Will Your Next Car Run on Natural Gas?

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.

Natural gas is well established among fleet vehicles such as refuse trucks and transit buses, and may be about to take off in the massive heavy-duty trucking market -- but what about light duty vehicles? In this video segment, Littlefair discusses the potential for increased availability of natural gas powered passenger cars and pickup trucks, including how Westport Innovations'  (NASDAQ: WPRT  )  partnerships with  Ford  (NYSE: F  )  and Delphi will lead to more natural gas vehicles for the consumer market, as well as fleets. 

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Andrew Littlefair: We could use more product for the light duty stuff -- we've struggled a little bit with taxicabs -- but when you drove in here this morning, at John Wayne Airport across the street from our headquarters here, all those taxicabs are natural gas. In San Francisco, all the taxicabs are natural gas. That market continues to grow.

Shuttles and shuttle buses, we now operate at 39 airports in our core market. We're building some more right now. We just opened at Kennedy Airport; we've got a big one going in right now at Chicago O'Hare. That's a nice market for us; we don't have much competition. In that market, we have nice margins, we own those stations, we're selling against gasoline and diesel, and we can save those customers $1.50 a gallon, which is meaningful.

Jason Hall: I think there are two things that could potentially continue to help that part of your business grow. Chevrolet's got the new Malibu CNG?

Littlefair: I think the Impala.

Hall: The Impala, right.

Littlefair: Which could be a great taxicab, because we've been struggling on that -- we had the Transit Connect from Ford -- so the Impala would be great.

Hall: Right. Plus Delphi and Westport Innovations now have an OEM agreement, and there's potential for that to go downstream.

Littlefair: You'll see more and more of it. This is still niche-y for the big OEMs, but you're seeing more; now the F-150, Ford is preparing that engine (featuring Westport Innovations' WiNG system), so that could be very good for municipalities and others.

You'll see more. The new Ford Transit, they're getting away from the old Econoline van and they're coming out with a bigger product that looks more like a Sprinter van. That'll be on natural gas too.

We have high hopes for that, and I think you're right. We've talked a lot about the America's Natural Gas Highway and heavy-duty trucking, and let me just mention this:

In our core markets, if every transit bus in America went to natural gas, that's about 1.5 billion gallons annually. Then airports are about 2 billion, so there's a lot of work to be done, still, in those areas. Refuse is about 2 billion gallons, so roll that all up and call it 6 billion gallons. Heavy-duty trucking is 30 billion gallons, so it's five times bigger.

I think it's appropriate for us to focus a lot on that because it's a very big market, but our other market's alive and well, and doing well. We continue to grow, and right now this year, on what we call our carpet -- our construction carpet, of things that are under way -- we have a total of 48 core stations underdevelopment right now, that will get built. If they don't all get built this year, it will be very close to all of them getting built this year, so it's a big part of our business.

One of the things, and you may ask me about this later -- I can go into more detail -- but one of our advantages is we have a compressor company, so most of the core markets that I've talked about are CNG. There are a few exceptions, but not many, so most all transit buses are CNG now; everybody's figured out that's the way to go, and the same with the refuse trucks.

We're able, for instance, to sell our equipment into Waste Management. We sell our equipment into Republic Waste, so it gives us an advantage.

Hall: I'm glad you brought up IMW, and we'll definitely circle back. There's definitely some value there and I'd like for you to add onto that.


Read/Post Comments (7) | Recommend This Article (4)

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 May 27, 2014, at 12:09 PM, GirlsUnder30 wrote:

    I think it may finally be time to buy some Westport. For the record, the decline from ~$40 to its current price levels was predicted in the link below:

    http://caps.fool.com/Blogs/why-is-westport-is-scary-over/730...

  • Report this Comment On May 27, 2014, at 12:53 PM, JTNesbitt wrote:

    If you want cars to run on Natural Gas...You should start talking to some car guys.

    Here is the main problem with corporate America- The utter lack of interest in mining for talent within the American people, and total disregard for the passion of individuals.

    Why don't we listen to what Jay Leno (a real car guy) has to say about Natural Gas Vehicles.

    http://www.youtube.com/watch?v=KeRg217H_3A

  • Report this Comment On May 27, 2014, at 1:37 PM, speculawyer wrote:

    Yes . . . but indirectly. My electric car will probably get charged by extremely efficient combined-cycle natural gas power plants at times. That is a more efficient way of using the natural gas than in an inefficient natural gas ICE. But much of the time, my EV will be powered by solar PV electricity generated on my roof. It is very cheap that way.

  • Report this Comment On May 27, 2014, at 4:52 PM, TMFVelvetHammer wrote:

    Just a huge point about where NGVs do make a lot of sense right now:

    Heavy transportation.

    The reality is, we are a lot of years away from battery technology that will work for the majority of heavy trucking, rail, and marine applications, not to mention remote power generation for oil and natural gas production.

    When the weight of the batteries would eliminate more than 30% of the freight capacity, and it would take several hours to recharge the vehicle, you have a non-started.

    NGVs are only partly about the everyday commuter. It's really about fleets and heavy vehicles that move large amounts of stuff over large distances.

    And EVs aren't there yet.

    Jason Hall

    article author, and TSLA shareholder

  • Report this Comment On May 27, 2014, at 8:04 PM, btc909 wrote:

    Nope. You can keep those recycled platforms with CNG tanks stuffed in.

  • Report this Comment On May 28, 2014, at 6:20 PM, steveks wrote:

    Anonymous special interest campaign contributors, presently call the shots for "energy policy" decisions at the Federal level.

    The International Oil Oligopoly, and domestic refiners of foreign oil (i.e., Koch Bros. et.al.,)prefer that American consumers remain "addicted" to foreign oil. Elected policy makers have no incentive to address this calamitous state of dependance, because the same special interest consortium propelled them into office.

    State "policy makers" are usually not so beholding to these powerful special interests, and progress is being made for state vehicles to make the transition to natural gas transportation fuel. It's happening at a snails pace, but it is happening because the benefits are so overwhelming.

  • Report this Comment On May 28, 2014, at 7:19 PM, speculawyer wrote:

    I agree that with heavy transportation, NGVs do make sense. It is really hard to compete with the energy density of hydrocarbons.

    But for light-duty vehicles, battery electrics work fine.

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