VI. COSTS and LEAD TIMES
Systems Costs
These cost estimates are NHTSA-derived estimates based on a tear-down study of costs by a contractor of three direct measurement systems and one indirect measurement system and confidential discussions with a variety of suppliers and manufacturers about how their systems work and the various components in their systems. All costs provided here are consumer costs. Variable cost estimates received from suppliers were multiplied times 1.51 to mark them up to consumer cost levels[1]. These cost estimates assume high production volumes and high volume labor, material, and overhead application rates, since these systems will be required to go on 16 million vehicles. For this analysis, we estimate there will be sales volumes of 16 million light vehicles per year, 8 million passenger cars and 8 million light trucks.
Indirect measurement systems:
There are different ways of using indirect measurement systems for a Tire Pressure Monitoring Systems (TPMS). The first assumes that the vehicle has an existing ABS system and that manufacturers will add the capability to monitor the wheel speed sensors, make changes to the algorithms, add the ability to display the information and a reset button. The incremental cost of adding these features to an existing ABS vehicle was estimated to be $13.29 per vehicle. In model year 2000, about 76 percent of all passenger cars and light trucks have an ABS system. However, you need a 4 wheel ABS system and you need a 4-channel ABS for the TPMS system to work. In model year 2000, 74 percent of all new light trucks and 63 percent of all new passenger cars have a 4 wheel ABS systems. However, a large percentage of these trucks (about 60 percent)[2] have a 3-channel ABS system (defined as a 3 channel system because the rear axle has one wheel speed sensor rather than a separate wheel speed sensor on each wheel, which would be required for a TPMS system). In the PEA, the agency discussed the costs for adding an indirect system to some pickup trucks. In order to pass the proposal that the system be able to detect when any one of the tires are low, the agency believed these trucks would have their speed detection system redesigned from being on the axle to being on both rear wheels at an estimated cost of $25 per vehicle. About 52 percent of the 4-wheel ABS systems are light trucks; if 60 percent of these need a fourth wheel detector, then 31.35 percent of all passenger cars and light trucks with 4-wheel ABS will need a fourth wheel detector. Thus, the average cost of providing an indirect system for ABS vehicles is estimated to be $21.13 ($13.29 + $25*.3135).
NHTSA tested four current ABS-indirect measurement systems and none of the four met the proposed requirements to provide a driver warning at 25 percent below placard and to detect “one, two, or three tires” being low. They had problems detecting two tires low on the same axle or when two tires on the same side of the vehicle were low. Commenters to the docket stated that the current indirect measurement systems could not meet the agency’s proposed Alternative 2 and that the agency would have to set the standard at 30 percent below placard for one wheel only to allow current indirect measurement systems to comply with a final rule. This is the basis for Alternative 4.
The indirect systems can’t detect when all four tires slowly lose air at about the same time and are low. Thus, to meet Alternative 3, a system like the hybrid system discussed by TRW in their comments would be needed.
In the PEA, the agency also discussed the possibility of manufacturers adding wheel sensors at a cost of $130 per vehicle or full ABS at a cost of $240 per vehicle to provide an indirect system. Some manufacturers may decide to add a full ABS as a countermeasure to the final rule. However, this is a marketing decision and the additional costs of adding an ABS system are not the result of this final rule.
Direct measurement systems:
A direct measurement system has a pressure sensor inside each tire that broadcasts tire pressure, and in some systems internal air temperature, to a central receiver on the vehicle (or in some cases to four separate antennae on the vehicle which relay the data to a central processor). It sends the information to a central processor that in turn displays a low-pressure warning when appropriate. Thus, there are two main costs of these systems (sensors and a receiver/central processor).
The agency has a teardown study performed by its contractor Ludtke & Associates.[3] Three direct measurement systems, the Beru tire pressure warning system, the SmarTire system, and the Johnson Controls system, have been torn down and their costs estimated.
The Beru system is an expensive system that goes beyond the bare minimum needed to pass the alternative. The Beru system is capable of providing a “soft warning” with an amber telltale lamp when the inflation pressure drops 2.8 or more psi below the recommended pressure, and a “hard warning” with a red telltale lamp when the under-inflation is 5.7 psi or greater below the recommended inflation pressure.
The costs of the Beru direct measurement system are broken into the following categories (1 control unit at $44, 4 wheels electronic modules to measure tire pressure and transmit the data at $32, 4 reception antenna at $11, 4 valves at $7, the instrument panel display at $2, assembly and miscellaneous costs at $10) for a total of $106.
