1. California Energy Commission Overview of Revised Vehicle Attributes and Demand Scenarios Energy Demand Cases and Forecast of Vehicle Attributes for 2015 Transportation Energy Demand First Floor, Rosenfeld Hearing Room September 30, 2015 Aniss Bahreinian Demand Analysis Office Energy Assessments Division Aniss.Bahreinian@energy.ca.gov / 916-653-0381 1

2. California Energy Commission Overview of Attributes –Light Duty Vehicles (LDV) –Medium and Heavy Duty Vehicles (MDV/HDV) Overview of Scenarios –Preliminary Forecast –Revised Forecast 2 Purpose

3. California Energy Commission Vehicles are characterized by their attributes such as: Price Fuel Economy/Miles Per Gallon (MPG) Fuel Cost Maintenance Cost Range Acceleration Storage Capacity …and others 3 What Are Vehicle Attributes?

4. California Energy Commission Economic and demographic forecasts determine fleet size, LDV models. Vehicle attributes drive consumers’ choice of vehicle type Fuel prices and vehicle attributes determine fleet composition, by vehicle class and fuel type. Plug-in electric vehicles (PEV) compete with other fuel types and vehicle technologies, including fuel cell vehicles (FCV), given their attributes and relative fuel prices. 4 Fleet Size vs Fleet Composition

5. California Energy Commission 10 Fuel/Vehicle Technologies, and 15 classes of LDVs Compete for Consumer Choice Gasoline Gasoline-Electric Hybrid Gasoline-E85 Flex Fuel Vehicle (FFV) Diesel Diesel-Electric Hybrid CNG Gasoline-Compressed Natural Gas (CNG) Dual Fuel Battery Electric Vehicle Plug-in Electric Hybrid Vehicle (PHEV) Hydrogen Fuel Cell Vehicle (FCV) 5

6. California Energy Commission Most studies use broader LDV vehicle classes. –For instance, David Greene (and National Research Council or NRC) study use LaveTrans model with two broad classes of cars and trucks for LDVs. Energy Commission models use 15 classes of LDVs: –Subcompact, compact, midsize, large and sport cars, 3 cross utility, 3 sport utility vehicles (SUV), 2 vans, and 2 trucks. 6 15 classes of LDVs

7. California Energy Commission While Energy Commission models use class-based analysis, the reality is that different makes and models of vehicles compete for consumer choice. The mid-size class has the most sales in California. −e.g. Nissan Leaf has to compete with 121 other makes and models within the midsize class, if one has already decided to purchase a midsize vehicle. 7 Vehicle Class-Based Analysis

8. California Energy Commission Almost all research and surveys have identified vehicle price as the primary factor in vehicle choice. Manufacturer suggested retail price (MSRP) includes the dealer mark-up over the manufacturer invoice price, and other fees. Transaction price: –Includes additional amount paid for different options added to base vehicle. –Excludes government incentives such as rebates and tax breaks. –Varies by negotiating skills of salesperson and the buyer. –Can change over time, for the same model year vehicle, generally lower after new model year vehicles are introduced. 8 Vehicle Prices

9. California Energy Commission Price Response? Price ChangesJuly 2012March 2013 Average New MSRP$37,124$37,991 Total Discounts $4,941$5,467 Manufacturer Incentives $3,604$4,162 Dealer Incentives $1,337$1,305 Core Transaction Price $32,183$31,826 %Mfg Incentive of MSRP9.71%10.96% %Total Discount of MSRP13.31%14.39% Source: CNW Research: retail Automotive Summary March 2013 9

10. California Energy Commission MSRP almost always exceeds the negotiated or transaction price. To comply with regulations manufacturers can distribute profit differently across different models they supply to market. Sales Weighted Average Price (SWAP) is based on transaction price and # of vehicles sold of each of the 121 makes and models in the midsize class. 10 Vehicle Prices and Vehicle Models

11. California Energy Commission The Energy Commission’s forecasting models do not include vehicle choice for MD/HD vehicles. For Trucks only Staff use two vehicle attributes in a preprocessing step to forecast market penetration rate by alternative fuel type, for compressed natural gas (CNG), liquefied natural gas (LNG), electric, and diesel electric hybrid: Vehicle Price Fuel Economy 11 MD/HDVs

12. California Energy Commission 12 Overview of LDV Scenarios

13. California Energy Commission Three demand cases were defined by three sets of model inputs for energy prices, income and population. One set of light duty vehicle attributes, identified as the reference case, was used for all demand cases. Demand cases were defined as: High Energy Demand: Low energy prices, high income, high population growth Reference: Reference energy prices, income, and population growth Low Energy Demand: High energy prices, low income and low population growth 13 Preliminary LDV Forecast Scenarios

14. California Energy Commission ZEV regulations apply to auto manufacturers. Manufacturers alter the attributes of the vehicles they offer for sale in order to meet the requirements. Consultants projecting vehicle attributes have been directed to generate vehicle attributes to ensure compliance with ZEV regulations, for all demand cases. Staff used the 2013 IEPR vehicle attribute projections, with price forecasts generated from the LaveTrans model. State and Federal ZEV incentives are applied in demand models that result in additional impact on consumer choices. Consumer Preferences were held constant in the preliminary 2015 IEPR demand forecast. 14 ZEV Compliance Method

15. California Energy Commission Staff will use three scenarios for each of the following vehicle attributes: Vehicle Price Makes and Models The LDV attribute scenario differences will be driven by energy price scenario differences, using LaveTrans model (the same model used in NRC and David Greene studies). More aggressive measures, such as greater ZEV vehicle price reductions, to ensure ZEV compliance in the reference case. 15 What is Different in the Revised Forecast?

16. California Energy Commission We will create 3 Plug in Electric Vehicle (PEV) Demand scenarios for consumer preferences for fuel type: Low PEV demand case. No change in consumer preferences over the forecast period. Reference case Continuously increasing preferences, in favor of all ZEV vehicles, as the ZEV markets expand.. High PEV demand case Continuously increasing preferences in favor of all PEV vehicles, with expanding ZEV markets, but assuming zero growth in FCVs, adding FCV market share of ZEV to BEVs. This is a departure from past practice. The revised reference case forecast will be further constrained to meet the ARB’s ZEV most likely scenario. 16 What is Different in the Revised Forecast? (Continued)

17. California Energy Commission 17 Overview of MDV/HDV Attributes

18. California Energy Commission The three demand cases are the same as defined for LDVs. In the preliminary 2015 IEPR demand forecast, staff used one CNG market penetration rate for alternative fuels from the National Petroleum Council (NPC) high case, same as the market penetration rate that was used for the 2013 IEPR. 18 Preliminary 2015 IEPR Forecast

19. California Energy Commission The revised 2015 IEPR demand forecast will use three sets of market penetration rates for different alternative fuel vehicles. These market penetration rates are based on truck price and fuel economy forecasts developed by Sierra Research, as well as fuel price scenarios developed by staff. 19 What is Different in the Revised Forecast?

20. California Energy Commission Questions? Comments? Aniss Bahreinian Demand Analysis Office Energy Assessments Division Aniss.Bahreinian@energy.ca.gov / 916-653-0381 20