Is Honda Set To Have The Last Laugh?

Here’s the basic premise of this article –

In terms of energy equivalence, 1 Barrel of Gasoline = 6 MCF of Compressed Natural Gas.

Cost of 1 Barrel of Gasoline = ~ $100
Cost of 6 MCF of CNG = $2.5 * 6 = ~ $15 (!!!)

So CNG costs less than 1/6th of Gasoline to produce the same energy!
(These costs are approximate, but you get the picture)

Granted the difference at the pump is not that much. A gallon equivalent of CNG costs a little less than half of Gasoline, but this is likely to move in only 1 direction – CNG prices at the pump will continue to go down, as more efficient supply and distribution channels are established, and Gasoline will continue to move upwards, potentially widening the difference to a multiple of 4 or more!

The point is that Natural Gas is going to be a very compelling alternative to not only Gasoline, but also Gas-Electric hybrids.

Today only 1 automaker has a (non-commercial) CNG car on the roads – Honda, with their Civic. And they’ve had it for over 10 years. Few automakers are investing in this technology to have their own CNG models in the foreseeable future.

This reminds me of Toyota in 1996, when it starting investing in the electric-gas hybrid technology before anyone else, and we’ve seen where they’ve come in terms of complete market domination in that segment.

That’s not to say that the CNG Civic does not have its flaws, but so did the first generation Prius in 1998. Natural Gas refueling stations are few and far between, but that’s starting to change. And the additional cost of the technology will go down as volumes go up.

The question is – is Honda set to have the last laugh?

Data sourced from www.CarPredictor.com and Google Finance.

91z4me - 3/28/2012 5:15:51 PM

+3 Boost

CNG cars are sold in much large quantities in some countries, Australia for instance has a number of different models that can run on CNG.

The problem with the US is infrastructure. Find a way to improve that and then raise consumer awareness and you can easily see demand growing. For now most CNGs are owned and operated as fleets, I doubt if 10% are owned by the public at large.

meetbhagde - 3/28/2012 5:30:03 PM

+2 Boost

Can't agree more! It took Toyota millions of $$ to market their hybrids and make the general public perceive them as "normal"... Honda will do more of that as CNG prices continue to tumble and Gas continues to become more expensive. The question is - will other automakers follow suit?

meetbhagde - 3/28/2012 8:07:57 PM

+2 Boost

Exactly, and the Leaf is still $32K AFTER the govt. subsidy!

MorePower - 3/29/2012 2:11:37 AM

+1 Boost

Unless you need the range, there is there is no way a CNG powered COMMUTER car is better, in the long-run, than an electric one.

Agent001 - 3/28/2012 6:04:45 PM

+1 Boost

And isn't it coincidental that the biggest anti-cng lobby in the USA is funded by oil companies?

001

chewy - 3/28/2012 8:20:44 PM

+2 Boost

Isn't the spread between CNG and gas at an alltime high? What happens when markets return to normal? With current technology horsepower also goes down by a decent amount, the CNG Civic only makes 110 horsepower compared to 140.

chewy - 3/28/2012 8:25:32 PM

+1 Boost

Also the Civic loses about half of its trunk and the CNG eqipped Ram loses what looks like half of its truck bed.

meetbhagde - 3/28/2012 9:07:54 PM

+1 Boost

Good question, and I guess the answer to that will determine whether or not other automakers will jump in. The key forecast needed here is what is the new "normal"?

quizz - 3/29/2012 1:24:02 AM

+1 Boost

Sorry, I'm not buying this argument. If you are truly going to be frugal about transportation and not care about performance one bit, then just get a ZipCar ($8/hour, including gas & insurance). What's the point of owning a CNG in cities where ZipCars are plentiful. In cities where there are no ZipCars, then what's the likelihood there are convenient CNG filling stations nearby?

MorePower - 3/29/2012 2:13:38 AM

+1 Boost

The problem with CNG is that you loose your available trunk space and have to suffer the penalty of the heavy, reinforced aluminum cylinders needed to house the gas.