Light-duty vehicles (LDVs) are the primary mode of transportation for the majority of the American public, being used for over 80% of all personal trips and comprising almost 90% of all passenger miles traveled (FHWA 2011). These vehicles consume about 130 billion gallons of gasoline each year, or approximately 18% of the total annual energy consumption in the United States, a significant fraction of which is produced from imported petroleum (EIA 2013; Davis et al. 2013). The impacts of this consumption are great, influencing economic prosperity, national security, and the environment. Gasoline consumed by the LDV fleet results in the production of air pollutants including carbon dioxide, the largest contributor to anthropogenic climate change. Political and economic instability in the Middle East, from which the United States receives about one eighth of its total petroleum supply, has contributed to concern over the nation’s dependence on foreign energy sources (EIA 2014). In the past, this dependence has affected the United States through supply shocks, price uncertainty, and foreign policy commitments.
In response to these issues, Congress and executive branch Agencies have moved to reduce the petroleum consumption of LDVs, primarily through the tightening of fuel economy and greenhouse gas emissions (GHG) standards. Meeting these standards, as with earlier fuel economy, emissions and safety regulations, will require the introduction of new technologies and increased deployment of existing ones, resulting in a future LDV fleet that will be lighter, use smaller, boosted engines, and be powered by a greater diversity of fuels and powertrains compared to the current vehicle fleet.
The Nation’s official pursuit of increased vehicle efficiency started 40 years ago when price shocks resulting from the 1973 Arab oil embargo led to the first regulations of fuel economy as part of the Environmental Policy and Conservation Act of 1975 (EPCA). Under the EPCA, Congress set the Corporate Average Fuel Economy (CAFE) standard for new passenger cars with the expectation of doubling the fuel efficiency of new passenger vehicles to 27.5 miles per gallon (mpg) by 1985. This legislation gave the National Highway Traffic Safety Administration (NHTSA), within the Department of Transportation (DOT), the authority to regulate the fuel economy of LDVs beginning with the 1978 model year and the authority to set fuel economy standards for other classes of vehicles, including light trucks.
After the CAFE standard set out in the EPCA was achieved in 1985, Congress relaxed the standard for passenger cars from 27.5 mpg to 26.0 mpg for a few years (1986-1988), responding to low oil prices, consumer demand, and pressure from the automotive industry (Bamberger 2002). After the standard returned to 27.5 mpg in 1990, passenger car fuel economy standards were not adjusted again for over two decades, until model year (MY) 2011. However, in 2003, NHTSA issued regulations increasing the fuel economy standards for light trucks for MY 2005-2007. In 2006, NHTSA again increased the fuel economy standards for light trucks for MY 2008-2011 and introduced the footprint standard, which is based on the product of a vehicle’s wheelbase and its track width. Figure 1.1 demonstrates the use of this footprint standard in the calculation of target curves for passenger cars for MY2012-2025.
In 2007, Congress passed the Energy Independence and Security Act (EISA), which authorized NHTSA, in consultation with the Environmental Protection Agency (EPA) and the Department of Energy (DOE), to establish regulations that would maintain vehicle performance while raising the fuel economy of the new LDV fleet to a minimum of 35 mpg by 2020 and to a “maximum feasible average fuel economy standard” thereafter until 2030. Also in 2007, the outcome of Supreme Court case Massachusetts v. EPA established that the EPA was obligated to determine whether to regulate the emission of carbon dioxide (CO2) and other GHGs from motor vehicles under Section 202 of the Clean Air Act. The Supreme Court decision and EPA’s finding on the need to regulate LDV GHG emissions also enabled the state of California, through the California Air Resources Board (CARB), to set its own regulations for GHG emissions under Section
209 of the Clean Air Act. The NHTSA and EPA standards are based on vehicle efficiency on a miles per gallon or GHG emission per mile basis.
Model Year 2012-2016 National Standards
Recognizing the problem of having as many as three separate regulatory Agencies setting standards governing the fuel economy of the light-duty fleet, the Obama Administration requested in 2009 that NHTSA, EPA, and the CARB work together to produce a single set of fuel economy and GHG emissions standards. The fuel economy and GHG emissions standards for MY 2012-2016 (EPA/NHTSA 2010) represent the first standard under this new National Program.1 The standard required that fleet-averaged fuel economy reach an equivalent of 35.4 mpg by MY 2016.
