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Automobile industry

Diesel Fuel Gets a Clean Bill of Health

Strategic Insights

— 2 min read

A more environmentally friendly version of diesel fuel, called ultra-low sulphur diesel (ULSD), is set to hit the US market, offering improved performance and reduced emissions. While car owners have been slow to adopt diesel-powered vehicles, the introduction of ULSD and new models equipped with exhaust-scrubbing technology could spark increased interest in diesel fuel. The environmental benefits and potential cost savings of diesel vehicles make them an attractive option, but Americans' prejudice against diesel engines and volatile fuel prices have long been a barrier to adoption.

Key Takeaways:

  • Ultra-low sulphur diesel (ULSD) emits only 15 parts per million of sulphur, compared to 500 parts for existing diesel, making it a cleaner-burning fuel.
  • New models equipped with exhaust-scrubbing technology, such as the Mercedes-Benz E320 Bluetec, will be available in the US market starting in 2008.
  • Diesel vehicles typically offer 30-45 per cent more fuel economy than petrol, making them an attractive option for consumers concerned about cost.
  • The introduction of ULSD has facilitated tighter emission standards for heavy-duty trucks, which take effect in January 2008.
  • Car owners have shown little enthusiasm for diesel-powered cars and light trucks, with sales making up only 3.6 per cent of the total.
  • The Diesel Technology Forum estimates that diesel vehicles could garner 10 per cent of the US market by 2015, roughly double the share of hybrids.
  • Volatile fuel prices, with diesel reaching a peak of $3.24 a gallon in 2006, have made it more expensive than petrol, a major turn-off for American consumers.
  • Persuading Americans of diesel's benefits would be much easier if the fuel regained its price advantage over petrol.

Statistics:

  • ULSD emits only 15 parts per million of sulphur, compared with 500 parts for existing diesel.
  • Diesel-powered vehicles can offer up to 45 per cent more fuel economy than petrol vehicles.
  • Sales of diesel-powered cars and light trucks rose by almost a third in 2006, but still made up only 3.6 per cent of the total.
  • Diesel vehicles make up more than half of Volkswagen's US sales at the height of the spike in petrol prices in 1981.
  • Diesel is currently selling at a national average of $2.62 a gallon in the US, compared to $2.26 for regular petrol and $2.48 for premium.
  • The next generation of diesel vehicles will meet federal emission standards, enabling buyers to qualify for a "fuel efficiency" tax credit of between $300 and $3,400 a vehicle.

Sources:

  • Volkswagen
  • Environmental Protection Agency (EPA)
  • Diesel Technology Forum
  • JD Power
  • AAA motoring organisation
  • Toyota
  • Mercedes-Benz
  • Chrysler
  • General Motors
  • Honda

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