Vehicle Technology Deployment Pathways: An Examination of Timing and Investment Constraints

Analysts may develop scenarios of the deployment of new vehicle technologies for a variety of reasons, ranging from pure thought exercises for hypothesizing about the future, to careful examinations of the possible outcomes of future policies or trends in technology, to examination of the feasibility of broad goals of reducing greenhouse gases and/or oil use. To establish a scenario’s plausibility, analysts will seek to make their underlying assumptions clear and to “reality check” the story they tell about technology development and deployment in the marketplace. This report examines two aspects of “reality checking”—(1) whether the timing of the vehicle deployment envisioned by the scenarios corresponds to recognized limits to technology development and market penetration and (2) whether the investments that must be made for the scenario to unfold seem viable from the perspective of the investment community. There are some excellent examples of scenario development that have taken a considerable effort to account for timing issues—the Massachusetts Institute of Technology report On the Road in 2035 (Bandivadekar et al. 2008) is one such example. However, a review of the literature shows that many reports discussing scenario analyses do not reveal the genesis of the deployment schedule embodied by the scenarios. The literature review also reveals that the perspective of the investment community apparently was not considered or was considered by using techniques that do not take into account the role of risk in investment decisions. This result may not be surprising—conducting an investment analysis is difficult given the variety of investment actors, the uncertainty in future costs, and a scarcity of literature on the capital costs of the key building blocks of a new technology vehicle deployment. Nevertheless, a method for examining the potential attractiveness of the required capital investments to the investment community would be extremely attractive both from the perspective of improving the credibility of scenario analyses and allowing better analysis of policies designed to stimulate investment. This report develops a proposed timeline for introduction and penetration of a new vehicle technology.. The timeline indicates a period of 12 to 20+ years between the initial market introduction of a new technology and when it reaches “saturation” in the new light-duty vehicle fleet, with the lower end of the range applying primarily to technologies that do not require extensive integration into vehicle systems or substantial post-introduction cost reductions