The costs of the SmarTire direct measurement system are broken into the following categories (1 control unit which includes one antenna at $30, 4 wheels electronic modules to measure tire pressure and transmit the data at $30, 4 valves at $5, the instrument panel display at $4, assembly and miscellaneous costs at $11) for a total of $80.
The costs of the Johnson Controls direct measurement system are broken into the following categories (1 control unit which includes one antenna at $19, electronic sensor modules in the 4 wheels to measure tire pressure and transmit the data at $30, 4 valves at $7, the instrument panel display at $4, assembly and miscellaneous costs at $9) for a total of $69.
Thus, one can see that the direct measurement system cost estimates are very consistent between systems with the exception being the control module. As with most electronic systems, the agency believes that the costs of the control module will decrease in the future as engineers learn how to design the systems more efficiently. Thus, we will use the least expensive control module cost in our calculations. However, it is possible that this cost could be reduced even further over time.
Based on the three direct measurement systems costed out in the teardown studies, the average price for the tire pressure sensors is about $7.50 per wheel or $30 per vehicle.
For the direct measurement system, in Alternative 1(a) the agency assumes that manufacturers will provide a display system that will allow the driver to check and see the tire pressure for all four tires individually. This system is not required by the final rule, however, we believe that consumers will value this information and that the manufacturers will provide it in some cases. Two systems with a selectable display feature were costed out. The design in the Johnson Controls system costs $4.28 and the design in the SmarTire system cost $3.73. Thus, the average cost is $4 per vehicle. These designs were individual displays. If the design of the system is set up in an existing display that the driver can access, the costs would be much less, probably on the order of $1 per vehicle. A selectable display is currently available in high-end vehicles as an option and is purchased by a small percent of those purchasers. The agency estimates that about 5 percent of total sales have a selectable display currently. Thus, the average cost is estimated to be $3.85 ($4*.95 + $1*.05). This cost is in addition to the cost of the telltale light that would typically be provided on the instrument panel to provide a warning when the system detects that tires are low. The cost of the telltale light was estimated in the Beru system to be $1.58.
To summarize, a direct measurement system with a selectable display (Alternative 1a) is estimated to cost $70.35 ($7.50 per wheel or $30 per vehicle for the tire pressure sensors, $19 per vehicle for the control module, $3.85 for a selectable display, 4 valves at $6, and $11.50 for the combination of an instrument panel telltale, assembly, and miscellaneous wiring, etc.). A direct measurement system with only a telltale light (Alternative 1b) is estimated to cost $66.50 ($70.35 - $3.85).
A comment to the docket by Hayes Lemmerz International Inc. (8572-158) stated that our estimate of direct system cost did not include wheel effect costs. NHTSA estimated an installation cost of $4.00 per vehicle. Hayes believes the cost to install the direct sensor into the wheel is up to $40 per vehicle. The agency disagrees with this estimate. Hayes provided tooling estimates of $150,000 per rim. At Hayes they have 200 part numbers, so $3 million. They would also need to replace the valve hole processing equipment at $450,000 per line or $5 million at Hayes. However, Hayes never directly ties the information to the cost per rim.
A direct measurement system with a pump:
Cycloid Company makes a pump based system that uses 4 wheel electronic modules, like a direct measurement system, as well as a pump to inflate the tires to proper pressure while the vehicle is being driven. Each tire has a sensor and a pump. The pump is attached under the hubcap. The display is designed to give a warning to the driver when a particular tire has a problem and needs servicing. For slow leaks, the pump can keep inflating the tire enough to get the vehicle to its destination. However, once the vehicle stops, the pump stops, and the tire will deflate. The cost of this system is estimated to be the same as a sensor-based system, except that there is the addition of a pump at an estimated cost of $10 per wheel, or $40 per vehicle. The benefit of this system is that it eliminates the need for the driver to stop for air for normal tire pressure loss conditions.
A hybrid system
A hybrid system is an indirect system for ABS-equipped vehicles with 2 direct wheel sensors. The agency believes such a system could detect when one to four wheels are 25 percent or more below placard. TRW estimated that adding two direct tire measurement systems to a vehicle that had ABS would cost about 60 percent of the cost of a direct measurement system. The hybrid system would not be able to tell drivers the inflation pressure in all four tires, so we do not believe that a selectable display would be provided. Thus, the estimated cost for a hybrid system is $39.90 ($70.35 - $3.85)*.60).