The National Program also continued its use of the attribute-based standard that was first used for the MY 2008-2011 light truck standards, in which a vehicle’s fuel economy target is related to its footprint (see Figure 1.1). The reasons given by NHTSA for a footprint standard are threefold: (1) the regulations encourage manufacturers with fleets that consist primarily of small passenger cars to continue to reduce the fuel consumption of even the smallest vehicles; (2) the footprint standard discourages manufacturers from downsizing vehicles to meet the standard, which could have led to safety concerns; and (3) the footprint standard is intended to be more equitable since it will require all manufacturers to make improvements. The footprint standard also means that compliance for each manufacturer is not a predetermined target but dependent on the mix of vehicle sizes it sells each year.
The National Program also made significant changes in the flexibility of manufacturer compliance. Credits for overcompliance could now be shared not just within a single manufacturer’s fleet between cars and trucks, as with the earlier CAFE program, but also traded or sold among manufacturers. Credits can also be “banked” and used in later years, which can help a manufacturer achieve compliance within its own refresh and redesign product cycles. Credits are available in MY2012-2016 under both the CAFE and CO2 programs for dual-fueled vehicles, which can run on gasoline and an alternative fuel such as electricity or a fuel mixture of 85% ethanol/15% gasoline (E85). There are also credits available under the EPA’s CO2 program for CO2 reductions from switching to alternative air conditioning refrigerants, applying advanced technologies such as hybridization and electrification in the 2012-2016 timeframe, and applying off-cycle technologies such as active aerodynamics, whose efficiency benefits are not captured by the test cycles. Finally, in the MY2012-2016 regulations, EPA created an opportunity for banking “early credits” generated for MY2009-2011 vehicles for overcompliance with California or CAFE regulations over that 3-year time span.
1 Throughout this report the combined GHG and fuel economy standards developed jointly by the NHTSA and EPA are referred to as the “National Program” or the “CAFE/GHG standards.”
Model Year 2017-2025 National Standards
The standards for MY2017-2025 were adopted in 2012 (EPA/NHTSA 2012). The footprint-based standards are meant to achieve an approximately 4.2 percent annual increase in fuel economy for passenger cars and 3 percent annual increase for light trucks over this period. The target curves for passenger cars are shown in Figure 1.1, and Table 1.1 shows the fleetwide efficiencies that are estimated to result from the application of the footprint standard curves. As a point for comparison with the estimates shown in Table 1.1, the achieved fleetwide fuel economy averages for all manufacturers in MY2012 were 35.3 mpg for cars and 25.0 mpg for trucks (NHTSA 2014). Key changes to the MY2017-2025 standards include new accounting for alternative fuels and changes to the crediting program meant to align more closely the CAFE and greenhouse gas standards as well as reflect the current levels of technology. For example, for MY2017-2025, credits for off-cycle technologies and air conditioner efficiency will be made available for CAFE as well as for the CO2 program. Chapter 10 contains a more detailed discussion of the 2017-2025 CAFE/GHG standards.
An important feature of the standards is their treatment of alternative-fuel vehicles. Dual-fueled vehicles—that is, vehicles that can be propelled using two different fuels (e.g., plug-in hybrid electric vehicles powered by either electricity or gasoline and flex-fuel vehicles powered by E85 or conventional gasoline)—have historically been credited equally for each fuel regardless of whether drivers use the alternative fuel. Beginning in 2020, credit for dual-fueled vehicles will consider how much of the alternative fuel an average consumer will use. This is especially important for plug-in hybrid electric vehicles, where battery size strongly dictates the fraction of electric miles. Vehicles using a single alternative fuel, such as battery electric vehicles or vehicles that run solely on compressed natural gas, also receive incentives for petroleum and GHG emissions reductions. Under the CAFE program, such vehicles are given a “petroleum equivalence factor,” which increases the compliance fuel economy. Under the EPA’s program, alternative-fuel vehicles will be considered based on “upstream accounting” of their emissions, in which net emissions including fuel production and distribution–related upstream GHG emissions are considered after an individual automaker exceeds its cumulative production cap. However, fuel cell, battery electric, and plug-in hybrid electric vehicles are currently credited only by their tailpipe emissions (0 g/mile) for an initial volume of vehicles in order to accelerate adoption. To further accelerate the production of alternative-fuel vehicles, those powered by natural gas, electricity, and hydrogen also receive credit multiplication under EPA’s program.
