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Yeah, they essentially hook the vehicle up to a fancy dyno, run it according to a given test procedure which specifies accelerating, cruising, stopping, all on a specific timescale, and under fairly stringent environmental settings. I don't think it's a terribly realistic test procedure (since it cuts out real-world aerodynamic benefits by only simulating aero loading on the dyno). Thankfully it's not meant to be realistic, but it IS a repeatable measure which shows how different vehicles perform under different standardized tests, which is helpful for comparing vehicles.
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