As U.S. natural-gas prices have fallen and supplies have increased in recent years, compressed-natural-gas (CNG) vehicles are garnering renewed attention. Major automakers, such as Ford and General Motors, have announced plans for a half-dozen different vehicle models powered by CNG. Cummins Westport is introducing a full range of medium- and heavy-duty engines that run on either compressed or liquefied natural gas. Clean Energy Fuels, backed by longtime natural-gas proponent T. Boone Pickens, has opened almost 500 CNG truck-refueling stations as part of its America’s Natural Gas Highway network. Companies that operate large vehicle fleets have also embraced CNG. Waste Management, for example, has said it plans to convert most of its refuse trucks to run on CNG.
Many of the benefits of CNG, however, have not lived up to the publicity. While the market is growing, CNG vehicles are not the revolutionary transportation solution that they often are portrayed to be. Instead, they are likely to emerge as an important and growing niche market that addresses specific needs of particular industries.
As the CNG market develops, it raises some long-term questions:
- What are the true costs of CNG-vehicle ownership compared with the alternatives?
- Will a consumer market ever develop, or will natural gas remain a fuel used primarily in fleet vehicles?
- How can the infrastructure problems be solved?
To answer those questions, BCG examined the benefits and shortcomings of the emerging market for natural-gas vehicles.