From Bloomberg News:
By Craig Trudell
Jul 31, 2013 10:14 AM ET
Ford Motor Co. (F), the second-largest U.S. automaker, plans to begin offering compressed natural gas fuel systems for its F-150 pickups to meet growing demand from business fleets and attract retail buyers.
Fuel packages similar to what Ford has offered on large commercial vehicles since 2009 will be available starting this year with the 2014 F-150, said Kevin Koswick, head of its fleet operations. The F-150 will be the only half-ton pickup capable of running on compressed natural gas, or CNG, the company said in a statement.
Ford is seeking to further bolster its F-Series pickups, which have been the top-selling trucks in the U.S. for the past 36 years. Natural gas prices have fallen as U.S. production surged with horizontal drilling and hydraulic fracturing, or fracking. Ford said the average U.S. price for CNG is equal to $2.11 a gallon, compared to $3.66 for regular gasoline.
The F-150 is “probably our No. 1 request out there right now, with people asking us” for a CNG system, Koswick said yesterday in a briefing near Ford’s headquarters in Dearborn,Michigan. The F-150 will be the eighth commercial vehicle that Ford will sell that can run on CNG.
Ford said it expects to sell more than 15,000 such vehicles this year, up at least 29 percent from 11,623 in 2012. The automaker started offering CNG-enabled commercial vehicles with its E-Series vans and has since added Super Duty large pickups, Transit Connect taxis and chassis-cab trucks that are used for mail delivery.
By adding the light-duty F-150 truck to the mix, Ford may begin drawing more retail buyers for CNG vehicles, Koswick said.
“You’re really starting to straddle into the retail marketplace,” Koswick said. “There is demand.”
Buyers who choose the CNG-enabled 2014 F-150 will pay $315 for modifications at Ford’s factory with hardened valves, pistons and rings that are capable of working with CNG.
Those customers would then complete the upgrades by selecting from among six Ford-approved companies, includingWestport Innovations Inc. (WPT), to supply fuel tanks, lines and injectors. The cost for the work by those companies ranges from about $7,500 to $9,500 depending on the size of the tank, the automaker said.
Using CNG also can result in as much as 30 percent less emissions of greenhouse gases, Ford said, citing U.S. Environmental Protection Agency figures.
Customers for Ford’s CNG vehicles have included telecommunications carriers such as AT&T Inc. (T), delivery services such as FedEx Corp. (FDX) and United Parcel Service Inc. (UPS), and oil and gas exploration companies such as Pioneer Natural Resources Co. (PXD)
States and municipalities in places such as Oklahoma, where natural gas production has surged, are purchasing the vehicles and offering tax credits as incentives for their use and for building infrastructure. In addition, operators of taxis and shuttles at airports in Phoenix and Denver also are buying CNG-powered cars and trucks.
The advances in techniques for natural gas output are allowing the U.S. to vie with Russia as the world’s largest producer, according to the International Energy Agency. The increased supply has driven down prices for the fuel.
“When they really developed horizontal drilling and the fracking process that they have right now, that changed and separated the cost of natural gas from gasoline,” Robert Stevens, Ford’s chief engineer for commercial trucks, told reporters yesterday. “That was the watershed event.”
Rising energy production along with a sustained housing recovery are fueling pickup sales this year and pacing gains for U.S. automakers. Ford, General Motors Co. (GM) and Chrysler Group LLC each increased market share in 2013’s first half, the first time all three gained in the initial six months of a year since 1993.
Ford has reported that U.S. sales of its F-Series pickups climbed 22 percent to 367,486 this year through June.
The company’s shares rose 0.5 percent to $17.07 at 10:10 a.m. New York time. Ford surged 32 percent this year through yesterday, compared with an 18 percent gain for the Standard & Poor’s 500 Index.
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