Cost Benefit Analysis – Hybrid Cars

Presented by

Mukesh Kakkar
Jeff Graebner
James Lepp
What is Cost Benefit Analysis (CBA)
Costs and Benefits
Applications of CBA
Steps involved
Process Flow
Consumer opinion

Cost & Benefits
Benefits are primary positive outcomes or consequences
Costs are value of the resources that must be used to develop, implement, and operate the program being analyzed
Application of CBA
Whether or not project should be undertaken
Could the project be viable in future
Which among many competing alternatives and projects should be funded given a limited budget.
CBA Drill-down tree
CBA Process Flowchart
Hybrid Vehicles
Opinions- facts or fiction

Gas Prices
Moving Average
Simple Regression
Multiple Regression (3)
Time Series Decomposition
Multiple Regression
Dependent Variable
Gas Price
Independent Variables
Consumer Price Index (CPI)
Average number of miles traveled per vehicle
9/11 -dummy variable
Hurricane Katrina -dummy variable
War in Iraq -dummy variable
Quarters -dummy variables
Total number of hybrids on the road
Total number of light vehicles on the road
Personal Income
Motor Vehicle Output
Vehicles Used in Study
Benefits of a Hybrid
Savings at the Pump
All Hybrids get a better fuel economy than their counterparts
Lower Insurance Rates
Drop of 5 to 10%
Government Assistance
Federal Tax credit
Coase Theorem
Take a decentralized approach to environmental pollution
Lower Emissions
Less Carbon Monoxide adding to Global Warming
Self-Powering Engines
No hassle in finding a plug
Special Car-Pool Lanes
No matter how many people are in the car
Costs of a Hybrid
General Maintenance and Repair
Even though it does have an electric engine it is still needed
New Batteries
Need to be changed out every 8 to 10 years
Higher Depreciation Rate
Expected as 1 to 4% higher
Higher Initial Cost
Between $4,000 and $9,000
Inside the Numbers
Inside the Numbers (Continued)
The Results
The Results (Continued)
The Results (Continued)

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