In addition to alternative-fuel vehicles, the Agencies consider a number of other advanced technologies to be “game changers” that offer significant petroleum displacement and GHG emissions reductions. In order to accelerate the production of these technologies, the Agencies offer additional credits to manufacturers that introduce these technologies at significant volumes in their fleet. For the MY2017-2025 rulemaking, the Agencies considered the hybridization of full-size trucks to qualify as a game-changing technology and established credits under both programs for manufacturers who apply strong or mild hybrid technology to a minimum fraction of their truck fleet (10+ percent for strong hybrids and 20+ percent for mild hybrids with a goal of reaching 80+ percent penetration by 2021).
One final important note about the MY2017-2025 National Program comes as a result of the differing statutory authorities granted to EPA and NHTSA: EISA 2007 precludes NHTSA from setting CAFE standards for more than five years at a time. Therefore, only the MY20172021 CAFE standards can be considered binding. In 2017, NHTSA and EPA will coordinate a mid-term review of the standard as part of NHTSA’s rulemaking for MY2022-2025, which must be finalized by April 2018.
Other Vehicle Regulations
There are other categories of vehicle regulations that will impact the deployment of new fuel economy technologies.
|EPA (g CO2/mi)||263||256||247||236||225||212||202||191||182||172||164||157||150||143|
|EPA (g CO2/mi)||346||337||326||312||298||295||285||277||269||249||237||225||214||203|
NOTE: Values are shown in miles per gallon for NHTSA’s CAFE standard and in grams CO2 per mile for EPA’s GHG regulations, with averages reflecting the MY 2008 baseline.
SOURCE: (EPA/NHTSA 2010, 2012).
These include the California Zero Emissions Vehicle (ZEV) mandates adopted by ten states, national criteria pollutant emissions standards, global fuel economy and emissions standards, and safety requirements (C2ES 2013). The most recent amendments to the California ZEV program (CARB 2013) stipulate that starting in 2017 zero tailpipe emissions vehicles (battery and fuel cell electric vehicles) and plug-in hybrid electric vehicles must together account for 15.4 percent of new sales in California and nine other states by 2025. Implementation of the ZEV mandate will increase the deployment of such vehicles above what NHTSA and EPA estimated might be required for compliance with the national CAFE/GHG standards.
Criteria pollutant standards, particularly the recently enacted Tier 3 standards for particulates, oxides of nitrogen, and hydrocarbon emissions, will add emission control costs and may create implementation issues for some fuel economy technologies (EPA 2014). The criteria pollutant standards are particularly important for diesel-fueled vehicles and some technologies that could be used for gasoline-powered vehicles.
Given that vehicle manufacturers, which are often referred to as Original Equipment Manufacturers (OEMs), operate in multiple markets around the world, their vehicle fleets must demonstrate compliance with the standards on the test cycles relevant for a given market. However, different technology options may yield varied benefits across the different test cycles used in various markets. For example, the lower speeds and accelerations and longer idling times of the test cycle used in Europe will confer greater advantages to technologies that reduce fuel consumption at lower speeds or idle compared to the test cycle used in this country (EPA n.d.; SAE 2012; VTA 2011). However, Europe will convert to the Worldwide Harmonized Light Vehicles Test Procedure in the 2020 time period, which will lessen the difference between the European and United States test cycles. Safety requirements will also impose additional equipment requirements and may limit some potential approaches to fuel economy improvement.
Fuel Consumption versus Fuel Economy
In understanding how the standards are defined and perceived, it is important to distinguish fuel consumption, the volume of fuel consumed divided by the distance traveled, from its inverse, the more commonly reported fuel economy, which is distance traveled divided by the volume of fuel used, usually reported in mpg. Fuel economy in mpg is familiar to consumers because it is the commonly used metric for vehicle efficiency, and it also tells the consumer something about the utility of the vehicle—how far one can travel on a given quantity of fuel. Fuel consumption, on the other hand, is proportional to the money a consumer would save or the benefits from reduced petroleum use that the nation may accrue from fuel economy standards. While fuel economy is regularly quoted and familiar to the public, it is not linear with fuel use because it is a distance/volume ratio. This nonlinear relationship is not well understood by consumers and leads to misinterpretation of the benefits of improved fuel economy for vehicles of different efficiencies (Larrick and Soll 2008). Compared to less efficient vehicles, more efficient vehicles show a smaller improvement in fuel consumption for a given incremental improvement in fuel economy, see Figure 1.2.
