Monday, December 3, 2012

Why MPGe really doesn't matter much...




I have long hated MPGe.  Miles Per Gallon Equivalent is an often misunderstood rating, that is prominently placed and emphasized by the EPA in its window stickers, and successful in confusing consumers, dealerships, and reporters alike.  I have seen many well intentioned dealerships advertise the Volt as a car with a "98 MPG" rating (dropping the 'e' altogether).  I have seen critics wrongly try to showcase cheaper cars with a higher MPGe as better than the Volt.  Competing car manufacturers are using the MPGe metric to make their inferior electric car offerings look better than the Volt.  Certain electric hybrid automobile manufactures, with their offerings being short on range but high on MPGe, are playing a game of smoke and mirrors.  "Ignore the short range, and put all your attention to our higher MPGe!"  The devil is in the details, and I worry that too many consumers aren't going to understand how to properly evaluate their choices.

What is MPGe?

Well, it is really an efficiency rating.  The EPA determined how many BTUs of heat a gallon of gas would put off if you if burned it.  Then they calculated how much electricity would be needed to generate to the same number of BTUs.  This number is 34 kilowatt hours.  Then the EPA determined the range of a car after consuming 34 kWhs of electricity.  So, if you see a car that is rated at 95 MPGe, that means the EPA rated that car to go 95 miles on 34 kWhs of electricity.  If you see a car rated at 115 MPGe, that means it could go 115 miles on 34 kWhs. 

So, why is the car rated at 115 MPGe not necessarily better than the car with a 95 MPGe.  There is no doubt that on a given amount of electricity, the car getting the 115 MPGe is going to do more with a given unit of energy.  However, if the car getting 115 MPGe can only drive 10 miles on electricity before turning on the gas engine, and the car getting 95 MPGe can go 45 miles before turning on the gas engine, the overall efficiency of the longer ranged, yet inferior MPGe car, is going to best the shorter ranged, higher MPGe car, on all but the shortest of trips.

Looking at this from the abstract.  Let's say I need to hire a worker.  I tell that worker that he/she can work up to 8 hours a day.

Option 1: Your first hour of work is paid at $10 an hour.  All subsequent hours are paid at $2 an hour. (Compare this to Car option 1:  115 MPGe and 50 MPG on gas)
Option 2: Your first four hours of work are paid at $8 an hour.  All subsequent hours are paid at $1 an hour.
(Compare this to Car option 2: 98 MPGe and 37 MPG on gas)

With option 1, the worker can make a maximum of $24 for 8 hours of work.  $10 for the first hour, then $14 for the remaining 7.

With option 2, the worker can make a maximum of $36 for 8 hours of work.  $32 for the first four hours, then $4 for the remaining 4.

So what can we take from this?

1) Option 1 has the highest hourly rates.  The starting rate and secondary rate are BOTH higher than the second option's rates.  BUT FOR A FULL WORKDAY, OPTION TWO WILL PAY YOU MORE.

2) If the person that is going to be hired plans on working 1 hour only, option 1 is the best.  The benefits of the second option don't come into play until after the first hour, so if the worker is only going to be working one hour a day, the first option is obviously best.

3) You have to look beyond just the raw numbers, and see what fits your situation the best.

So, bringing this back to cars...  A car that promises a higher MPGe than the Volt, may not be better for you at all.   You need to look at the electric range of the car, estimate your daily driving habits, and come up with a combined fuel economy in your situation.  This obviously extends to the MPG rating on range extended cars like the Volt and Plug in Prius.  The Volt gets about 37 MPG when running on gas, with the Prius at 50 MPG.  Ignoring the fact that the Prius will turn on the gas motor even during the initial electric range if the car gets to 62 MPH or if you accelerate too hard, the Prius's superior MPG shouldn't matter much to Volt owners.  Volt owners use their gas engine so little that the added 13 MPG efficiency of the Prius won't cut much into the fuel savings.

What would I like to see done about this? 

Despite there being a lot of criticism on this idea, the EPA needs to consider adding other metrics to their label that reduce the bias of MPGe.  Given the cheap nature of electricity compared to gasoline, one car being 10-15% more efficient with the power it consumes isnt going to amount to much difference in the wallet of the buyer, but that car only going 11 miles on a charge versus 40 is going to make a big one.   It would also be nice to display the potential tax credits for the car.  With the Volts much larger battery, it gets 3x the tax credit of the Plug in Prius ($7500 versus $2500).  With this difference, the Volt has over 3x the electric range for about the same cost.

One final note... I know for 100% electric vehicles, MPGe is a good metric.  It could also be a good 'tie break' metric if two cars are identical in range.  Its just not a great starting point to evaluate electric cars, and the EPA can do much better.

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