Fiat's Marchionne Bets on Natural Gas to U.S. GM, Toyota electric Go

As Sergio Marchionne, Fiat SpA brings back to the U.S. after nearly three decades, can add another Italian specialty: natural gas engine.

Marchionne, who is executive director of Fiat and Chrysler Group LLC, said the natural gas engine offers a better way to reduce emissions, because they are more expensive than competing technologies. He also argues electric cars, General Motors Co. and Toyota Motor Corp. is betting that "many obstacles" such as load time.

"Natural gas is well suited for the U.S.," said Constantinos Vafidis, which oversees the development and hybrid transmission in the Fiat Research Centre in Turin, Italy, in an interview. "Especially for public services and freight transport, where vehicles are refueled from a central base."

Fiat is the market leader in Europe for natural gas engines, with a share of 80 percent of the methane-powered cars and 55 percent of light commercial vehicles. The strengthening of view Marchionne, USA has the natural gas supply to the engines after becoming the world's largest producer last year.

"Fiat will use its technological leadership in the natural gas in a region found that the huge reserves," said Giuliano Noci, MIP school teacher management of the Polytechnic University of Milan. "It's almost mandatory strategy. Fiat should lead the market for natural gas cars as far behind in terms of electric vehicles."

Shares Advance

Fiat rose to 19 cents, or 1.4 percent, to 13.53 euros and was up 0.2 percent to € 13.37 as of 14:50 in trading in Milan. The stock has gained 30 percent this year, valuing the company based in Turin at 16 million euros.

Natural gas is a "more affordable solution, since it is less expensive to produce, transport and distribution in comparison with other fuel sources, Alfredo Altavilla, who heads the Iveco truck unit of Fiat, said in September. The additional cost for a natural gas engine 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 compact Panda Ducato Van, thanks to government incentives. U.S. last year surpassed Russia as the largest producer of natural gas, because production of gas trapped in shale rock increased to 10 percent of total U.S. supply from 2 percent in 1990.

"We have had contact with the U.S. and Canadian governments," Lucio said Bernard, director of Fiat Powertrain. The two countries have become more interested "after recent discoveries of shale gas reserves in the region."

Sales Target

While the Italian market for natural gas vehicles is one of the strongest in the world, with more than 800 stations across the country, the market is still in its infancy in the U.S. only MM began selling vehicles with natural gas engines in the country this year for fleet buyers. Honda Motor Co. is currently the only automaker to sell cars with engines to compressed gas retail customers in the U.S. natural

Fiat and Chrysler, who joins the association of natural gas vehicles in Washington, are currently studying whether the sale of natural gas vehicles in the U.S., the two automakers said. Fiat to re-enter the U.S. next year, and aims to sell 50,000 of the covenant of 500 in the market.

"We are always looking for alternative propulsion systems and how to reduce our dependence on foreign oil, so this is something we are seeing," said Chrysler spokesman Vince Muniga.

GM and Toyota are focused on hybrid electric vehicles as an alternative to conventional gasoline engines. Detroit-based GM began production of year $ 41,000 of gasoline-electric Chevrolet Volt, 30 November and forecasts sales of 10,000 cars and 45,000 in 2012 below.

Service Stations

Toyota is the maker of mass-produced hybrid car, Prius, which went on sale for over a decade. Chrysler is also developing an electric version of the Fiat 500 to begin selling in the U.S. in 2012 for city driving.

While charging stations for electric car batteries have a challenge of infrastructure, places to refuel natural gas vehicles are also limited. There are 1,300 stations in the U.S. for the 110,000 vehicles that use natural gas, the International Association of Natural Gas Vehicles, said. That compares with 160,000 gasoline stations, oil marketing Association of America, said.

The lack of fueling stations in the U.S. methane these vehicles has been limited primarily to government and business fleets that can return to a central location to fill.

"That's where the industry is putting all his emphasis on this point," said Richard Kolodziej, president of Natural Gas Vehicles for America. The natural gas is about $ 1 less than the average for a gallon of gasoline, he said.

Truck Orientation

Marchionne, who plans to increase its stake to 35 percent of Chrysler in late 2011 from 20 percent last year Dodge Ram between brands and create an independent unit of the car. His five-year plan for Chrysler includes bringing large vans and small commercial enterprises to the U.S. in 2012 in RAM brand trucks based on Fiat platform.

"That gives them the freedom to introduce Iveco products in the Chrysler lineup," said Phil Gott, an analyst at IHS Automotive in Lexington, Massachusetts. "The target customer would be heavy-duty fleet, which could reduce fuel costs in half," he said of natural gas engines.

U.S. currently ranks 14 th in the world of sales of natural gas vehicles, while Italy is the sixth, as the International Association of Natural Gas Vehicles. Pakistan ranks No. 1 with 2.3 million vehicles and 3,068 service stations. Marchionne hopes to increase the number of U.S..

"The technological leadership of Fiat in the compressed natural gas in Europe is a key element in the U.S. market for natural gas vehicles," said the director general of the week.