Incremental vs. Fundamental: Two Paths to Automotive Efficiency

When it comes to making vehicles more fuel-efficient, policymakers and engineers have two fundamentally different approaches at their disposal. The first is the incremental approach-making gradual, step-by-step improvements to existing technologies. The second is fundamental analysis-starting from a clean slate to reimagine vehicle design from the ground up. Both strategies have shaped automotive efficiency policy over the past few decades, with dramatically different outcomes. Understanding these two paths helps explain why some regulations succeed while ambitious research programs sometimes fall short.

What is the incremental approach to automotive efficiency? 🔗

The incremental approach focuses on making small, continuous improvements to existing vehicle technologies. Rather than revolutionizing the automobile, this strategy accumulates technological changes to produce designs with progressively better fuel economy. Each step builds upon proven engineering, keeping costs manageable while delivering measurable gains.

This method has a strong track record. Corporate Average Fuel Economy (CAFE) standards have used this approach since 1975, when Congress enacted regulations requiring automakers to meet fleet-wide fuel economy targets. The standards were designed around what was technologically feasible and economically practical at any given time, pushing manufacturers to adopt available technologies rather than waiting for breakthrough innovations.

How incremental improvements work in practice 🔗

Incremental innovation in the automotive industry takes many forms. Mechanical functions have progressively shifted to electronic controls, with modern vehicles now containing over 40 electronic controllers connected by kilometres of wiring. These controllers refine powertrain performance, reduce emissions, and improve fuel consumption without changing the fundamental architecture of the internal combustion engine.

Specific technologies that have emerged through incremental development include variable valve timing, cylinder deactivation, direct fuel injection, turbocharging, improved transmissions with more gear ratios, and reductions in aerodynamic drag and rolling resistance. Each technology provides modest efficiency gains on its own, but together they compound into substantial improvements.

The MY2012-16 Joint Rule: incremental success in action 🔗

The most significant example of the incremental approach succeeding came with the model year 2012-2016 fuel economy standards. The EPA and NHTSA jointly established a national program combining greenhouse gas emission standards with Corporate Average Fuel Economy requirements for light-duty vehicles.

This landmark regulation achieved remarkable results. The average 2016 model year vehicle was projected to emit 16 fewer metric tons of CO2-equivalent emissions over its lifetime compared to vehicles without these standards. Consumers would see net savings of more than $3,000 over the vehicle’s lifetime through reduced fuel costs, even accounting for higher upfront purchase prices.

Why the joint rule worked 🔗

Several factors contributed to the MY2012-16 rule’s success. First, it established a unified national standard, harmonizing what had previously been three separate regulatory regimes-federal CAFE standards, EPA greenhouse gas rules, and California’s state standards. This gave automakers regulatory certainty and allowed them to develop a single national fleet.

Second, the standards were based on vehicle footprint-the area calculated by multiplying wheelbase by track width. This approach has remained in place since MY 2011, allowing manufacturers flexibility while still requiring efficiency improvements across all vehicle sizes.

Third, the rule relied on technologies that were already available or in advanced development. Automakers could meet the standards using improved engines, better transmissions, reduced vehicle weight, and lower aerodynamic drag-technologies they understood how to manufacture at scale.

What is fundamental analysis in technology assessment? 🔗

Fundamental analysis takes a different approach entirely. Rather than building incrementally from existing designs, engineering-based fundamental analysis begins with an essentially clean sheet to ask what would be possible with radical design changes. This approach examines theoretical limits and explores what could be achieved if manufacturers were unconstrained by existing production methods or market expectations.

Researchers using this method have argued that ultralight vehicles weighing between 400 and 580 kilograms, with drag coefficients as low as 0.10, and hybrid powertrains with regenerative braking could theoretically achieve between 150 and 300 mpg. While such concepts push the boundaries of what seems possible, they often lack detailed pathways explaining how to get from current production to these advanced designs.

Strengths and limitations of the fundamental approach 🔗

The strength of fundamental analysis lies in its ability to identify long-term possibilities that incremental thinking might miss. It can reveal efficiency frontiers that seem impossible from the perspective of current technology but could become achievable with sustained research investment.

However, fundamental analysis has notable limitations. Estimates generated through this approach often involve significant uncertainty about manufacturability, cost, and consumer acceptance. Without detailed implementation pathways, even technically sound concepts may never reach production. The fundamental approach is better suited to guiding long-term research priorities than setting near-term regulatory standards.

The PNGV program: a case study in fundamental redesign 🔗

The Partnership for a New Generation of Vehicles (PNGV) represents the most ambitious attempt to apply fundamental analysis to automotive efficiency policy. Launched in 1993 as a cooperative program between the federal government and the three major domestic automakers-General Motors, Ford, and Chrysler-PNGV aimed to triple fuel efficiency while maintaining vehicle performance, safety, and affordability.

