cost benefit analysis – hybrid cars presented by mukesh kakkar jeff graebner james lepp
TRANSCRIPT
Cost Benefit Analysis – Cost Benefit Analysis – Hybrid CarsHybrid Cars
Presented by Presented by
Mukesh KakkarMukesh KakkarJeff GraebnerJeff GraebnerJames LeppJames Lepp
AgendaAgenda
What is Cost Benefit Analysis (CBA)What is Cost Benefit Analysis (CBA) Costs and BenefitsCosts and Benefits Applications of CBAApplications of CBA
Steps involvedSteps involved Process FlowProcess Flow
HybridsHybrids FunctioningFunctioning
Consumer opinionConsumer opinion
Cost & BenefitsCost & Benefits
Benefits are Benefits are primary positive primary positive outcomes or outcomes or consequencesconsequences
Costs are value Costs are value of the resources of the resources that must be that must be used to develop, used to develop, implement, and implement, and operate the operate the program being program being analyzed analyzed
Application of CBAApplication of CBA Whether or not project should be Whether or not project should be
undertakenundertaken Could the project be viable in Could the project be viable in
futurefuture Which among many competing Which among many competing
alternatives and projects should alternatives and projects should be funded given a limited be funded given a limited budget.budget.
CBA Drill-down treeCBA Drill-down treeCost Benefit
Analysis
Costs Benefits
Direct Costs ( resources budgeted)
Tangible BenefitsIndirect Costs (not budgeted)
Intangible Benefits Positive benefits Negative benefits
Personnel
Facilities, equipment, and materials
Other
Lost time
litigation
Health/Pension benefits
revenue Goodwill
Knowledge gained
Attitude Changed
Process improvements
Benefits to society and environment
Opportunity Cost
Establish Objectives
Identify Constraints Identify Assumptions
Define Base case
Set Analysis period
Define Alternatives
Define level of effort
Estimate benefits and cost relative to base case
Evaluate risks
Compare net benefitsand establish ranks
Recommendations
CBA Process FlowchartCBA Process Flowchart
Hybrid VehiclesHybrid Vehicles
FunctioningFunctioning
A hybrid car
Stored in petrol
From the battery
The car moving has The car braking generates
Stored in the battery
Chemical energy Kinetic energy Electrical energy
Chemical energyElectrical energy
Opinions- facts or fictionOpinions- facts or fiction
Gas PricesGas Prices
Gas Price
0
0.5
1
1.5
2
2.5
3
2000
-1
2000
-3
2001
-1
2001
-3
2002
-1
2002
-3
2003
-1
2003
-3
2004
-1
2004
-3
2005
-1
2005
-3
Year - Quarter
Gas
Pri
ce (
$)
RegressionsRegressions
Moving AverageMoving Average Simple RegressionSimple Regression Holt-WintersHolt-Winters Multiple Regression (3)Multiple Regression (3) Time Series DecompositionTime Series Decomposition ARIMAARIMA
Multiple RegressionMultiple Regression Dependent VariableDependent Variable
Gas PriceGas Price Independent VariablesIndependent Variables
SignificantSignificant Consumer Price Index (CPI)Consumer Price Index (CPI) Average number of miles traveled per vehicleAverage number of miles traveled per vehicle 9/11 – dummy variable9/11 – dummy variable Hurricane Katrina – dummy variableHurricane Katrina – dummy variable War in Iraq – dummy variableWar in Iraq – dummy variable Quarters – dummy variablesQuarters – dummy variables
InsignificantInsignificant Total number of hybrids on the roadTotal number of hybrids on the road Total number of light vehicles on the roadTotal number of light vehicles on the road Personal IncomePersonal Income Motor Vehicle OutputMotor Vehicle Output
StatisticsStatisticsAudit Trail -- Coefficient Table (Multiple Regression Audit Trail -- Coefficient Table (Multiple Regression
Selected)Selected)
SeriesSeries IncludedIncludedStandarStandar
dd
DescriptionDescription in Modelin ModelCoefficienCoefficien
