Join Motley Fool analyst Brendan Byrnes for a video conversation with Ian Scott, the executive vice president of Westport Innovations' on-road systems segment, which works with OEM partners such as Ford, Volvo, Kenworth, and Peterbilt to produce natural gas-powered vehicles in the U.S. and elsewhere.
Not surprisingly, natural gas vehicles sell best in areas that offer the infrastructure required to refuel them. Scott says those areas currently include states rich in natural gas, such as Oklahoma and Texas, although infrastructure development is expanding to other regions.
To watch the full interview, click here.
Brendan Byrnes: What kind of customers are you and Ford seeing as buying these F-250s, 350s, and soon to be 450s and 550s? What kind of customer would need these and use these?
Ian Scott: They're typically work vehicles, so they're larger vehicles. Having said that, we are seeing some retail consumer buying -- farmers, et cetera -- that see the advantage of using natural gas, mainly due to the cost, obviously, as it's a much cheaper fuel.
Target customers initially are oil and gas companies. With respect to natural gas, at the retail pump you can get an advantage of maybe $1.50 -- even more in some jurisdictions -- per gallon over gasoline, over diesel.
What happens is you get the fleets that have to pay retail, but then you have the oil and gas producers that get a much lower-cost fuel. For them, they may be saving $2.00-2.50 a gallon. These are what we're seeing initially, are the fleet buyers, the commercial buyers, that get these cost advantages.
Byrnes: Geographically in North America, are you seeing areas where you get stronger sales, and what are those? Maybe where the infrastructure is a little bit more built out?
Scott: Yeah. If you're talking about the pickup trucks specifically, Oklahoma, Texas -- these jurisdictions where you have very strong fuel price differentials. The fuel price does differ, depending where you are, where the infrastructure is.
Regionally we see -- I think it's safe to say Oklahoma, Texas is one of our strongest markets at the moment, but there are others. We see the Northeast really growing right now as well. It's getting more aggressive.
Quite often what you see is the attractiveness regionally is directly related to where they're producing the natural gas.
Byrnes: Sure. How about overall? You mentioned that was just for pickup trucks, I believe. What about overall fleet sales as well?
Scott: Yeah, I think for other products as well. In North America I think, again, California, Texas, Oklahoma, these are all -- Utah -- these are all very large natural gas states, and I think they're going to continue to be, because we see the infrastructure being built out there. We see the fuel price advantage, obviously.
I think over time you're going to see it much more even across the U.S. and Canada, but right now these are some of the main areas.
Brendan Byrnes owns shares of Ford. The Motley Fool recommends and owns shares of Ford and Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.