When Will Natural Gas-Powered Vehicles Take Off?

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Natural gas-powered vehicles are one of the most obvious ways of using America's cheap and plentiful supplies of natural gas. Not only would gas-powered cars theoretically be cheaper, but they would also be more beneficial to the environment, emitting about 25% less carbon dioxide on average than their gasoline and diesel-burning counterparts.

Why, then, has adoption of natural gas-powered vehicles in the U.S. been so excruciatingly slow? And when -- if ever -- will we see U.S. roads inundated with them?

Challenges facing natural gas vehicles
So far, the widespread adoption of natural gas vehicles has faced two overwhelming challenges -- high costs and limited refueling infrastructure.

The cost issue has to do with the fact that the technology behind natural gas vehicles is still in its infancy compared with gasoline- and diesel-powered vehicles and hasn't been developed and mass-produced to the extent that costs can be brought down substantially.

Eventually, however, as long as natural gas prices remain attractive compared with gasoline and diesel, natural gas vehicle technology will advance to the point that cost savings can be passed on to consumers, which should help sales pick up. After all, many potential consumers are being deterred mainly by financial considerations. Take Honda's (NYSE: HMC  ) natural gas-powered offering, for instance.

Though Chrysler, General Motors, and Ford (NYSE: F  ) have introduced bi-fuel versions of some of their most popular vehicles, such as the Ford CNG F-250 and F-350 Super Duty pickup truck models, Honda was the first car company to offer a light-duty vehicle running exclusively on natural gas in the U.S. market -- its Civic Natural Gas, formerly Civic GX.

Honda's natural gas Civic highlights major challenges
The natural gas Civic has been around for quite some time, yet sales have barely budged since 2008, the first year the vehicle was made commercially available. The model's disappointing sales highlight some of the crucial challenges natural gas vehicles must overcome to gain more widespread acceptance.

High cost is the most significant of these challenges. At a starting price of $26,305, not only will the natural gas Civic cost you significantly more than its gasoline-burning counterpart, which is priced at $18,165, but it'll also run you nearly $2,000 more than the Civic hybrid. In addition to shelling out more money upfront, potential buyers can also expect to spend considerably more on maintenance and repair.

Then there are issues with cargo space and range. Because compressed natural gas requires larger, heavier fuel tanks, potential Civic Natural Gas buyers will have to put up with about 50% less cargo space than the gasoline version. They'll also have to cope with a dramatically lower driving range of around 225 miles, less than half the range offered by the Civic hybrid.  

Refueling infrastructure constraints
Another major issue preventing natural gas vehicles from taking off is the paucity of refueling stations across the country. It's mainly a chicken-and-egg problem: Consumers have little incentive to switch to natural gas cars if there are hardly any refueling stations, while companies have little incentive to build refueling stations if there are barely any gas-powered cars on the road.

Currently, there are just over 1,000 natural gas refueling stations in the U.S., compared with nearly 160,000 gasoline stations. Of these natural gas stations, less than half are available to the public and more than a fifth are located in California.  

Final thoughts
In the future, we will almost certainly see many more natural gas vehicles on the road, as long as natural gas prices remain low compared with gasoline and diesel. As the technology behind natural gas-burning vehicles is perfected and natural gas fuel tanks made more compact, consumers will have greater incentives to make the switch.

Companies such 3M and Chesapeake Energy have already pledged to jointly develop lighter and more efficient natural gas fuel tanks, which should allow natural gas cars to have more cargo space.

Meanwhile, companies such as Westport Innovations (NASDAQ: WPRT  ) are working with auto manufacturers to develop more advanced bi-fuel technologies for passenger vehicles. In February, Westport announced that its Westport WiNG Power system, a CNG bi-fuel system, will be available on the Ford F-450 and F-550 Super Duty Chassis Cab trucks starting April 1.

