Alternative Fuels Gaining Traction

flexfuelWhile sales are increasing, the overall market share remains dwarfed by gasoline.
By Brian L. Milne, Energy Editor, Schneider Electric

U.S. vehicle sales in November 2013 at 1.243 million were at a 10-year high for a November, according to Edmunds.com, the car people. And, WardsAuto.com, which tracks global auto sales and trends, in December said auto manufacturers in North America would expand production capacity in 2014 after reductions caused by the Great Recession and rationalizing a previously overbuilt manufacturing sector.

The U.S. auto industry continues to gain steam alongside an improving U.S. economy, also benefiting from pent- up demand as consumers held back purchases amid the vast uncertainty experienced dating back to 2008.

The vehicles purchased are far more efficient than in the past. The Environmental Protection Agency (EPA) reported that, in December,  model year 2012 vehicles sold achieved an all-time high fuel economy of 23.6 miles per gallon. That’s a 1.2 mpg increase over the prior year and the second largest annual increase in the last 30 years.

Vehicle efficiency gains will continue amid a sharply higher CAFÉ standard, while younger drivers are more conservation-minded than in the past, steering the Millennial class to higher mpg vehicles. There are also a host of federal and state tax subsidies available for those seeking out an alternative fuel vehicle as government looks to a greener economy that emits fewer harmful emissions into the atmosphere.

Even with a surge in U.S. oil supply, with domestic production at a 25-year high and still climbing, Energy Secretary Ernest Moniz said, “We remain committed, even as we produce more oil, to lessening our oil dependence, using less oil domestically and having fewer emissions.”

Moniz made the comments as the keynote speaker at the 2013 Platts Global Energy Outlook Forum held Dec. 12 in New York City, adding the U.S. remains a major importer of crude oil and the Obama administration is taking aim at reducing those imports through efficiency measures and investments in alternative fuels and vehicle electrification.

Retail Outlook
As fuel merchants, the shifting tide toward lower gasoline demand heightens concern for our business, while the entrepreneur within sees opportunity. What investment now will turn into a winner?

There are several alternative fuel vehicles (AFVs) to choose from, including AFVs that run on propane, natural gas, E85, electric plug-ins and fuel cells. There’s also rising interest for clean diesel vehicles in the U.S.

AFV sales are trending higher in the U.S., but from a low base. Consider General Motors, which reported a 14% year-on-year jump in vehicles sold in November 2013 at 212,060—the best sales results for the company in November in six years. GM saw sales of its electric-powered Volt surge 26% during the same period, but sales totaled 1,920. Or Nissan North America, which sold 106,528 vehicle sales in November 2013, a record high for a November for the company. Sales were up 11% from the previous year. Sales for its Nissan Leaf surged 30% for the same period and set a monthly record for the company, although the total was 2,003 or 1.9% of Nissan’s total sales.

U.S. light vehicle sales during the first 11 months of 2013 totaled 14,179,416, with 13,224,773 or 93% of those vehicles powered by gasoline, according to WardsAuto.com. Total sales were up 8.3% from the same period in 2012 while gasoline powered vehicle sales gained 7.6%, data supporting the trend to AFVs.
Gasoline sales will continue to dominate the market, explained the Fuel Institute, a non-profit research-oriented think tank founded by NACS, in its“Tomorrow’s Vehicles: What will we drive in 2023?” However, gasoline powered vehicles could see their market share drop to as low as 82% by 2023.

“Despite this continued dominance of petroleum based vehicles, alternatives are gaining traction,” the report summarized. “Yet infrastructure and vehicle limitations remain, constraining overall market share to less than 1%.”

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