PNGV’s ambitious goals 🔗

The program set a target of developing vehicles achieving up to 80 mpg-roughly three times the average fuel economy of mid-1990s family sedans. This wasn’t meant to be achieved through incremental improvements but through radical technological leaps including new powertrains, advanced materials, and completely redesigned vehicle architectures.

The partnership involved eight federal agencies, national laboratories, and universities working alongside the United States Council for Automotive Research (USCAR). More than $250 million in federal funding supported PNGV projects in its early years, with costs shared roughly equally between government and industry.

What PNGV achieved 🔗

The program did produce notable results. All three automakers developed fully operational concept cars demonstrating that dramatic efficiency improvements were technically feasible. General Motors built the 80 mpg Precept, Ford designed the 72 mpg Prodigy, and Chrysler created the 72 mpg ESX-3. These vehicles used diesel-electric hybrid powertrains, lightweight aluminum or thermoplastic construction, and advanced aerodynamics.

PNGV also drove genuine technological breakthroughs, including significant cost reductions in fuel cell technology, development of near-frictionless carbon coatings, and improved power electronics. Researchers reduced fuel cell costs from $10,000 per kilowatt in 1994 to $300 per kilowatt by 2000-a 97% reduction.

Why PNGV was discontinued 🔗

Despite these achievements, the program was cancelled in 2002 under the Bush administration, with funding redirected to the FreedomCAR program focusing on hydrogen fuel cells. Several issues contributed to PNGV’s discontinuation.

Environmental groups raised concerns that diesel hybrid technology might not meet upcoming Tier 2 emissions standards. The program had no requirement that developed vehicles ever be produced and sold, leading critics to question whether manufacturers would commercialize the technology. Some argued that PNGV was used to forestall increases in mandatory CAFE standards rather than genuinely preparing for their implementation.

Perhaps most fundamentally, PNGV struggled with what one analysis called its core flaw: it was designed to pursue long-term technologies in a near-term timeframe. The ten-year horizon was too short for truly revolutionary changes but diverted attention and resources from more achievable near-term improvements.

Comparing the two approaches 🔗

The contrast between the MY2012-16 Joint Rule and PNGV illustrates the trade-offs between incremental and fundamental approaches. The Joint Rule achieved significant, measurable improvements using available technologies within a clear regulatory framework. PNGV demonstrated impressive technical possibilities but failed to translate them into production vehicles.

When to use each approach 🔗

Incremental approaches work best when technologies are relatively mature, costs and benefits can be reliably estimated, and manufacturers need regulatory certainty to plan production. The step-by-step nature of incremental improvement also allows for course corrections as technologies perform better or worse than expected.

Fundamental analysis remains valuable for guiding long-term research investment and identifying efficiency frontiers that might not be visible from an incremental perspective. However, programs based on fundamental analysis should acknowledge the uncertainty inherent in their projections and avoid setting rigid timelines for achieving breakthrough goals.

Lessons for future efficiency policy 🔗

The history of automotive efficiency regulation suggests several principles for future policy. Clear, achievable targets based on available technologies tend to produce results. Unified national standards reduce compliance costs and provide investment certainty. And while ambitious research programs can drive technological progress, they work best when decoupled from near-term regulatory requirements.

The automotive industry continues to evolve, with electrification now reshaping efficiency possibilities in ways that neither the MY2012-16 rule nor PNGV fully anticipated. Whether this transition follows an incremental path or requires more fundamental rethinking of vehicle design remains an open question.

What do you think? Should automotive efficiency policy focus primarily on achievable incremental improvements, or does the urgency of climate change justify more ambitious fundamental redesign approaches? How might the lessons from PNGV apply to today’s push for vehicle electrification?

References

1. https://dieselnet.com/standards/us/fe.php
2. https://www.the-waves.org/2022/02/22/car-evolution-competition-race-in-incremental-innovation/
3. https://www.epa.gov/regulations-emissions-vehicles-and-engines/final-rule-model-year-2012-2016-light-duty-vehicle
4. https://www.federalregister.gov/documents/2010/05/07/2010-8159/light-duty-vehicle-greenhouse-gas-emission-standards-and-corporate-average-fuel-economy-standards
5. https://www.federalregister.gov/documents/2024/06/24/2024-12864/corporate-average-fuel-economy-standards-for-passenger-cars-and-light-trucks-for-model-years-2027
6. https://www.osti.gov/servlets/purl/753365
7. https://en.wikipedia.org/wiki/Partnership_for_a_New_Generation_of_Vehicles
8. https://www.rand.org/pubs/monograph_reports/MR1011.html
9. https://clintonwhitehouse4.archives.gov/textonly/WH/EOP/OSTP/other/pngvpr94.html
10. https://www.everycrsreport.com/reports/RS20852.html
11. https://issues.org/sperlin/