Clean Energy Fuels CEO: Why Tesla Isn't Competition, and Passenger Cars Aren't Clean Energy's Market

The difference between fleet and passenger vehicles is often misunderstood, Andrew Littlefair says. Andrew Littlefair is the CEO and co-founder of Clean Energy Fuels (NASDAQ: CLNE  ) , the leading provider of natural gas for transportation in North America. Clean Energy provides CNG and LNG fuels to solid waste, trucking, and transit fleets, among others, and currently operates some 500 fueling stations in the United States and Canada, as well as manufacturing related equipment and technologies.

In this video segment Littlefair describes the biggest misconceptions people have regarding Clean Energy and natural gas in general, including the scalability of different alternative fuels. Tesla Motors'  (NASDAQ: TSLA  )  battery technology is great for the daily commuter, and will be even better in the next three years. But battery tech is many years -- maybe decades -- away from being able to haul 80,000 pounds of freight the hundreds of miles truckers travel between refueling stops. Littlefair closes by sharing some key messages about Clean Energy Fuels with The Motley Fool community.

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Jason Hall: In the broader media -- I think the answer may be something we already talked about -- but what's the biggest conception of the company that you see in the broader media?

Andrew Littlefair: Of our company in the broader media? That's an interesting question. I think what happens in the broader media -- maybe not some of the people like yourself that really understand us and focus -- they confuse the fleet business with the passenger.

Often, tucked in an article -- in The Wall Street Journal or someplace -- it will say, "Well, they're making progress, but there's 118,000 gasoline stations." Most people, when they focus on this, they have their individual experience -- passenger car experience -- hat on. They're not really focused on the business that we're in, so people confuse that.

Yes, if you look at 500 stations and you compare it to 118,000, that doesn't sound very good. When you take 500 stations and compare it to 5,000 diesel depots or so, that's not so bad.

Then I think there's a general confusion. We used to call it "alternative fuel du jour." People get confused. Electric; Tesla's doing really good, so therefore that means that's going to be an over-the-road truck. People don't understand some of the realities of energy that well.

Hall: Just because it has wheels and rolls on asphalt doesn't mean it's the same thing.

Littlefair: "Fuel cells are going to really be good, so we'll just do that." I think you're going to see that Tesla and electric vehicles are really great for certain applications. You've got some work to do before they're ready to ...

Hall: Moving 40,000 pounds worth of cargo.

Littlefair: Yes -- 80,000 -- and natural gas is really well suited for that and may not be, in the United States, particularly well suited -- just because of the infrastructure and the scale -- on the light duty side.

I still think it is weird, though, that you have 62 makes and models in Europe of natural gas vehicles. You can get about anything you want, but here you have one. So, I'm not convinced that that always has to be the case. I think natural gas can be cheap.

I think there's a little bit of that confusion about what fuels you have. You'll have people say, "Well, propane could be the fuel." Well, no, propane can't. Propane is all right, but you don't have that much propane. You don't have that much biodiesel. You just can't make that much of it.

Natural gas is really one of the only fuels that has scale, and most people just don't quite understand that.

Hall: Right. That definitely makes sense.

In closing, what would you like to leave our viewers with?

Littlefair: Just that we're really focused. We're excited about the opportunity and the size of the market. We feel like we've assembled a good team, and we've spent some money to do it. We've spent some money, and we've staffed up in order to address this big market.

We've always been the leaders in this business. We continue to be. This last heavy-duty trucking market really is the big enchilada. It's a huge market so it's exciting, but it's required a lot of capital.

I want your viewers to know that we're well-funded, that we're going to be careful with the capital, that we can afford the debt that we have in place, that we're very focused on our core markets that grow at about 20%, but we're also very focused on this big opportunity, and that we have the infrastructure in place.

Our job is to open a bunch of it this year, and I feel like things are coming along pretty well.

Hall: Great. I think you're right, I think 2014 is definitely positioned to be the year of (unclear).

Littlefair: Yes. I think that you've seen the tip. Now, guys are testing it, but everybody gets it. We don't go around arguing about whether or not you can use natural gas in transportation. Every fleet operator knows, and a lot of them won't do anything else.

This is the last market. It's going to take a little while, but I think we've already been at the tipping point, and now it's just how fast does it go?

Hall: Makes sense. Thanks again for taking the time.

Littlefair: Thanks a lot, appreciate it.

Hall: Thanks for tuning in, everybody, and Fool on! 


Read/Post Comments (8) | Recommend This Article (4)

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  • Report this Comment On April 21, 2014, at 1:17 PM, ptrobrn wrote:

    So Locomotives have been diesel hybrids for decades... why are we not making hybrid trucks? Couple a diesel generator to an electric motor and bingo your semi tractor is now fuel efficient and more capable than its predecessors.

