARB staff continues to believe that technology forcing needs to be an element of our long-range programs. Nonetheless, the near term technologies outlined in the staff report are already available in numerous vehicle models. While the mid-term technologies are generally emerging, we believe that setting technology forcing goals will spur further development that will ultimately help industry in meeting the proposed greenhouse gas requirements.

656. Comment Since the emissions standard is a performance-based emissions standard, it is still possible that some automobile manufacturers may choose to comply with the new regulations by “down-sizing” some of their fleet. Since the emissions standard is stated in terms on “grams per mile” of emissions, a reduction in vehicle size and weight would be one potential means to contribute to meeting the emissions standard. We encourage automobile manufacturers to continue to meet and exceed all automobile safety standards. (California State Automobile Association and the Automobile Club of Southern California)

Agency Response: As noted in previous responses, feasibility to the requirements has been demonstrated without resorting to reductions in vehicle size and weight. However, should manufacturers choose this compliance option, their vehicles would still be required to comply with California and federal vehicle safety standards.

657. Comment: While the proposed changes which triggered the 15-day notice do not raise additional material issues for AIAM’s member companies, the Association is particularly concerned that the staff report completely fails to address the issues raised in AIAM’s previous comments. Indeed, the report seems to virtually ignore most of the other comments, which were in any way adverse to the staff’s analysis and conclusions. AIAM believes that from both a policy and a legal standpoint the Board is obligated to not only address but resolve the many differences in the staff analysis and amend its conclusions accordingly. To facilitate accommodating that responsibility, I have attached another copy of AIAM's 45-day comments. (Association of International Automobile Manufacturers, Inc.)

Agency Response: AIAM’s resubmission of its previous 45-day comments does not address (and is therefore outside the scope of) the 15-day changes noticed and requires no response here.

With regard to the status of those comments, however, staff did not ignore the comments previously submitted by AIAM. Rather, staff carefully considered all of the issues raised by AIAM and made changes to the staff analysis as appropriate. In addition, staff fully responds to all AIAM comments elsewhere in this Final Statement of Reasons for the rulemaking. The commenter does not here raise any legal issues to which the Board must respond.

658. Comment: To be competitive in the automotive industry today, it is necessary for manufacturers to ensure that their products and production correspond to shifting customer demands and federal and state requirements. This is leading to shorter product life cycles requiring a high degree of flexibility, low-cost/low-volume manufacturing skills, and short time to market. A shortening of product cycles is particularly notable in the light truck segments, which traditionally had longer cycles than cars but now face an intensely competitive market situation brought about by their popularity. Many studies and industry trade press articles have highlighted this shift towards flexible manufacturing systems and lean manufacturing in he automotive industry. Following in the footsteps of Asian auto manufacturers, American automakers are switching over and starting to reap the benefits. Automotive News reported that Ford will have 80 percent of its plans converted to flexible manufacturing by 2010. (Haxthausen, Environmental Defense, 11/05/04).

Agency Response: No response necessary. This comment supports the staff analysis.

659. Comment: Flexible automotive manufacturing systems promise to speed time-to-market while adding significant gains for automakers in both cost efficiencies and product quality. In a Society of Manufacturing Engineers article, DaimlerChrysler reported an 8.3% reduction in time to design and manufacture a vehicle due to their switch to lean manufacturing. Although much of the adaptability of the flexible system has allowed manufacturers to move between existing vehicle modes, it will also allow them to make more speedy and efficient adjustments in power train design to meet federal and state emissions standards. Many of the elements of Ford’s flexible manufacturing systems were designed to enable improvements in engine performance and facilitate emissions reductions. Continuing improvements and emission reductions to comply with CARB’s adopted regulation will benefit from this trend toward greater agility, making CARB’s analysis of costs and necessary lead-time for manufacturers a conservative estimate. (Haxthausen, Environmental Defense, 11/05/04).

Agency Response: No response necessary. This comment supports the staff analysis.


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