Light Duty Technology Cost Analysis, Power - US Environmental ...

A. Executive Summary
Light-Duty Technology Cost Analysis
Power-split and P2 HEV Case Studies
The United States Environmental Protection Agency (EPA) contracted with FEV, Inc. to
determine incremental direct manufacturing costs for a set of advanced light-duty vehicle
technologies. The technologies selected are on the leading edge for reducing emissions
of greenhouse gases in the future, primarily in the form of tailpipe carbon dioxide (CO2).
In contrast to comparable cost analyses done in the past, which relied heavily on supplier
price quotes for key components, this study is based to a large degree on teardowns of
vehicles or vehicle systems that employ the new technologies and of similar vehicles or
systems without the new technologies. Analysts with expertise in automotive design,
materials, and manufacturing then compare the teardown components and evaluate the
differences. Using databases for materials, labor, manufacturing overhead, and mark-up
costs, the overall cost to manufacture individual parts and assemble them into systems are
calculated and summed into final results. A model consisting of an extensive set of
linked spreadsheets and associated macros has been developed to perform the
calculations, to track the input data, identify sources of information, describe assumptions
used in the case study, and provide analysis tools such as forecasting to future years.
To establish a consistent framework for all costing work, several primary technology and
manufacturing assumptions were established that directly impact the cost parameters used
in the analysis. For example, the manufacturing time period and location identifies the
labor rate data uploaded into the analysis. The maturity level of the technology defines
the mark-up rates (end-item scrap, corporate overhead/SG&A, profit, engineering, design
and testing (ED&T)/research and development (R&D)) applied against the total
manufacturing cost.
Examples of universal assumptions used for the cost analyses included in this report are
as follows:
� Technology and manufacturing methods are considered mature in the 2009/2010
timeframe, e.g., well developed product designs, high production volumes, high
first time manufacturing yields, significant marketplace competition, low field
warranty.
� Manufacturing rates are considered high volume, i.e., approximately 450,000 units
per year, and maintained throughout the product life.
� All OEM and supplier manufacturing locations are in North America (i.e., USA
and Canada), unless otherwise stated.