U.S. Light Duty Diesel Engine Benefits · The Martec Group is a global technical marketing research...

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U.S. Light Duty Diesel Engine Benefits

C H I C A G O • D E T R O I T • G R E E N B A Y • F R A N K F U R T • S H A N G H A I • B E I J I N G

THE MARTEC GROUP

September 23, 2015

http://www.dieselforum.org/index.cfm


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THE MARTEC GROUP CONFIDENTIAL

Diesel Technology Forum would like to further understand the benefits oflight and heavy duty diesel engines to the fleet.

Project Request

Diesel Technology Forum would like to undertake research on the benefits of new technology dieselengines in the US market.

• There is significant (media) interest in alternative fuels and battery based technologies such ashybrids and EVs and there needs to be a strong message to promote the benefits and value ofNTDE in light duty applications

• The goal is to provide new perspectives and information on proven diesel societal benefits andfuture potential gains in order to educate policymakers and the media

• State-based benefits analysis is needed to expand the targeted outreach and media targetsbeyond the national level.

The Martec Group is a global technical marketing research firm with deep experience in competitivepowertrain technology assessments.

• Experienced in the diesel engine technology market, supporting the Diesel Technology Forumwith a similar study on new diesel engine benefits in 2013

• For this engagement, we propose to develop and deliver an updated comprehensive study thatwill be successfully incorporated into the Forum’s strategic plans.



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Light Duty Objectives

Analyze historic fuel savings and CO2 reductions for 2005-2014 light duty diesel vehicles

• Aggregated by cars, trucks, and HD pickups

• National and state specific fuel savings

Targeted states to include CA and additional targets as necessary

Project potential future fuel savings and CO2 reductions for 2013-2020 for the same scenario ofvehicles and markets as above

• This projection will be based on available 3rd party forecasting information, CAFÉregulation estimates for diesel technology adoption, and projected future dieselpowertrain announcements

Biodiesel benefit analysis

• The above forecasting scenario will then be run with various levels of biodiesel in placeof B0 reference fuel and the benefits will be recalculated

• B5, B10, B20

Analyze the potential fuel and CO2 savings and generate an appropriate comparisons

• SPR, Imported oil (OPEC, Saudi Arabia, etc.), cars off the road, value of CO2 saved versusbattery factory grants, equivalent solar panel sprawl, etc.



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Methodology will follow previous study… Registration data, fuel economyvalues and average VMT will be used to calculate benefits to the fleet.

Inputs and Assumptions Provided by DTF/Martec

Output and Analysis of Data Provided by Martec

Light-duty• Polk registration data for U.S. and state

specific registrations of passenger cars, light trucks, and HD pickups.

• Actual fuel economy benefits for diesel options over equivalently performing gasoline option.

• Average vehicle miles traveled (VMT) of 15,000 miles per year

Methodology for Historic Diesel Vehicle Savings

Light-duty• Class level savings for each model

year for the U.S. based on actual registrations and EPA estimated emission rates.

• These class level savings are summed up to generate a cumulative savings to date for new technology diesel powertrains.



Light Duty – National & California

Savings to NTDE Buyer – Light Duty

National – Forecast

THE MARTEC GROUP 5

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Analysis of registration data for diesel vehicles in the U.S. yields acumulative savings curve for fuel and CO2 savings.

Inputs and Assumptions Output and Analysis

• Polk registration data for U.S. and state specific registrations of passenger cars, light trucks, and HD pickups.

• Actual fuel economy benefits for diesel options over equivalently performing gasoline option.

• Average vehicle miles traveled (VMT) of 15,000 miles per year

Methodology for Historic Diesel Vehicle Savings

• Vehicle level savings for each model year by U.S. total and for selected states based on actual registrations and average savings over gasoline equivalent powertrains.

• These vehicle level savings are summed up to generate a cumulative savings to date for diesel powertrains.



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Diesel engines sold between 2005 and 2014 have saved ~1.5B gallons of fuel.