tt ErrorError T-testT-test
Gas PriceGas PriceDependenDependen
tt -13.76-13.76 1.631.63 -8.44-8.44
CPICPI YesYes 0.050.05 0.010.01 9.889.88
Miles Vehicles Miles Vehicles TraveledTraveled YesYes 0.000.00 0.000.00 6.896.89
9/119/11 YesYes -0.16-0.16 0.040.04 -3.74-3.74
KatrinaKatrina YesYes 0.250.25 0.070.07 3.573.57
Iraq WarIraq War YesYes 6.236.23 0.920.92 6.796.79
Q1Q1 YesYes -0.01-0.01 0.040.04 -0.27-0.27
Q2Q2 YesYes 0.110.11 0.040.04 3.003.00
Q3Q3 YesYes 0.040.04 0.040.04 1.001.00
Accuracy MeasuresAccuracy Measures ValueValue
AICAIC -73.65-73.65
BICBIC -72.47-72.47
Mean Absolute Percentage Error Mean Absolute Percentage Error (MAPE)(MAPE) 2.38%2.38%
R-SquareR-Square 97.78%97.78%
Adjusted R-SquareAdjusted R-Square 96.60%96.60%
OverallOverall
F-testF-test
82.6882.68
ForecastForecast
YearYear Gas PriceGas Price
20062006 $2.73$2.73
20072007 $2.91$2.91
20082008 $3.19$3.19
20092009 $3.47$3.47
20102010 $3.75$3.75
Gas Price
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Jul-0
0
Jan-
01
Jul-0
1
Jan-
02
Jul-0
2
Jan-
03
Jul-0
3
Jan-
04
Jul-0
4
Jan-
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Jul-0
5
Jan-
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Jul-0
6
Jan-
07
Jul-0
7
Jan-
08
Jul-0
8
Jan-
09
Jul-0
9
Jan-
10
Jul-1
0
Jan-
11
Gas Price Forecast of Gas Price Fitted Values
Vehicles Used in StudyVehicles Used in StudyFord Escape HybridFord Escape Hybrid Ford EscapeFord Escape
Honda Accord Honda Accord HybridHybrid
Honda AccordHonda Accord
Honda Civic HybridHonda Civic Hybrid Honda Civic EXHonda Civic EX
Lexus 400 HybridLexus 400 Hybrid Lexus RX 330Lexus RX 330
Toyota Highlander Toyota Highlander Hybrid LtdHybrid Ltd
Toyota Highlander Toyota Highlander LtdLtd
Toyota PriusToyota Prius Toyota Corolla LEToyota Corolla LE
Benefits of a HybridBenefits of a Hybrid Savings at the Pump Savings at the Pump
All Hybrids get a better fuel economy than their All Hybrids get a better fuel economy than their counterpartscounterparts
Lower Insurance RatesLower Insurance Rates Drop of 5 to 10%Drop of 5 to 10%
Government AssistanceGovernment Assistance Federal Tax creditFederal Tax credit Coase TheoremCoase Theorem
Take a decentralized approach to environmental pollutionTake a decentralized approach to environmental pollution Lower EmissionsLower Emissions
Less Carbon Monoxide adding to Global WarmingLess Carbon Monoxide adding to Global Warming Self-Powering EnginesSelf-Powering Engines
No hassle in finding a plugNo hassle in finding a plug Special Car-Pool LanesSpecial Car-Pool Lanes
No matter how many people are in the carNo matter how many people are in the car
Costs of a HybridCosts of a Hybrid General Maintenance and RepairGeneral Maintenance and Repair
Even though it does have an electric engine it is still Even though it does have an electric engine it is still neededneeded
New BatteriesNew Batteries Need to be changed out every 8 to 10 yearsNeed to be changed out every 8 to 10 years
Higher Depreciation RateHigher Depreciation Rate Expected as 1 to 4% higherExpected as 1 to 4% higher
Higher Initial CostHigher Initial Cost Between $4,000 and $9,000Between $4,000 and $9,000
Inside the NumbersInside the Numbers5 years5 years Honda Civic Honda Civic
Hybrid (50)Hybrid (50)Honda Civic Honda Civic
EX (28)EX (28)Hybrid extra Hybrid extra
cost or cost or savingssavings
Purchase price Purchase price (Automatic)(Automatic) $22,400 $22,400 $18,444 $18,444 $3,956$3,956
Sales tax (7%)Sales tax (7%) 1,5681,568 1,2911,291 $277$277
Tax creditTax credit 2,1002,100 00 $2,100$2,100
Fuel cost (5 yrs)Fuel cost (5 yrs) 4,4684,468 7,9797,979 $3,511$3,511
Insurance (5% Insurance (5% savings)savings) 4,6704,670 4,9164,916 $246$246
Maintenance & Maintenance & repairrepair 4,1634,163 4,1634,163 $0$0