Table VI-1 shows the estimated incremental costs for the different types of systems
Table VI-1
Cost Summary of
TPMS Costs
(2001 Dollars)
| Indirect Measurement System - Add to ABS System |
$21.13 |
| Direct Measurement System with Selectable Display | $70.35 |
| Direct Measurement System with Only a Telltale Display | $66.50 |
| Hybrid Measurement System | $39.90 |
Current TPMS Systems in New Vehicles
Current use of TPMS in new vehicles was determined by using the calendar year 2000 sales, a model year 2001 list of the make/models with each type of system, and an estimate that 2 percent of sales were purchased as an option for those optional systems, to estimate the percent of the year 2000 sales that had each type of system. The resulting estimates are that 4 percent of the model year 2001 light vehicle fleet has an ABS-type indirect measurement TPMS, and 1 percent of the fleet has a direct measurement system.
System Cost Summary by Alternative
Alternative 1(a): Assuming a direct measurement system with a selectable display, the incremental cost would be an estimated $69.65 per vehicle ($70.35 per vehicle * 99 percent to account for the 1 percent of sales in the current fleet = $69.65)
Alternative 1(b): Assuming a direct measurement system with only a telltale light, the incremental cost would be an estimated $65.84 per vehicle ($66.50 per vehicle * 99 percent to account for the 1 percent of sales in the current fleet = $65.84)
Alternatives 2 and 3: In the near term it is assumed that for both Alternatives 2 and 3 that a hybrid system would be provided for the 67 percent of the fleet that is already equipped with ABS, and that a direct measurement system with a telltale display will be installed in the remaining 33 percent of the fleet. The average overall cost for these alternatives is estimated to be $48.19[39.90*.67 + $66.50*.33]*.99 to account for one percent current compliance.
Alternative 4: In the near term it is assumed for Alternative 4 that an indirect system would be provided for the 67 percent of the fleet that is already equipped with ABS, and that a direct measurement system with a telltale display will be installed in the remaining 33 percent of the fleet. The average overall cost for these alternatives is estimated to be $33.34 [21.13*.67 + $66.50*.33]*.95 to account for five percent current compliance.
Maintenance Costs
The direct measurement systems have a battery in the sensor in most systems, which has a finite life of 7 to 10 years currently, that will have to be eventually replaced to keep the system functioning. At this time, the tire pressure sensor has a battery in an enclosed package which does not open to replace the battery. Thus, the entire sensor must be replaced to replace the battery. This may be necessary to ensure the lifetime use of the sensor given its location in the wheel considering vibrations. To estimate the present discounted value of this maintenance cost the following assumptions were made. The agency assumes that the second time the tires are changed, in the 90,000 to 100,000 mile range, that the sensor and battery will be replaced. This occurs in year 9 for all Alternatives for passenger cars and light trucks. Survival probability and discount factors from year 9 are used (see Tables V-25 and V-26). The cost of the sensor ($7.50 each for 4 tires) is multiplied by 3 to account for typical aftermarket markups. Thus, the estimated maintenance costs are $39.24 for passenger cars ($7.50 * 4 * .775 * .5626 * 3) and $43.39 for light trucks ($7.50 * 4 * .857 * .5626 * 3), making the average maintenance costs for a direct measurement system for all four wheels of $40.91 (41.32*.99 to account for current compliance). When a hybrid system is used with a direct measurement system in two wheels, the average maintenance costs would be $20.45 ($40.91*0.5).
Indirect systems do not need a battery, and are assumed to have no additional maintenance costs for this analysis.
Thus, for Alternative 1, the present discounted value of the quantified maintenance costs is $40.91. For Alternatives 2 and 3, the present discounted value of the quantified maintenance costs is $27.20 ($20.45*.67 + $40.91*.33). For Alternative 4, the present discounted value of the quantified maintenance costs is $13.50 ($0*.67 + $40.91*.33).
It should be noted that all suppliers of direct measurement systems are working on systems that do not use batteries. At least two designs are being worked on. IQ-mobil Electronics GmbH stated in its docket comment (Docket No. 2000-8572, No. 174) that it has designed a batteryless transponder chip at the valve that is 1” by 1” in size. A second system could use kinetic energy in the rotating wheel to provide power for the system. The Cycloid Company already uses a similar technology to power its pump. Thus, there is a very good chance that the maintenance costs discussed above may only last for a few model years until a newly designed system is available.
Owner’s manual costs
The agency is going to require the owner’s manual to describe the performance of the TPMS telltale and the performance limitations of the indirect system TPMS. The cost implication of adding information to the owner’s manual is small, probably on the order of $0.01 per vehicle.
Total Costs by Alternative
Table VI-2 provides the total cost by Alternative adding the vehicle consumer cost and the present discounted value of maintenance costs. As stated above, it is likely that these costs will decrease over time.
