DETROIT (Bloomberg) -- As Sergio Marchionne brings Fiat S.p.A. back to the United States after nearly three decades, he may add another Italian speciality: the natural gas engine.
Marchionne, who is CEO of Fiat and Chrysler Group, says natural gas engines offer a better way to cut emissions because they're cheaper than competing technologies.
He also argues that electric cars, which General Motors Co. and Toyota Motor Corp. are betting on, present “too many obstacles” such as the recharge time for batteries.
“Natural gas is very suitable for the U.S.,” Constantinos Vafidis, who oversees transmission and hybrid development at Fiat's research center in Turin said in an interview. “Especially for public services and goods transportation, where vehicles are refueled from a central base.”
Fiat is the market leader in Europe in natural gas engines, with an 80 percent share of methane-powered cars and 55 percent of light commercial vehicles.
Bolstering Marchionne's view, the United States has the natural gas supply for the engines after becoming the world's largest producer last year.
“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 should lead the natural gas car market as it's far behind in the electric vehicle sector.”
Natural gas is a “more affordable solution” as it's less expensive to produce, transport and distribute compared with other fuel sources, Alfredo Altavilla, who heads Fiat's Iveco truck unit, said in September. The additional cost for an engine using natural gas is $3,000, compared with $3,300 for diesel and $8,000 for an electric hybrid, he said.
Fiat sold 127,000 methane-powered cars in Europe last year, including versions of the Panda minicar and Ducato van, helped by government incentives.
The United States last year overtook Russia as the world's largest producer of natural gas, as output of gas trapped in shale rock rose to 10 percent of total U.S. supplies from 2 percent in 1990.