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Future Potential of Hybrid and Diesel Powertrains in the U.S. Light-Duty Vehicle Market


  • David L. Greene

    (Oak Ridge National Laboratory)

  • K.G. Duleep

    (Energy & Environmental Analysis, Inc.)

  • Walter McManus

    (J.D. Power & Associates)


Diesel and hybrid technologies each have the potential to increase light-duty vehicle fuel economy by a third or more without loss of performance, yet these technologies have typically been excluded from technical assessments of fuel economy potential on the grounds that hybrids are too expensive and diesels cannot meet Tier 2 emissions standards. Recently, hybrid costs have come down and the few hybrid makes available are selling well. Diesels have made great strides in reducing particulate and nitrogen oxide emissions, and are likely though not certain to meet future standards. In light of these developments, this study takes a detailed look at the market potential of these two powertrain technologies and their possible impacts on light-duty vehicle fuel economy. A nested multinomial logit model of vehicle choice was calibrated to 2002 model year sales of 930 makes, models and engine- transmission configurations. Based on an assessment of the status and outlook for the two technologies, market shares were predicted for 2008, 2012 and beyond, assuming no additional increase in fuel economy standards or other new policy initiatives. Current tax incentives for hybrids are assumed to be phased out by 2008. Given announced and likely introductions by 2008, hybrids could capture 4-7% and diesels 2-4% of the light-duty market. Based on our best guesses for further introductions, these shares could increase to 10-15% for hybrids and 4- 7% for diesels by 2012. The resulting impacts on fleet average fuel economy would be about +2% in 2008 and +4% in 2012. If diesels and hybrids were widely available across vehicle classes, makes, and models, they could capture 40% or more of the light-duty vehicle market.

Suggested Citation

  • David L. Greene & K.G. Duleep & Walter McManus, 2004. "Future Potential of Hybrid and Diesel Powertrains in the U.S. Light-Duty Vehicle Market," Industrial Organization 0410003, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpio:0410003
    Note: Type of Document - pdf; pages: 93

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    References listed on IDEAS

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    2. Jean-Jacques Chanaron & Julius Teske, 2007. "Hybrid vehicles: a temporary step," Post-Print halshs-00207392, HAL.
    3. Lutsey, Nicholas P., 2008. "Prioritizing Climate Change Mitigation Alternatives: Comparing Transportation Technologies to Options in Other Sectors," Institute of Transportation Studies, Working Paper Series qt5rd41433, Institute of Transportation Studies, UC Davis.
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    6. Wu, Tian & Shang, Zhe & Tian, Xin & Wang, Shouyang, 2016. "How hyperbolic discounting preference affects Chinese consumers’ consumption choice between conventional and electric vehicles," Energy Policy, Elsevier, vol. 97(C), pages 400-413.
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    13. Al-Alawi, Baha M. & Bradley, Thomas H., 2013. "Review of hybrid, plug-in hybrid, and electric vehicle market modeling Studies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 21(C), pages 190-203.
    14. Haaf, C. Grace & Morrow, W. Ross & Azevedo, Inês M.L. & Feit, Elea McDonnell & Michalek, Jeremy J., 2016. "Forecasting light-duty vehicle demand using alternative-specific constants for endogeneity correction versus calibration," Transportation Research Part B: Methodological, Elsevier, vol. 84(C), pages 182-210.
    15. McManus, Walter, 2006. "Can proactive fuel economy strategies help automakers mitigate fuel price risk?," MPRA Paper 3460, University Library of Munich, Germany.
    16. Lee, Yongseung & Kim, Chongman & Shin, Juneseuk, 2016. "A hybrid electric vehicle market penetration model to identify the best policy mix: A consumer ownership cycle approach," Applied Energy, Elsevier, vol. 184(C), pages 438-449.
    17. McManus, Walter, 2007. "Economic analysis of feebates to reduce greenhouse gas emissions from light vehicles for California," MPRA Paper 3461, University Library of Munich, Germany.
    18. Diamond, David, 2009. "The impact of government incentives for hybrid-electric vehicles: Evidence from US states," Energy Policy, Elsevier, vol. 37(3), pages 972-983, March.
    19. Fox, Jacob & Axsen, Jonn & Jaccard, Mark, 2017. "Picking Winners: Modelling the Costs of Technology-specific Climate Policy in the U.S. Passenger Vehicle Sector," Ecological Economics, Elsevier, vol. 137(C), pages 133-147.

    More about this item


    diesel; hybrid; vehicle; fuel; gasoline; fuel economy; scenario; technology; environment;

    JEL classification:

    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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    1. Studies on the automobile industry


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