Financing (3%)Financing (3%) 3,5683,568 2,9382,938 $630$630
Five-year Five-year depreciation depreciation raterate 56.10%56.10% 53.00%53.00%
Projected resale Projected resale priceprice 9,8329,832 8,6698,669 $1,163$1,163
with federal tax with federal tax creditscredits $2,156$2,156
w/o federal tax w/o federal tax creditscredits $56$56
Inside the Numbers (Continued)Inside the Numbers (Continued)
YearYear MilesMilesDrivenDriven
CarbonCarbonMonoxideMonoxideEmittedEmitted
HondaHondaCivicCivic
HybridHybrid
HondaHondaCivic EXCivic EX
5050 2828
20062006 15,00015,000 274,950274,950 5,4995,499 9,8209,820
20072007 14,50014,500 265,785265,785 5,3165,316 9,4929,492
20082008 14,00014,000 256,620256,620 5,1325,132 9,1659,165
20092009 13,50013,500 247,455247,455 4,9494,949 8,8388,838
20102010 13,00013,000 238,290238,290 4,7664,766 8,5108,510
Total Carbon Monoxide ReleasedTotal Carbon Monoxide Released 25,66225,662 45,82545,825
The ResultsThe Results
ManufacturerManufacturer Model (mpg)Model (mpg) Costs/Savings Costs/Savings PointsPoints
FordFord Escape Hybrid Escape Hybrid (33)(33)
Escape (23)Escape (23) with taxeswith taxes $3,871.42$3,871.42 44
without taxeswithout taxes $2,450.58$2,450.58 -2-2
HondaHonda Accord Hybrid Accord Hybrid (28)(28)
Accord (25)Accord (25) with taxeswith taxes $3,251.84$3,251.84 -3-3
without taxeswithout taxes $3,901.84$3,901.84 -4-4
HondaHonda Civic Hybrid (50)Civic Hybrid (50) Civic EX (28)Civic EX (28) with taxeswith taxes $2,156.36$2,156.36 22
without taxeswithout taxes $56.36$56.36 00
LexusLexus RX400h (30)RX400h (30) Rx330 (25)Rx330 (25) with taxeswith taxes $4,296.78$4,296.78 -4-4
without taxeswithout taxes $6,496.78$6,496.78 -6-6
ToyotaToyota Highlander Highlander Hybrid Ltd Hybrid Ltd (30)(30)
Highlander Highlander Ltd (25)Ltd (25)
with taxeswith taxes $2,953.00$2,953.00 -3-3
without taxeswithout taxes$6,074.62$6,074.62 -6-6
ToyotaToyota Prius (55)Prius (55) Corolla LE Corolla LE (34)(34)
with taxeswith taxes $1,493.43$1,493.43 11
without taxeswithout taxes $4,141.38$4,141.38 -4-4
The Results (Continued)The Results (Continued)
ManufacturerManufacturer
Model (mpg)Model (mpg)
Carbon Monoxide Carbon Monoxide Saved Saved
AmountAmount PointsPoints
FordFord Escape Hybrid (33)Escape Hybrid (33) Escape (23)Escape (23)
38,88238,882 55,78755,787 16,90516,905 33
HondaHonda Accord Hybrid (28)Accord Hybrid (28) Accord (25)Accord (25)
45,82545,825 51,32451,324 5,4995,499 11
HondaHonda Civic Hybrid (50)Civic Hybrid (50) Civic EX (28)Civic EX (28)
25,66225,662 45,82545,825 20,16320,163 44
LexusLexus RX400h (30)RX400h (30) Rx330 (25)Rx330 (25)
42,77042,770 51,32451,324 8,5548,554 22
ToyotaToyota Highlander Hybrid Ltd Highlander Hybrid Ltd (30)(30)
Highlander Ltd (25)Highlander Ltd (25)
42,77042,770 51,32451,324 8,5548,554 22
ToyotaToyota Pirus (55)Pirus (55) Corolla LE (34)Corolla LE (34)
23,32923,329 37,73837,738 14,40914,409 33
The Results (Continued)The Results (Continued)
ManufacturerManufacturer
Model (mpg)Model (mpg)
Costs/Savings Costs/Savings
With Tax With Tax Savings Savings
Included Included
Without Without Tax Tax
Savings Savings IncludedIncluded
FordFord Escape Hybrid Escape Hybrid (33) (33)
Escape (23)Escape (23)99 33
HondaHonda Accord Hybrid Accord Hybrid (28)(28)
Accord (25)Accord (25)00 -1-1
HondaHonda Civic Hybrid Civic Hybrid (50)(50)
Civic EX Civic EX (28)(28) 88 66
LexusLexus RX400h (30)RX400h (30) Rx330 (25)Rx330 (25) 00 -4-4
ToyotaToyota Highlander Highlander Hybrid Ltd (30)Hybrid Ltd (30)
Highlander Highlander Ltd (25)Ltd (25) 11 -4-4
ToyotaToyota Pirus (55)Pirus (55) Corolla LE Corolla LE (34)(34) 66 33
QuestionsQuestions
"An unsophisticated forecaster uses statistics as a drunken man uses lamp-posts - for support rather than for illumination."—Andrew Lang