Cost Benefit Analysis – Hybrid Cars

Cost Benefit Analysis – Hybrid Cars

• Presented by
• Mukesh Kakkar
• Jeff Graebner
• James Lepp

Agenda

• What is Cost Benefit Analysis (CBA)

• Costs and Benefits

• Applications of CBA

• Steps involved

• Process Flow

• Hybrids

• Functioning

• Consumer opinion

Cost & Benefits

• Benefits are primary positive outcomes or consequences

Application of CBA

• Whether or not project should be undertaken

• Could the project be viable in future

• Which among many competing alternatives and projects should be funded given a limited budget.

CBA Drill-down tree

CBA Process Flowchart

Hybrid Vehicles

Functioning

Opinions- facts or fiction

Gas Prices

Regressions

• Moving Average

• Simple Regression

• Holt-Winters

• Multiple Regression (3)

• Time Series Decomposition

• ARIMA

Multiple Regression

• Dependent Variable

• Gas Price

• Independent Variables

• Significant
• Consumer Price Index (CPI)
• Average number of miles traveled per vehicle
• 9/11 – dummy variable
• Hurricane Katrina – dummy variable
• War in Iraq – dummy variable
• Quarters – dummy variables
• Insignificant
• Total number of hybrids on the road
• Total number of light vehicles on the road
• Personal Income
• Motor Vehicle Output

Statistics

Forecast

Vehicles Used in Study

Benefits of a Hybrid

• Savings at the Pump

• All Hybrids get a better fuel economy than their counterparts

• Lower Insurance Rates

• Drop of 5 to 10%

• Government Assistance

• Federal Tax credit
• Coase Theorem
• Take a decentralized approach to environmental pollution

• Lower Emissions

• Less Carbon Monoxide adding to Global Warming

• Self-Powering Engines

• No hassle in finding a plug

• Special Car-Pool Lanes

• No matter how many people are in the car

Costs of a Hybrid

• General Maintenance and Repair

• Even though it does have an electric engine it is still needed

• New Batteries

• Need to be changed out every 8 to 10 years

• Higher Depreciation Rate

• Expected as 1 to 4% higher

• Higher Initial Cost

• Between $4,000 and $9,000

Inside the Numbers

Inside the Numbers (Continued)

The Results

The Results (Continued)

The Results (Continued)

Questions