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Million Gallons

Cumulative Diesel Savings – U.S. Market

Total savings for cars, light trucks, and HD pickupsAssumes average VMT of 15,000 miles/year

Gasoline = 8,887gCO2 /gal. Diesel = 10,180gCO2 /gal.

U.S. Market

Total Savings1.5B gallons36M barrels

9.7M tonnes CO2

Number of Models

11 14 11 11 16 15 17 19

Lt. TruckPass. Car

HD Pickup

29 29



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Passenger car diesel sales and savings have exploded in the last 3 years.

0

10

20

30

40

50

60

70

80

90

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Million Gallons

Cumulative Diesel Savings – Passenger Car

Total savings for passenger carAssumes average VMT of 15,000 miles/year


U.S. Market

2014 Diesel VehiclesAudi A3Audi A6Audi A7Audi A8BMW 3-seriesBMW 5-seriesChevy CruzeMercedes E-ClassMercedes S-ClassVolkswagen BeetleVolkswagen GolfVolkswagen JettaVolkswagen Passat

Total Savings80M gallons1.9M barrels

0.4M tonnes CO2



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Light duty Ram pickup diesel application is responsible for significantsavings between 2013 and 2014.

0

10

20

30

40

50

60

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


Million Gallons

Cumulative Diesel Savings – Light Truck

Total savings for light trucksAssumes average VMT of 15,000 miles/year

U.S. Market

2014 Diesel VehiclesAudi Q5Audi Q7BMW X3BMW X5Dodge RamJeep Grand CherokeeMercedes GLMercedes GLKMercedes MLMercedes RPorsche CayenneVolkswagen Touareg Total Savings

48M gallons1.1M barrels

0.2M tonnes CO2



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2005-2014 Chrysler, Ford and GM HD diesel pickup trucks have saved the USconsumer 1.4B gallons of fuel.

0

200

400

600

800

1,000

1,200

1,400

1,600

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


Million Gallons

Cumulative Diesel Savings – HD Pickup

Total savings for HD pickupsAssumes average VMT of 15,000 miles/year

U.S. Market

Diesel VehiclesDodge RamFord F-SeriesChevrolet SilveradoGMC Sierra

Total Savings1.4B gallons33M barrels

9.1M tonnes CO2



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Since 2005, new diesel vehicles in the state of California have saved theenvironment nearly 850,000 tonnes of CO2.

-

20

40

60

80

100

120

140

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Million Gallons

Cumulative Diesel Savings – California



Total Savings126M gallons3.1M barrels

0.85M tonnes CO2

Pass Car/ Lt. Truck

7%

HD Pickup

93%

Benefits by Vehicle Type

CA Market



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Putting the numbers into perspective…

The 3.9M light-duty new technology diesels introduced from 2005 through 2014 have saved theAmerican consumer:

• 9.7M tonnes of CO2

• 1.5B gallons of gasoline

• 36M barrels of crude oil

These reductions are equivalent to:

• Removing 2.0M vehicles from the road for a year

• Carbon sequestration from 8.0M acres of forests

This is an equivalent forest the size of Maryland

• Societal savings of $380M based on U.S. government value of CO2 ($39/ton)

• Roughly 14% of the Strategic Petroleum Reserve for sweet crude.

U.S. Market

“Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 “ Interagency Working Group on Social Cost of Carbon ,May 2013






THE MARTEC GROUP 13

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Diesel fuel prices are now trending very closely to gasoline: improving thepayback for choosing the technology.

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$5.00

Jan 02,2006

Jan 02,2007

Jan 02,2008

Jan 02,2009

Jan 02,2010

Jan 02,2011

Jan 02,2012

Jan 02,2013

Jan 02,2014

Jan 02,2015

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Diesel ($/Gal)

Gasoline ($/Gal)

Source: EIA Gasoline and Diesel Fuel Pricing, Sept. 14 2015



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Passenger car diesel owners will stop to refuel 9.5 less times per year.

