Fiat Banking on Natural Gas Engines in the US, Thinks Hybrids and EVs Present Too Many Obstacles

Fiat’s comeback to the U.S. with the 500 is just the first piece of a larger puzzle. The company’s CEO, Sergio Marchionne, may give the green light for natural gas-powered cars to be sold in the Land of the Free, as they offer a cheaper way to cut emissions. In an interview with Bloomberg News, Mr. Marchionne noted that electric cars, favored by GM and Toyota, present “too many obstacles” with long recharge time for batteries being one of them.

Another company official, Constantinos Vafidis, who oversees transmission and hybrid development for the Italian maker, said that “natural gas is very suitable for the U.S., especially for public services and goods transportation, where vehicles are refueled from a central base”.

That’s why Fiat wants to target the commercial vehicle segment. The automaker has separated the Ram and Dodge brands last year, thus creating a standalone truck division. In 2012, the range could encompass various vans based on Fiat/Iveco platforms and brought over from Europe.

Natural gas is less expensive to produce, transport and distribute, which makes it an ideal solution for fleet operators. Currently, it costs about $1 less on average than a gallon of gasoline. Also, the additional cost for an engine running on natural gas is $3,000. For a diesel, this amounts to $3,300, while hybrids cost automakers a whopping $8,000.

Having an edge in production costs and the U.S. being the world’s number one provider of natural gas means that Fiat could become a major player in the eco-friendly niche. The Turin-based maker is Europe’s market leader in manufacturing methane-powered cars delivering some 127,000 units last year.

The only problem is that in America, natural gas refueling stations are vastly outnumbered by gasoline stations. There are only 1,300 stations providing natural gas for 110,000 vehicles, compared to 160,000 stations selling conventional fuels. However, this problem could be circumvented if Fiat can convince government agencies and corporate fleets that natural gas is the way to go.