by Susan J. Aluise | August 2, 2013 8:48 am
Although natural gas-powered buses and heavy trucks have been on the road for decades, there has been far less traction for the cleaner-burning fuel source in the consumer vehicle market.
At least, until now.
Ford’s (F) announcement Wednesday that it would launch a natural gas vehicle (NGV) option for its popular F-150 model pickup this fall stakes a claim in a potentially lucrative green vehicle niche.
NGVs, which include compressed natural gas (CNG) and liquid petroleum gas (LPG) technology, are not new. While all Detroit Three automakers — Ford, General Motors (GM) and Fiat’s (FIATY) Chrysler — offer the CNG fueling option in their heavy-duty truck lines, Ford’s move brings the technology to its more consumer-oriented, half-ton pickup line. Prior to this new launch, buyers seeking a natural gas-powered Ford pickup were limited to retrofitting certain F-250 and F-350 heavy-duty pickups to also run on compressed natural gas.
Ford’s new NGV truck reportedly will get the fuel efficiency equivalent of about 23 miles per gallon. Don’t expect to walk in and drive the natural-gas fueled F-150 off the dealer’s lot, though: One of Ford’s Qualified Vehicle Modifiers will have to install the CNG/LPG conversion package for you.
Until now, Honda’s (HMC) Civic Natural Gas sedan was the lone consumer vehicle available commercially in the U.S. market. So-called “bi-fuel” trucks that can run either on gasoline or compressed natural gas are targeted to commercial fleets and government users.
GM offers two CNG-powered pickups aimed at those markets — the Chevy Silverado and GMC Sierra 2500 HD. Chrysler sells a comparable model with its Dodge Ram 2500 CNG. Chrysler sells the Dodge Ram 2500 CNG, another so-called “bi-fuel” vehicle that can run on both gasoline and natural gas.
What’s driving natural gas as a fuel source for consumer vehicles? Two things: lower levels of environmental pollutants and cheaper prices at the pump. Exhaust emissions from NGVs are much lower than those from gasoline and diesel vehicles, according to the trade group National Gas Vehicles for America. The group also notes that the natural gas equivalent fueling is $1.50 to $2.50 a gallon cheaper than gasoline or diesel.
It’s also a growth market: The number of NGVs on roadways worldwide will increase steadily over the remainder of this decade, reaching 34.9 million by 2020, up from 18.2 million in 2013, according to a report released by Navigant Research in June.
But while the technology is promising, and the comparative fuel efficiencies impressive, natural gas fueling infrastructure is far from mature — a factor that must be addressed before the market can embrace its full potential. There are only about 1,200 such fueling stations in the U.S. currently, according to recent Department of Energy estimates.
Navigant also has been quick to point out the urgent need to beef up fueling infrastructure if the market is to take off as advocates and automakers hope. Although there is a strong supply chain for CNG components, it will take time and money to build new pipelines to transport the fuel from the gas grid to fueling stations, Navigant says.
LNG’s supply chain is behind the curve, comparatively speaking, requiring LNG to be transported to stations by truck, as is the case with diesel fuel today. NVG stations also are pricey to build, costing about $750,000 a pop, according to Clean Energy Fuels (CLNE), a provider of natural gas fueling solutions.
Government obviously has a role to play in creating an NGV-friendly environment in the U.S. — and a couple of key bills recently were introduced in the U.S. Senate.
The Alternative Fueled Vehicles Competitiveness and Energy Security Act, introduced by Sen. Ron Wyden, D-Ore., would offer federal loan guarantees and other incentives to encourage a broader proliferation of natural gas fueling stations. The bill would authorize up to $50 million a year between FY 2014 and FY 2018 to boost deployment of alternative fueled infrastructure and vehicles — including NGVs.
Sen. Jim Inhofe, R-Okla., has introduced a bill to improving level the playing field among alternative fuel vehicles by amending the Corporate Average Fuel Economy standards automakers must meet to encourage production of more bi-fuel NGVs. The net effect of the legislation would eliminate current limits on credits, giving bi-fueled NVGs the same treatment as electrical vehicles.
The opportunity for automakers is potentially a huge one — after all, shale gas has become so plentiful and cheap that it provides a compelling value for consumers. But as with other alternative fueled vehicles, you have to have an infrastructure in place that erases consumer angst about potentially being stranded a vast distance away from the nearest station.
That’s where bi-fueled options like the new F-150 have the potential to really shine: They also offer a reserve tank for common from-the-pump unleaded just in case.
As of this writing, Susan J. Aluise did not hold a position in any of the aforementioned securities.
Source URL: http://investorplace.com/2013/08/is-fords-natural-gas-burning-f-150-pickup-a-game-changer/
Short URL: http://investorplace.com/?p=381005
Copyright ©2013 InvestorPlace Media, LLC. All rights reserved. 700 Indian Springs Drive, Lancaster, PA 17601.