  • Report this Comment On April 21, 2014, at 4:01 PM, TMFVelvetHammer wrote:

    >>So Locomotives have been diesel hybrids for decades... why are we not making hybrid trucks? Couple a diesel generator to an electric motor and bingo your semi tractor is now fuel efficient and more capable than its predecessors.<<

    Except locomotives are set up to haul millions of pounds of freight, and batteries to pull off what you are talking about in a class 8 truck would weigh ten tons, or 25% of the total weight limit for these trucks.

    The diesel generators charge batteries, which power the electric motors. It's not a simple thing you're talking about, and it just doesn't translate to the highway yet.

  • Report this Comment On April 21, 2014, at 6:17 PM, burgermcshame wrote:

    CLNE is toast, 10 year old toast

  • Report this Comment On April 22, 2014, at 2:01 AM, Factkneader wrote:

    What happens after the first couple of wrecks where the LNG trucks explode and incinerate 10 or so passenger cars unlucky enough to be in the vicinity? Propane tank cars have launched like rockets after train wrecks.

  • Report this Comment On April 22, 2014, at 11:43 AM, TMFVelvetHammer wrote:

    Factkneader,

    You do realize that LNG is actually LESS explosive than diesel, right?

    There have only been a few isolated incidents of the sort of thing that you describe. They are incredibly, incredibly rare.

    Diesel trucks on the roads today are no safer than LNG trucks will be. LNG (and CNG) carry less energy than diesel and gasoline.

    Know your facts.

  • Report this Comment On April 22, 2014, at 9:23 PM, Factkneader wrote:

    OK Velvet, you forced me to do some research to test my intuition. I was surprised to learn that the ignition temperature of methane (NG) is much higher than I suspected, ~ 1100 deg. F, while that of diesel is only 494. However what is really important from a safety point of view is that the flash point of methane (the temperature at which ignition can occur) is only - 306 deg.F (below the temp. at which LNG is stored) while that of diesel is +126. A dangerous difference! Seems to me a LNG tank ruptured in a wreck and spewing it's contents poses a far greater ignition hazard than a ruptured diesel tank. Since heavy truck wrecks are not at all uncommon, I anticipate that there will be some serious consequences when a large number of them are fueled with LNG. Other than that I would be happy to see the use of low polluting LNG.

  • Report this Comment On April 23, 2014, at 12:20 AM, TMFVelvetHammer wrote:

    Factkneader,

    LNG tanks systems (and of course, this isn't perfect, but it is a serious mitigating factor for these incidents) are designed to vent gas when the tank pressure increases beyond a certain level, such as in the case of exposure to heat.

    The think with LNG is -- if the tank is ruptured -- it will very quickly vaporize. While this does lead to a risk of burning if there is a fire present, it's actually less dangerous than diesel, which can leak out and cover significant areas before it completely burns, creating a much, much more dangerous situation than LNG.

    Again -- and I want to stress this -- LNG isn't perfect, and the tank technology isn't 100% fail proof. But for the most part, LNG is less dangerous than diesel.

    CNG, on the other hand, does present some higher levels of risk, as explained to me by someone who's been involved in fire rescue for several decades. Think about the risks of a gas leak in your home, and extrapolate that to a wreck involving a truck with 200 or more gallon-equivalents of CNG.

    This is one of the reasons I'm not crazy about CNG for long haul, though it will still play some role there also.

    Thanks for the engaging comments!

  • Report this Comment On April 23, 2014, at 3:04 AM, TMFVelvetHammer wrote:

    Factkneader,

    One last point: of course the flash point of natural gas is so low; natural gas vaporizes (turns from liquid to gas) at a very low temperature.

    But It would still have to be exposed to flame to ignite. It's autoignition temperature is higher, closer to 600 degrees.

    Diesel's autoignition temp is just over 400 degrees, much lower.

    Simply put, LNG can be ignited (if exposed to a very hot flame) because methane WANTS to be a gas at very low temperatures, and it's the vapors that burn, whether gas, diesel, or methane.

    But again, LNG spilled from a tank would very quickly begin to vaporize, thus reducing the spreading affect versus diesel and gas, which are liquids at room temp.

    So, a natural gas fire would burn very hot, but also very quickly. A diesel fire is more likely to spread, and also burn longer because the diesel will want to stay a liquid, even as it heats.

    Again, I'm not trying to minimize your concern, it's just that the key point is these are ALL flammable, dangerous chemicals. But to call LNG more dangerous than diesel just isn't really accurate.

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