The striking similarities among today’s new automobiles within each competitive class – like features, near identical passenger and cargo space, comparable styling, even near matching MSRPs – has created a hyper-competitive marketplace with little variation among product offerings, at least at face value.
There are indeed underlying product-differentiating factors that have traditionally been exempt from automotive value-based assessments. Consumer product knowledge regarding environmental, socioeconomic and life-cycle costs are extremely limited, yet these costs have a measurable impact not only on the consumer’s best financial interest, but also on the best interest of the environment in which we live and the global community of which we are all an equal part. Even in this now digital age, these costs are not transparent.
Given current market conditions, we believe that transformational change is essential to better differentiate product offerings for consumers based on a comprehensive value-based assessment.
A product’s value and relative worth should derive from the many factors that influence design and production choices: by the materials that were mined, processed and used in production; by the technologies employed to improve product qualities and efficiencies; by the labor and environmental compliance costs in the country of assembly; etc. These considerations offer perhaps the greatest opportunity to not only allow consumers to better differentiate between product offerings, but to also empower purchasing decisions that contribute toward a just and sustainable future, without compromising one’s financial well-being.
And while this transformation may sound like a pipedream, it is in fact already in motion. Consumers are driving this transformation toward environmental and social transparency of the products they buy and the company’s they buy from. A recent study by Cone Research found that 87% of all consumers consider Corporate Social Responsibility (CSR) prior to product purchase, and 85% consider CSR when deciding what products to recommend to others (Cone, 2013). The study was also quick to point out that consumers now demand more than just CSR mission statements, with 91% of those consumers seeking results. The challenge with seeking results in the current market is that many results-oriented publications are often based on unsubstantiated advertising claims, not objective analysis.
We therefore set out to do something responsive, something revolutionary, something disruptive. We set out to redefine value in the automotive marketplace by breaking each vehicle down into the sum of all its parts, and measuring the natural capital, the social and human capital, and the economic efficiencies embodied within each vehicle to derive its real market value relative to all new vehicles in its class. The result: a consumer-friendly Automotive Performance Index™ based on scientific principles and methods.
Our approach to redefining automotive value is in fact a principled approach, one founded on the principles of ecological economics. This transdisciplinary field examines the relationship between ecological and economic systems, realizing that sustained economic activity is fully reliant on a resilient ecological system to provide natural, social and human capital. Ensuring that economic activity does not undermine the resource capacity of our natural environment requires transparent value assessments that ensure costs are not externalized (otherwise not accounted for) to the environment, to the labor force and to their communities.
With this in mind, we developed a principled model founded in ecological economics, while utilizing practical methods founded in life-cycle assessment (LCA). Environmental LCAs (E-LCA) consider the entire life-cycle of a product, from raw material extraction and acquisition, through energy and material production and manufacturing, to use, end-of-life treatment and final disposal (ISO 14040).
Environmental LCAs consider material and energy flows, but products are also made of real-life stories about production and consumption impacts on the workers, the local communities, the consumers, the society and all value chain actors (UNEP, 2009). The recent emergence of social life-cycle assessment (S-LCA) methodologies now allow for the consecutive and interlinked stages of a product to be viewed in terms of social and socioeconomic impacts in addition to environmental impacts. By incorporating both E-LCA and S-LCA, this Study offers comprehensive, transparent and scientifically based results that can ultimately enable an ecologically sustainable, socially equitable, and economically viable product choice.
The vast number of automotive E-LCA’s conducted to date are not vehicle specific, but are instead focused on generic vehicles that are not available to the consumer and therefore not useful in comparing one product against another.
While such research has made great contributions to advancing knowledge and understanding of current and emerging automotive technologies from a life-cycle perspective, this research is locked in academia – in dense reports that are not practically translated nor intended for broad consumer use.
Further, there have been great contributions made in recent years by international bodies, academic institutions and non-governmental organizations in social and socioeconomic research as it pertains to the automotive marketplace. The existing body of research and the wide international support for programs that improve social and socioeconomic conditions is again not widely accessible to consumers, but is instead housed in international treaties, government agency correspondence and academic reports.
Realizing the tremendous value of this existing and still emerging body of research, we set out to bridge the information gap between the scientific community and the consumer who stands to benefit from this exchange. We provide access to scientific research findings for practical use. This Study and the findings assembled in the Automotive Performance Index are the links that provide consumers with access to automotive research that is specific to current product offerings, and that which defines clear points of differentiation among competing products.