Fuel consumption scales linearly with fuel volume and also accordingly with fuel cost and CO2 emissions, which are the metrics of interest for the CAFE/GHG standards. If the goal of a consumer or policy maker is to minimize fuel use and maximize energy efficiency of passenger vehicle travel, then fuel consumption, rather than fuel economy, is the more straight-forward metric to use for accurate comparisons of the efficiency of different vehicles or vehicle technologies. In this report, the fuel efficiency of passenger vehicles or vehicle technologies will typically be reported in terms of fuel consumption, in units of gallons/100 miles. The fuel economy of vehicles will also be reported at times because the CAFE standards are defined in terms of fuel economy and the mpg metric is so generally familiar.
All fuel economy or fuel consumption values used in the report for actual vehicles fueled exclusively with gasoline or diesel will be compliance numbers as recorded by the EPA unless otherwise noted. This is to distinguish them from label-reported fuel economy values, which are adjusted to reduce mpg from the city and highway compliance numbers to mimic more closely what consumers will experience in real world driving. The label value will be occasionally reported when discussing consumer perceptions and will be identified as the fuel economy label value.
A central task for the committee was to develop estimates of the cost2 and potential fuel consumption reductions for technologies that might be employed from 2020 to 2030. This is challenging given the inherent difficulty in projecting technology outcomes so far into the future. In order to accomplish this task, the committee focused its efforts on projecting technology effectiveness and costs in years 2017, 2020, and 2025. This allowed the committee to collect and assess information developed by the Agencies for the current and upcoming
2 In general, the committee reports direct manufacturing costs (DMC) and does not estimate the indirect costs (IC) or total costs (TC=DMC+IC). As discussed in Chapter 7, DMCs are defined alternatively as the price an OEM would pay a supplier for a fully manufactured part ready for assembly in a vehicle, or the OEM’s total cost of internally manufacturing the same part. Indirect costs (IC) include expenditures not directly required for manufacturing a component technology but necessary for the operation of an automobile manufacturing firm. Chapter 7 discusses methods and issues associated with estimating DMC, IC, and TC.
FIGURE 1.2 Diminishing fuel consumption reduction from 5 mpg fuel economy improvement at low to high fuel economy. Fuel consumption reductions are the fundamental metric of vehicle efficiency as they are directly proportional to fuel cost as well as CO2 emissions reductions. The graph highlights the diminishing fuel consumption reduction benefit to marginal increases in fuel economy for increasingly efficient vehicles.
standards from 2017-2025. The committee also used input from OEMs, suppliers and other analysts whose predictions are often geared towards near-term implementations. Recognizing both the importance of looking at fuel consumption reduction technologies beyond 2025 and the high degree of uncertainty associated with making projections so far into the future, the committee felt it best to discuss only qualitatively the prospects for most technologies for the time frame beyond 2025. The committee has included effectiveness and cost estimates for SI technologies that might be available beyond 2025 in Tables S.1 and S.2, with the recognition that there are many hurdles associated with these technologies, as discussed in Chapter 2.
The committee’s conclusions on cost and effectiveness are summarized in Tables S.1 and S.2. The committee found the analysis conducted by NHTSA and EPA in their development of the 2017-2025 standards to be thorough and of high caliber on the whole, and recognized in particular the value of their use of teardown studies and full-system simulation for estimating cost and effectiveness of many technologies. Consequently, for technologies considered by the Agencies, the committee used the Agencies’ effectiveness and cost findings as a starting point and assessed the methodologies and assumptions used to develop them. It then conducted its own analysis, giving greatest attention to those technologies that have large potential benefits and/or that raised particular methodological or technical concerns. This analysis, which is presented in the following chapters, relied on committee expertise; presentations from Agency experts, OEMs, suppliers, and others; and information contained in regulatory documents, academic literature, and press accounts. As part of this effort, the committee reviewed the extensive modeling and analysis done by the Agencies during the rulemaking, as documented in the supporting studies for the final rule. In addition, the University of Michigan was engaged to perform full system simulation of a hypothetical gasoline-powered spark ignition vehicle to further the committee’s understanding of the interactions of multiple technologies.