Table VI-2
Cost Summary
| Consumer Cost Increase | Present Value of Maintenance Costs | Total Cost | |
| Alternative 1(a) | $69.65 | $40.91 | $110.56 |
| Alternative 1(b) | $65.84 | $40.91 | $106.75 |
| Alternative 2 | $48.19 | $27.20 | $75.39 |
| Alternative 3 | $48.19 | $27.20 | $75.39 |
| Alternative 4 | $33.34 | $13.50 | $46.84 |
Non-Quantified Costs
Maintenance costs
The agency anticipates that there will be maintenance costs other than batteries for direct measurement systems associated with both a direct and an indirect measurement system. With indirect systems, the agency is aware of problems with wheel speed sensors with mis-adjustment, maintenance, and component failures. With direct systems, there is the possibility that the wheel sensors could be broken off when tires are being changed. Without estimates of these maintenance problems and costs, the agency is unable to quantify their impact.
More frequent tire inflation costs
In order to benefit from the TPMS, drivers must respond by maintaining the air pressure in their tires. To accomplish this, they must either make a separate trip to a service station to get the air, or spend additional time to fill their tires when they are at the station getting gasoline. The process of checking and filling tires is relatively simple and would probably take from 3-5 minutes. The time it takes to make a separate trip to a gas station would vary depending on the driver’s proximity to a station at the time they were notified. Presumably, the greater the distance to the station, the less likely the driver would be to make a separate trip.
It is likely that drivers who take action to fill their tires would consider this extra time to be fairly trivial. Since the action is voluntary, by definition, they would consider it to be worth the potential benefits they derive from properly inflated tires. However, when tallied across the entire driving population, the total effort involved in terms of man hours may be significant. Tires lose an estimated 1 psi per month, which means they lose 6 psi every 6 months. Therefore, people who otherwise would never fill their tires would be notified about twice a year. However, since many people do check their tires more frequently than that, the average number of extra fill ups would be considerably less than 2 per year. NHTSA has no data to indicate what portion of drivers would make a separate trip, or wait to fill their tires when they next filled their gas tanks.
Testing Costs
The test to show compliance starts with the tires at the placard pressure. The vehicle would be run for a specified time to check out the system. The actual test procedure has not fully been worked out yet. For this cost analysis, it is assumed that every possible combination of deflated tires would be tested. First, one tire would be deflated and the vehicle driven for 10 minutes to determine the response. Each of the other three tires would be deflated separately and the response of the system checked. Then, different combinations of two tires would be deflated at a time and the vehicle driven for ten minutes, different combinations of three tires would be deflated at the same time and finally all four tires would be deflated at the same time. Before and during these tests, the system may need to be calibrated. The agency has not worked out the calibration procedure yet, but for these estimation purposes, assumes it would take several hours. The data must be collected, analyzed and a test report written.
Assuming one set of tires on one vehicle at one vehicle load, the man-hours for the test are 6 hours for a manager, 30 hours for a test engineer and 30 hours for a test technician/driver.
Labor costs are estimated to be $75 per hour for a manager, $53 per hour for a test engineer and $31 per hour for technicians. Total testing costs are thus estimated to be $2,970 ($75 * 6 + $30 * 53 + $31 * 30). If for light trucks, it is necessary to test the vehicle unloaded and fully loaded, the test costs for light trucks would essentially double.
Lead Time
The act requires that the effective date of the rule be two years after the final rule. The agency has decided to have a phase-in schedule for the final rule. The phase-in is
10 percent of all vehicles for the year starting November 1, 2003
35 percent of all vehicles for the year starting November 1, 2004
65 percent of all vehicles for the year starting November 1, 2005
100 percent of all vehicles starting November 1, 2006.
The agency will allow carry forward credits as it has done in other rulemakings, but only for vehicles that are manufactured during the phase-in and comply with the four-tire 25 percent option, and will allow small volume vehicle manufacturers to meet the standard starting November 1, 2006.
The agency is also allowing the current TPMS systems (Alternative 4) to meet the standard during the phase-in period. Thus, a system which can detect one low tire at 30 percent below the placard can be used to meet the standard during the phase-in period. The agency will be conducting a tire pressure survey of indirect systems and comparing them to vehicles with no TPMS. After the results of that survey have been reviewed, the agency will determine the requirements for vehicles produced after Nov. 1, 2006.
[1] A docket comment from Public Citizen (8572-148) argued that profits are transfer payments and should not be included as costs of the rule. This is incorrect. Profits represent the opportunity costs of using capital. Whatever profit that occurs in a competitive market is simply what is necessary to recover the value of those resources in their next best use.
[2] Based on a model by model analysis of data in the Mitchell Service Manual.
[3] Beru Tire Pressure Warning System, for No. DTNH22-00-C-02008 Task Order No. Three (3).