Fiat Re-Enters US Market with Natural Gas Engines as Alternative to Electric Cars

Strategic Insights -

Fiat is poised to make a comeback in the US market after nearly three decades of absence, and it's not just about selling compact cars like the Fiat 500. The Italian automaker is also focused on introducing natural gas engines to the US market, a move that Sergio Marchionne, CEO of Fiat and Chrysler Group, believes will provide a more affordable and efficient alternative to electric cars.

"Fiat will use its technological leadership in natural gas, in a region discovered to have huge reserves," said Giuliano Noci, a professor at the MIP management school of Milan's Polytechnic university. "It's almost a mandatory strategy."

Fiat's natural gas engine technology has been successful in Europe, with the company holding an 80% share of the methane-powered car market and 55% of the light commercial vehicle market. The US, however, is a different story. While the country has become the world's largest producer of natural gas, with an output of 10% of total US supplies from just 2% in 1990, the infrastructure for natural gas vehicles is still in its infancy.

Fiat's comeback to the US market is expected to start next year, and the company targets sales of 50,000 Fiat 500s in the market. Chrysler, on the other hand, is studying whether to sell natural gas vehicles in the US and is currently evaluating the market with its natural-gas vehicles association in Washington.

While GM and Toyota are focusing on hybrid electric vehicles as an alternative to conventional gasoline engines, natural gas engines offer a more affordable solution, with an additional cost of only $3,000 compared to $3,300 for diesel and $8,000 for an electric hybrid.

Key Takeaways:

  • Fiat is re-entering the US market after nearly three decades with a focus on introducing natural gas engines as an alternative to electric cars.
  • Natural gas engines offer a more affordable solution, with an additional cost of only $3,000 compared to $3,300 for diesel and $8,000 for an electric hybrid.
  • Fiat's natural gas engine technology has been successful in Europe, with an 80% share of the methane-powered car market and 55% of the light commercial vehicle market.
  • The US has become the world's largest producer of natural gas, with an output of 10% of total US supplies from just 2% in 1990.
  • Fiat's comeback to the US market is expected to start next year, with a target sales of 50,000 Fiat 500s in the market.

Statistics:

  • Fiat holds an 80% share of the methane-powered car market in Europe and 55% of the light commercial vehicle market.
  • The US has become the world's largest producer of natural gas, with an output of 10% of total US supplies from just 2% in 1990.
  • Fiat's additional cost for a natural gas engine is $3,000, compared to $3,300 for diesel and $8,000 for an electric hybrid.
  • There are 1,300 stations in the US for the 110,000 vehicles using natural gas, compared to 160,000 gasoline stations.
  • The Petroleum Marketers Association of America estimates that there are 160,000 gasoline stations in the US.
  • The International Association for Natural Gas Vehicles estimates that there are 1,300 stations in the US for the 110,000 vehicles using natural gas.

Sources:

  • Bloomberg News
  • MIP management school of Milan's Polytechnic university
  • Natural Gas Vehicles for America
  • Petroleum Marketers Association of America
  • International Association for Natural Gas Vehicles
  • Waterloo Region Record