Based on its analysis, the committee concurred with the Agencies’ costs and effectiveness values for many technologies. In other cases, however, the committee developed cost and effectiveness values using its expert judgement that differed from the Agencies’ reported cost and effectiveness values. As documented in the report, updates or adjustments to the Agencies’ estimates were based on the committee’s expertise and judgment that incorporated a review of available information. This included reviews of information contained in published studies; input from experts in the automobile field including consultants, OEMs, and suppliers; and discussions with experts from NHTSA and EPA. Each of the committee’s chapters contains an extensive reference list; Appendix C provides a list of all the public presentations
the committee received (over fifty presentations, including three workshops); and the committee’s public access file contains additional input (over 130 items) it received. The committee spent much time reviewing the regulatory documents produced by NHTSA and EPA, and followed up with the Agencies on particular issues through exchanges of questions from the committee and responses from the Agencies (contained in our Public Access File) and open session presentations/discussions with the Agencies’ experts. The committee recommends that the Agencies revisit these areas of difference in depth in the midterm evaluation.
For some technologies, committee members held different views on the best estimate of cost and effectiveness; these are represented in the different values in Tables S.1 and S.2. In such cases, the committee feels that both values are supported by the available data and analysis. It is important to note that these values are not meant to represent the full range of possible values for technology cost and effectiveness, but rather the different possible most likely values based on expert views represented on the committee. The committee has included a general discussion of uncertainty in Chapter 10.
Other Considerations for Study
An important consideration for this study is whether the committee should explicitly consider the “unknown unknowns” (technologies and design beyond what is known today) in its estimates of fuel economy effectiveness and costs. The committee based its estimates on those fuel efficiency opportunities for which it could foresee a technology pathway to deployment over the 2017-2030 time period. The committee realizes that there will be unanticipated technological innovations and market trends that will produce vehicles with technologies not fully considered in the committee’s analysis. The committee acknowledges the possibility that these unanticipated innovations may permit the industry to meet emission standards at lower than predicted cost. Though the committee could not describe such unpredictable technologies nor could it quantify their effectiveness and cost, it did look forward as far as possible to evaluate technologies that are on the development horizon but which do not have a clear technology pathway to deployment, such as advanced vehicle batteries and highly turbocharged engines. The committee does not believe that the automobile industry has reached the end of innovation, but quantifying possible improvements for unknown innovations was beyond the scope of the committee’s study.
Understanding the impacts of LDVs on petroleum consumption and GHG emissions requires considering the fuels used to power such vehicles. The committee notes that it was not tasked with addressing fuels for light-duty vehicles independent of the interaction with technologies. This meant that the committee was not tasked with how different fuels, such as natural gas or biofuels, might independently reduce GHG emissions or contribute to energy security. Further, although the committee recognized the impact of fuel prices on consumer adoption of fuel economy technologies in Chapter 9, it was not tasked with providing a detailed assessment of the relationship between fuel prices and fuel economy technology deployment. This relationship has been emphasized due to the fluctuations in fuel costs that have occurred over the timeframe of this study. For example, during 2014 alone, average U.S. gasoline prices ranged from a high of over $3.60 per gallon to a low of under $2.25 per gallon. As discussed in Chapter 9, it is unknown how consumers will alter purchase decisions and assess total cost of ownership in the face of short-term fluctuations of fuel costs. Also, it is difficult to predict the effect lower fuel costs will have on marketing efforts for fuel-efficient vehicles. The committee was not tasked with predicting how fuel prices will change in the future beyond noting that the short-term fluctuations observed recently do not provide any insights into fuel prices that will occur during the time period (2017-2030) that is the focus of the committee’s assessment.
The National Research Council (NRC) has long had a role in helping to inform NHTSA on issues related to fuel economy. In 1992, the NRC released Automotive Fuel Economy: How Far Should We Go?, which considered the feasibility and the desirability of a variety of efforts to improve the fuel economy of the light-duty vehicle fleet. Subsequently, the NRC released Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards (NRC 2002), which studied the impact and effectiveness of CAFE standards originally mandated in the Energy Policy and Conservation Act of 1975.
