Natural Gas Pickups Picking up Steam
Kyle is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Introducing the new bi-fuel Chevy Silverado, with the ability to travel 650 miles on a full tank of natural gas and when that runs out, the OPEC tank seamlessly takes over. Let’s also bring out the Dodge Ram 2500 pickup, which runs over 360 miles on a full tank of natural gas. So we should all hurry over to our dealers and participate in the March madness craze that is “Truck Month."
Not so fast, folks. These vehicles will only be available to retail and fleet customers of General Motors (NYSE: GM), and Chrysler, for the time being. With less than 400 public stations nationwide that offer the sweet aroma of compressed natural gas (CNG), for our vehicles’ consumption, don’t start shopping around for one of these clean-burning trucks anytime soon, but this information should plant a seed in our investing minds for the potential it may afford.
Last year I started a position with Westport Innovations (NASDAQ: WPRT), after reading several articles concerning their joint venture with Cummins, Incorporated (NYSE: CMI), creatively named, Cummins Westport. I have taken profits on a few occasions, and currently I am letting the remaining shares ride, since I have put the original investment to good use, satisfying my Starbucks addiction, and buying a few shares of other companies of interest. Now for those of you that don’t know about the blissful union of these two, Cummins makes engines and Westport makes fuel-system technologies that allow engines to run on alternative fuels, namely, natural gas, a perfect marriage.
So with the word that government-owned auto manufacturers (just kidding), are coming out with truck models that run on natural gas, I am mildly optimistic, and T. Boone Pickens may give it a “yee-haw”, but I am pretty certain he would prefer this move toward CNG at a much more rapid pace.
Currently, the reasoning behind not flooding the market with vehicles that run on natural gas is because there aren’t enough filling stations offering anything close to CNG. But it’s not like you need a CNG-spewing 7-Eleven within walking distance, these trucks run forever. Now I’ll admit it’s probably a bit of a drawback, since questionable sources tell me the CNG stations have the worst restroom facilities this side of the moon. It may also have a lot to do with the funny smell of natural gas and how nobody will franchise a Taco Bell next to the CNG-mart. But it may very well have to do with the auto manufacturers’ management adhering to the old adage, “fool me 200 times, shame on me”. These companies have gone so far as to accept taxpayer money to stay afloat, so we shouldn’t think they would proclaim to know what the public wants. I applaud the steps toward innovation and alternative fuels, and I think they are playing it safe because about 9% of the population doesn’t have a job to drive their shiny new bi-fuel truck to each and every day.
With the most recent earnings calls, even Ford (NYSE: F), which I own, stated they were scaling back on production because their product lines weren’t moving out of dealerships as they had imagined. So rather than saturate dealerships with inventory they can’t move, why not cater to the demand, if there happens to be one? But the move in this direction should offer some hope and the potential opportunity. Last month Westport announced an agreement with “a leading global engine manufacturer”, with an anticipated product launch sometime in 2014. Now the specific details were not disclosed to protect the innocent, and for competitive reasons. But with the latest news regarding Chevy, GMC and Dodge bi-fuel trucks set to populate our interstate highways, it looks like Westport is ready to start talking, with the release of the new power systems for Ford pickup trucks. So it looks like I am going to be adding to my long position with both of these companies, and hope that a possible venture into the development of more CNG filling stations is somewhere on the horizon.
Motley Fool blogger Kyle Metivier owns shares of Ford and Westport Innovations. He does not own shares with any other company mentioned. Motley Fool newsletter services recommend Cummins, Ford, General Motors Company and Westport Innovations. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