Below are short extracts that identify the leading organizations and programs that have made significant contributions to advancing the knowledge and understanding of the principles and practical methods considered in this Study. This is a non-exhaustive list.
MIT Sloan Automotive Laboratory
The Sloan Automotive Laboratory housed at the Massachusetts Institute of Technology (MIT) conducts research activities in the areas of internal combustion engines and fuels, fundamental fluid/thermal/combustion studies, and assessment of advanced propulsion and vehicle technologies, with specific focus on energy consumption and environmental impacts. Research includes the performance and emissions of spark-ignited and compression-ignited or diesel engines, understanding fuel-air mixture preparation processes, and engine lubrication studies to reduce friction, wear, and oil consumption. The Lab also conducts research on future automotive technologies and fuel requirements, focusing on greenhouse gas emissions reduction.
Argonne National Laboratory
Argonne National Laboratory Transportation Technology R & D Center (TTRDC) housed at the University of Chicago brings together scientists and engineers from different disciplines, as one of the DOE’s lead laboratories to conduct research in hybrid powertrains, batteries, and fuel-efficient technologies. TTRDC developed the Greenhouse gases, Regulated Emissions, and Energy use in Transportation (GREET) model. This model is a great contribution to environment life-cycle assessment of conventional and emerging automotive technologies.
Center for Transportation Analysis Oak Ridge National Laboratory
The Center for Transportation Analysis (CTA) at Oak Ridge National Laboratory (ORNL) has seven major focus areas of research: Freight and Passenger Flows, Transportation Energy Efficiency, Transportation Safety and Security, Supply Chain Efficiency, Climate Change, Vehicle Technologies, and Enterprise Modeling. Researchers at CTA recently developed the gamma distribution methodology (Lin et al., 2012) for plug-in electric vehicles to assess the daily vehicle miles travelled and the appropriate distribution of gasoline and electric fuel to better gauge the impacts of plug-in electric technologies.
Institute of Transportation Studies at UC Davis
The Institute of Transportation Studies at UC Davis (ITS-Davis) is supporting the development of a national Low Carbon Fuel Standard and supporting the development of national 54-mpg vehicle standards. ITS plays an important role in designing and analyzing initiatives on zero emission vehicles, low carbon fuels, vehicle use and sprawl.
University of Michigan Transportation Research Institute
The University of Michigan Transportation Research Institute has carried out more than 1,000 research projects in broad areas involving accident data collection and traffic safety analysis, bioengineering, human factors, mechanical engineering, psychology, economics, and public policy.
Yale Center for Environmental Law and Policy
The Yale Center for Environmental Law and Policy (YCELP) is a joint venture of the Yale School of Forestry & Environmental Studies and the Yale Law School. Together, they seek to incorporate ethical awareness and analytical decision-making tools into environmental law and policy. YCELP developed the Environmental Performance Index which ranks how well countries perform on high-priority environmental issues in two broad policy areas: protection of human health from environmental harm and protection of ecosystems. This global ranking for the environment is a great contribution to better understand the environmental commitments and implementations at a country level.
The World Bank
The World Bank is a United Nations international financial institution that has supported the development of The Worldwide Governance Indicators Project. This project has contributed to the comparative understanding of quality and effectiveness of governance across 215 economies. Governance consists of the traditions and institutions by which authority in a country is exercised, looking at the capacity of a government to effectively formulate and implement sound policies as well as the respect of citizens and the state for the institutions that govern economic and social interactions among them.
United Nations Environmental Program
The United Nations Environmental Program (UNEP) is the environmental organization within the United Nations system. UNEP’s mission is to “provide leadership and encourage partnership in caring for the environment by inspiring, informing, and enabling nations and peoples to improve their quality of life without compromising that of future generations.” UNEP recently developed the Guidelines for Social Life Cycle Assessment of Products, which is a significant contribution to social and socio-economic LCA that complements environmental LCA and Life Cycle Costing, and further contributes to the full assessment of goods and services within the context of sustainable development.
United Nations International Labor Organization
The International Labor Organization (ILO) is devoted to “promoting social justice and internationally recognized human and labor rights, pursuing its founding mission that labor peace is essential to prosperity. Today, the ILO helps advance the creation of decent work and the economic and working conditions that give working people and business people a stake in lasting peace, prosperity and progress. Its tripartite structure provides a unique platform for promoting decent work for all women and men. Its main aims are to promote rights at work, encourage decent employment opportunities, enhance social protection and strengthen dialogue on work-related issues.” The ILO has made significant contributions to improve working conditions and advocate for environmental justice and fundamental human rights for all.