And finally, several companies are working hard to surmount the challenge of limited refueling infrastructure. For instance, Navistar (NYSE: NAV  ) , a manufacturer of trucks and diesel engines, is partnering with Clean Energy Fuels (NASDAQ: CLNE  ) to offer natural gas-powered trucks and greater refueling infrastructure.

Clean Energy Fuels already has more than 300 natural gas refueling stations throughout the country, of which four-fifths are equipped to refuel passenger vehicles and light-duty trucks that run on CNG. Earlier this month, it opened up a new CNG fueling station at the Baltimore/Washington International Thurgood Marshall Airport, which will be open to both public and private vehicles and fleets, including CNG-powered consumer vehicles.

Read/Post Comments (19) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 28, 2013, at 1:12 PM, ratcat6 wrote:

    As soon as the government stops trying to push hybrids and plug--ins down our throats.

  • Report this Comment On April 28, 2013, at 1:39 PM, 05softail wrote:

    when they quit playing games with the price...

  • Report this Comment On April 28, 2013, at 1:41 PM, jccf wrote:

    this is all BS anybody that goes to SA will see that for 15 YRS THEY HAVE BEEN USING GAS!!!!

    the infrastructure is no problem you drive into a filling station on one side nat gas on the other side reg gas NO PROBLEM. it is big oil in bed with detroit that is keeping this from happening . please do not take my word for this look it up

  • Report this Comment On April 28, 2013, at 1:45 PM, locsphere wrote:

    Soo really? We haven't learned yet? That we need to move beyond gases and start thinking about alternatives? Natural gas isn't infinite! Just like gasoline and oil.

  • Report this Comment On April 28, 2013, at 1:48 PM, Sardir wrote:

    I remember and at 1961 there was a pickup moving in streets, there was a reclaim by 2side doors.(This car is working by kitchen gas, it's helping health-bring your car to us to change it to work by kitchen gas, and now we are in a new century and I read this article, isn't funny

  • Report this Comment On April 28, 2013, at 1:52 PM, phillipzx3 wrote:

    "When Will Natural Gas-Powered Vehicles Take Off? "

    They've been doing conversions for as long as I can remember (I'm 60) and they still haven't "taken off." If natural gas was a fraction ( fracking ?) of the current cost, it might.

    It might help if one could buy a converted car off the showroom floor. Then again, it would be nice if one could buy a sub $20,000 electric car that didn't look like it came some someones nightmare. The Ford Focus EV almost gets there...just a bit too expensive.

    " Not only would gas-powered cars theoretically be cheaper..."

    "Theoretical," brings up the $64,000 question. Why theoretical? Theoretically, gasoline has to get down below $1.25 a gallon for it to beat the price of electricity, yet nobody is chasing that dream except a handful of DIYers,. Google "White Zombie electric car" and you'll see what a guy in a garage can do.

    To hell with gas, give us decent, CHEAP, batteries. :-)

  • Report this Comment On April 28, 2013, at 1:57 PM, yaovk wrote:

    Why are we so backward compare to developed countries like Thailand where most gas stations carry both petrol and LPG? Taxis and for most people LPG is extensively used because of its cost over petrol. Sure you have to retrofit your gar with a tank. I believe our big oil companies are the culprit in allowing natural gas for the consumers.

  • Report this Comment On April 28, 2013, at 2:01 PM, mkelly85 wrote:

    Natural gas vehicles require significantly less maintenance. Oil can be changed after 6000 or more miles, and is usually just as clean as when it went in. That means less deposits in your engine and longer engine life.

  • Report this Comment On April 28, 2013, at 2:19 PM, rodgerolsen wrote:

    This report is extremely inaccurate. Half of the cars in Russia outside Moscow and 40% of Ukrainian and Takjik cars already run on natural gas. The conversion to bi-fuel costs less than $300. I converted my last Russian car for less than $200 because I purchased a used gas bottle.

    The converted cars keep the ability to run on gasoline and the gas bottles are small enough to fit on the shelf in most car trunks.

    Only in America, with the generous help of the EPA and GM could we make the process so ridiculously expensive. This is a political problem rather than a financial one.