Savings to the clean diesel

buyer

Per Year 54 Month Ownership

Fuel savings - gallons 138 623

Fuel savings - bbl 3.3 15

Fuel cost savings $210 $960

CO2 savings – metric tones 0.65 3.0

Refueling trips saved 9.5 43

Passenger Car

Assumptions: • Fuel savings based on Polk sales weighted average of diesel vehicles for 2014.• DOE Average gasoline and diesel prices for the U.S. as of 4/20/15. Gasoline = $2.49 Diesel = $2.78• CO2 conversion based on EPA’s content per gallon.• While not specifically evaluated in this study, other reports and data from used car sales indicate that diesel

powered vehicles retain a higher residual value compared to gasoline counterparts.



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Customers that choose the light duty diesel in a SUV will reduce theircarbon footprint by 6.1 metric tons.


buyer


Fuel savings - gallons 247 1,100

Fuel savings - bbl 5.9 26.4

Fuel cost savings $423 $1,900


Refueling trips saved 10 45

Light Duty Truck





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The average diesel engine in a heavy duty pickup saves the customer~$3,600 in fuel over the typical ownership cycle.


buyer


Fuel savings - gallons 418 1,880

Fuel savings - bbl 10 45

Fuel cost savings $795 $3,600


Refueling trips saved 14 65

Heavy Duty Pickup Truck








THE MARTEC GROUP 18

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Baseline assumptions for diesel engine growth yield a 7% market share andover 1.2M new diesel sales per year by 2020.

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

New Technology Diesel Engine Sales Forecast – U.S. Market

Market Share ForecastAggressive Scenario = 10%Baseline Scenario = 7%Conservative Scenario = 4%

Aggressive

Baseline

Conservative

Total sales for cars, light trucks, and HD pickups based on future EPA compliance paths, fuel requirement changes under RFS2 and ARB LCFS and announced OEM diesel vehicle introductions.

Forecast

2012-2014 Actual Diesel Sales



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Forecasted diesel savings for new diesel sales are expected to save 1.5-2.3Bgallons of gasoline.

Cumulative Diesel Engine Savings – U.S. Market

-

500

1,000

1,500

2,000

2,500

2013 2014 2015 2016 2017 2018 2019 2020

Million Gallons

Aggressive2.3B gallons12.4M tonnes CO2

Baseline1.8B gallons10.4M tonnes CO2

Conservative1.5B gallons9.1M tonnes CO2



Forecast



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Forecasted diesel savings for new passenger car diesel sales are expected tosave 0.1-0.5B gallons of gasoline.

Cumulative Diesel Engine Savings – U.S. Market Passenger Cars

-

100

200

300

400

500

600

2013 2014 2015 2016 2017 2018 2019 2020

Million Gallons




Total savings for passenger carsAssumes average VMT of 15,000 miles/year


Forecast



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Forecasted diesel savings for new light truck diesel sales are expected tosave 0.2-0.4B gallons of gasoline.

Cumulative Diesel Engine Savings – U.S. Market Light Trucks

-

50

100

150

200

250

300

350

400

450

500

2013 2014 2015 2016 2017 2018 2019 2020

Million Gallons




Total savings for light trucksAssumes average VMT of 15,000 miles/year


Forecast



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Forecasted diesel savings for new heavy duty pickup truck diesel sales areexpected to save 1.0-1.2B gallons of gasoline.

Cumulative Diesel Engine Savings – U.S. Market HD Pickups

-

200

400

600

800

1,000

1,200

1,400

2013 2014 2015 2016 2017 2018 2019 2020

Million Gallons




Total savings for HD pickupsAssumes average VMT of 15,000 miles/year


Forecast



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Light-duty Diesel Engine Summary

Recall, 2005-2014 light duty diesel engines have saved the American consumer:





Conservative estimates of fuel savings and CO2 reductions for new light duty diesel enginesintroduced between 2013-2020 will save American consumers an additional:





Increased usage of B20 biodiesel will have an additional positive savings for America.

• Up to a conservatively estimated 300M gallons of fuel



THE MARTEC GROUP 25

Thank you for your attention.

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U.S. Light Duty Diesel Engine Benefits · The Martec Group is a global technical marketing research...

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