More recently, Section 107 of EISA instructed NHTSA to contract with the NRC to “develop a report evaluating vehicle fuel economy standards, including an assessment of automotive technologies and costs to reflect developments since the [NRC]’s 2002 report (NRC 2002) evaluating the corporate average fuel economy standards was conducted and an assessment of how such technologies may be used to meet the new fuel economy standards.” Section 107 also noted that the report should be updated at 5-year intervals through 2025. In 2011, the first such report in response to this mandate was released, Assessment of Fuel Economy Technologies for Light-Duty Vehicles (NRC 2011). This will often be referred to as the Phase 1 report throughout this report. That report examined categories of near-term technologies important for reducing fuel consumption, their costs, issues associated with estimating costs and price impacts of these technologies, and approaches for estimating the fuel consumption benefits from combinations of these technologies.
The current report is the second in the series and is timed to inform the mid-term review mentioned above by considering technologies applicable in the 2020 to 2030 timeframe. In
particular, the committee was asked to include the following in its assessment:
- Methodologies and programs used to develop standards for passenger cars and light trucks under current and proposed CAFE programs;
- Potential for reducing mass by up to 20%, including materials substitution and downsizing of existing vehicle designs, systems or components;
- Other vehicle technologies whose benefits may not be captured fully through the federal test procedure, including aerodynamic drag reduction and improved efficiency of accessories;
- Electric powertrain technologies, including the capabilities of hybrids, plug-in hybrids, battery electric vehicles, and fuel cell vehicles;
- Advanced gasoline and diesel engine technologies that will increase fuel economy;
- Assumptions, concepts, and methods used in estimating the costs of fuel economy improvements, including the degree to which time-based cost learning for well-developed existing technologies and/or volume-based cost learning for newer technologies should apply and the differences between Retail Price Equivalent and Indirect Cost Multipliers;
- Analysis of how fuel economy technologies may be practically integrated into automotive manufacturing processes and how such technologies are likely to be applied;
- Costs and benefits in vehicle value that could accompany the introduction of advanced vehicle technologies;
- Test procedures and calculations used to determine fuel economy values for purposes of determining compliance with CAFE standards;
- Consumer responses to factors that may affect changes in vehicle use.
This report is organized to correspond with the statement of task. Powertrain technologies are discussed first (Chapters 2-5), followed by non-powertrain technologies (Chapter 6). All cost and effectiveness tables for these sections, unless otherwise specified, represent the committee’s estimates. Cost and manufacturing issues are discussed in Chapter 7. Chapter 8 then provides the committee’s estimates of the costs and fuel consumption reduction benefits of employing these technologies. That is followed by the impacts on future consumers (Chapter 9) and a general assessment of the regulatory process (Chapter 10). A central result of the Phase I committee was a pair of tables summarizing the committee’s estimate of each technology’s costs and fuel economy benefits. This same format was followed, and updated tables are provided in Chapter 8.
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EPA (Environmental Protection Agency). n.d. Emission Test Cycles: EPA Highway Fuel Economy Test Cycle. DieselNet. https://www.dieselnet.com/standards/cycles/hwfet.php.
EPA. 2013. EPA Proposes Tier 3 Motor Vehicle Emission and Fuel Standards. Regulatory Announcement. http://www.epa.gov/otaq/documents/tier3/420f13016a.pdf.
EPA. 2014. Control of Air Pollution From Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards; Final Rule. Federal Register 79(81): 23414-23886.
EPA/NHTSA (National Highway Traffic Safety Administration). 2010. Light-Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards; Final Rule. Federal Register 75(88):25323-25728. May 7.
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FHWA (Federal Highway Administration). 2011. Summary of Travel Trends: 2009 National Household Travel Survey. FHWA-PL-11-02. U.S. Department of Transportation, Federal Highway Administration. Accessed March 12, 2013. http://nhts.ornl.gov/2009/pub/stt.pdf.
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NHTSA. 2014. Summary of Fuel Economy Performance (Public Version). U.S. Department of Transportation, NHTSA, NVS-220, June 26.
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