Friday, August 28, 2015

Dear EPA

Last week I got a letter which asked me to loan my car to the EPA for their research on emissions from privately owned vehicles. The car would be used between 1 and 4 weeks, assuming it met their criteria. They provided a couple of incentive options and also stipulated that my car would be returned with a full tank of gas after driving it up to 300 miles per day, along with being covered by their insurance.
  • If I wanted a loaner car from them (which appears to be insured by them), I would receive $20 per day.
  • If I did not receive a loaner car from them, I would receive $50 per day. 
Based on my post on the true cost of driving, I wondered how the offers compare to the cost to me. The costs I will experience if I participate in this (in approximate order of cost to me) include:
  • Wear and tear on the car and tires at a rate of up to 300 miles per day (possibly excluding weekends, possibly not).
  • The loss of use of my vehicle for the testing period if I take the $50 per day option
  • Miles towards my next oil change.
  • Time out of my day to do drop-off and pickup.
  • The risk that something bad will happen to the car that may cost me additional time and money (which I would hopefully be appropriately compensated for).
The benefits I will experience (in approximate value for me) include:
  • $50 or $20 per day for participating.
  • A loaner car if I choose that option.
  • A full tank of gas when I get my car back.
  • If the loaner car is insured by them, I may avoid some risk due to accidents during the time of the study.
If I normally drove close to 300 miles a day, this problem would be easy to solve by choosing to get a loaner car (assuming there is no limit on the number of miles on it). Most days though, the car they would be using of mine drives 30 miles, so no easy out there. For me personally since we have two cars, I can quickly say that the loss of use of the vehicle is less than $30 a day, so I would go without if I participated at all.

We can quickly see that they are offering a minimum of 17 cents per mile driven if they drive it the full 300 miles every day they pay me for. From the information available from AAA, we can try to figure out if that leaves any extra money as an incentive for me to participate. Tires and maintenance (including oil changes) add up to 6 cents per mile. But what about the loss in value due to additional miles?

AAA estimates depreciation at 24 cents per mile based on numbers that are close to true for me, so there's definitely a risk of wiping out all the potential profit. But, how much of that has to do with the age vs. the actual miles driven? I decided to use Edmunds and Kelley Blue Book to estimate what the change in value to my car would be purely based on the miles driven. I tested both for the present, and since I didn't entirely trust the numbers, I also tried projecting out 2 years to when I might end up selling the car (I did this by checking the present value of a car 2 years older than mine with estimated mileage numbers). When I initially tried entering a change of 4000 miles to the odometer reading (a guess of the total miles that would be added), Edmunds gave me no change in value of the car at all. So instead I am basing the numbers in the table on a jump of 10,000 to the odometer just to avoid any weird artificial cutoffs.


Edmunds
Kelley Blue Book
Effect on current value (cents / mile)
4.09
4.43
Effect on future value (cents / mile)
1.79
4.02

In short, that gives an upper bound of 5 cents per mile for depreciation due only to mileage. Therefore, we are left 6 cents a mile (or almost $20 a day) for participating. That once again seems like more than the value of having the second car to me, so I guess I should get the form in the mail!

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