  • Report this Comment On April 28, 2013, at 2:24 PM, AlmightyMega wrote:

    The cars can be reliable, clean running, not need oil changed for much longer times and come out clean, be sharp looking, have all the bells and whistles available... they could even be $1000.00 each with $50 a month payments and people still are not going to buy them if there are NO places to fill up without traveling 50 to 75 miles for a tank of gas!

    An X-GF of mine got a gas/natural gas hybrid (it was used) and never once use the natural gas.. there is simply nowhere in the area (under an hour away) to fill it up.

    Now, if there was a way to fill up at home, just like electric cars... simple gas line tie in out to a pump that would compress the gas into your vehicle... problem completely solved.

  • Report this Comment On April 28, 2013, at 5:48 PM, canetoad wrote:

    Absolute nonsense, our natural gas car was inexpensive, bought used on Ebay, runs great, costs $2.00 a gallon, easy to fill at our local PG&E center, they give you a key card and instructions. And off you go, saving tons of money on gas. many public utilities have been using these cars for a long time. At least here in CA. It is a natural gas/gas so should you run out of natural gas, it switches. But there are plenty of places to fill up, you just need to ask.

  • Report this Comment On April 28, 2013, at 6:00 PM, bajimiusa wrote:

    Strangely in a 2nd world country like Hungary the LPG run autos are reality today. You could see LPG stations all around. Running your car half the price of the old gasoline power. Look at the cars made by Dacia which is factory equipped for such. Why the USA is an underdeveloped country for this? Ask the large and powerful oil companies! They will hate you instantaneously even to the drastic point of literally killing you! Is this why the USA is becoming a backward country? ...always look for the financial reasons... The big oil business will protect their interest with vigor!

  • Report this Comment On April 28, 2013, at 6:11 PM, rocket7777 wrote:

    I would say it only make sense for fleet. Also, as soon as enough of truck/power plants are built, they will increase the price.

  • Report this Comment On April 28, 2013, at 6:37 PM, russ1in1mo wrote:

    "The cost issue has to do with the fact that the technology behind natural gas vehicles is still in its infancy compared with gasoline- and diesel-powered vehicles and hasn't been developed and mass-produced to the extent that costs can be brought down substantially."

    Utter, utter rubbish. CNG & LPG vehicles with the current iteration of the technology have been in widespread use throughout the world since the 1970's. They make up large percentages of the vehicles through much of Western & eastern Europe and a significant percentage in Australia, New Zealand and other countries. The technology is well proven and cheap at less than ~NZ$1500/vehicle - about $800 in US dollars.

  • Report this Comment On April 28, 2013, at 8:48 PM, danwoods wrote:

    why would refueling stations be a problem? i don't get it. i live in rural west virginia and natural gas is piped directly to my house!

  • Report this Comment On April 28, 2013, at 10:03 PM, Hngnthweb wrote:

    There is no infrastructure or commercially made duel fuel vehicle. There have been CNG vehicles my entire life. If the Obama Government would invest in this instead of welfare it would be possible and create tons of jobs. Corn Syrup is not an alternative fuel, sure it burns but gets half the mileage!

  • Report this Comment On April 29, 2013, at 10:15 AM, FB101 wrote:

    In Europe, especially in The Netherlands, LPG gas powered vehicles have been on the road for at least 30 years. A relatively simple kit costs about 1,300 - 2,500 EUR.

    It takes away some of the horsepower and makes the car heavier.

    It definitely is not a new technology.

  • Report this Comment On April 29, 2013, at 10:01 PM, gregcpadua wrote:

    Not true, natural gas can be converted to methanol and can use in flexfuel cars. read robert zubrin or george olah.

  • Report this Comment On April 30, 2013, at 6:09 PM, VOLCANOPUKER wrote:

    When we are done expanding the world money supply and the pacific rim economy kicks into gear over the next twenty years the nat gas infrastructure will be appreciated. Interest rates and fuel rates will rise and so will nat gas demand.

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