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Methodology: Technology Price Estimates

In this report, the Office of Technology Assessment (OTA) has estimated the approximate retail price of technologies that range from those already present in the current light-duty vehicle fleet to those whose final design, choice of materials, and manufacturing process are not known.

Some warning about these estimates and their sources is warranted:

  1. For technologies far from commercialization, price estimates should be treated with skepticism. The only available manufacturing experience with these technologies is likely to be one-of-a-kind hand building.
  2. Redesigning to solve remaining problems may increase costs; mass production will certainly lower costs; the technologies will be redesigned to cut manufacturing costs; and learning over time will cut costs both through product redesign and through continual cost-cutting in manufacture. The magnitude of changes over time is not particularly predictable.
  3. Although technology developers know the most about their technology’s costs and remaining problems, the estimates of costs are particularly suspect.
  1. Technology developers are at the mercy of their finding sources–their company’s directors, venture capitalists, and government agencies–and these sources generally will not proceed without assurances that costs will be competitive. The sole exception occurs when regulatory demands require proceeding with a technology regardless of market factors.
  2. Alternative estimates of technology prices are exceedingly difficult to compare, because they rarely focus on precisely the same technological specifications and often differ in their inclusion of key cost components.
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For example, vehicle price estimates must include a range of expenses, including amortization of design costs, transportation, dealer markups, and so forth, but key cost components are frequently ignored in cost analyses.

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