Incentivizing passenger vehicle mass reduction technologies in China

Published: 2013.11.27

As China rolls out more stringent fuel-efficiency standards for new passenger cars at an accelerated pace, regulators are looking at feasible near- to mid-term (2015–2020) fuel-saving technologies and their associated costs. Powertrain efficiency technologies are high-profile innovations that can cut vehicle fuel consumption significantly, and at relatively low cost. These will have a key role to play in China, as they have elsewhere.

Vehicle mass reduction is an important non-powertrain technology option to meet the 2020 fleet target of 5L/100 km, a 36% reduction from today’s level. It can be significantly more cost-effective than other alternatives. A regulatory system that fully rewards mass-reduction technologies reduces compliance costs for manufacturers, improving the chance of meeting stringent fuel-saving targets.

Using vehicle size as the utility parameter for setting vehicle efficiency standards creates exactly the reward structure needed to incentivize the fullest exploitation of vehicle mass reduction options. Vehicle footprint, the area beneath the vehicle defined by the four wheels, serves as a proxy for vehicle size, which unlike mass is an attribute valued by consumers and is less susceptible to gaming than vehicle weight. A footprint-based standard is more technology neutral than the more common alternative, which indexes efficiency standards to vehicle weight, as it fully accounts for the adoption of lightweight materials and design. Thus it tends to reduce the cost of compliance and enable more stringent standards to be set in the future.

China’s previous and current fuel consumption standards are indexed to vehicle weight. This paper summarizes the case for shifting to a footprint-based efficiency standard in China, and analyzes how the compliance burdens on auto manufacturers might change if that were to happen.