Return on Investment Analysis for Improved Energy Efficiency in
Passenger Cars 2023-01-5005
Energy efficiency investment is commonly thought to be poor for business. The
analysis presented here uses current cost data to demonstrate that there is
plenty of room to improve the energy efficiency of cars from the current 25.7
miles per gallon (mpg) or 20%. Investing in the optimum yields an excellent
return of over 22% on the owner’s investment in the improved efficiency. A model
for the initial cost of a car was developed to accurately predict (within 10%
for the majority of over 90% of the data for gasoline and hybrid cars) the
initial cost as a function of power output and fuel efficiency. Minimizing total
life cycle costs produces an optimum fuel efficiency ranging from 62 mpg to 82
mpg (48% to 64%) as gasoline prices vary from $5 to $10 per gallon,
respectively. The higher efficiencies result in fuel savings with corresponding
reductions in greenhouse gas emissions. Therefore, investing in energy
efficiency is not only a good business decision, but it also makes for a more
sustainable future.
