I should preface this article by reference to the fact that I work in the financial sector, not the automotive or fuel sectors. Any mistakes here are due to my own shortcomings in understanding the full issue and technical nature of the subject. Corrections to mistakes are welcome in comments and I can adjust the factual content of the article as time progresses. Cheers.
UPDATE: After you’re done here, I’d also invite you to read this transcript of a speech given today by Tom LaSorda from Daimler Chrysler to the Renewable Fuels Association.
Saab USA won’t be bringing the diesel engine to the US. Not in the near-term anyway. That much was made clear in an email response to this website earlier this week. Their preference seems to be Biopower – the e85 engine that is selling so well in Sweden.
Ethanol has plenty of credentials as a fuel, both green and otherwise. It’s sources are renewable. It’s more environmentally friendly in terms of emissions. It has a higher octane rating for more zippy performance.
But it also has its critics. Depending on who you believe, ethanol is said to use more energy in its production than what it produces as a fuel. The numbers on this vary and are turning in ethanol’s favour as the technology improves, but the consensus opinion is that it’s well behind gasoline in net terms. The other problem mentioned is transportation. Ethanol, at this point, has to be transported in trucks and boats due to corrosion problems with piping it around the countryside.
Diesel, on the other hand, has much wider distribution around the US. It’s not available everywhere, but it’s much more readily available accross a wider geographic area than ethanol. It’s more easily transported, gets better mileage, gives great performance in modern diesel engines and can also be made from more sustainable, organic sources (than gasoline, anyway).
Given all this, why would Saab choose to go with ethanol over diesel for the US market?
Beats the hell out of me, but I’ll give it a shot.
Saab is undoubtedly small potatos in the United States. Even though it’s Saab’s single biggest market, my feeling is that it’s still an irritant on the big toe of GM’s corporate concerns. It’s no surprise that GM is run by car people as well as beancounters, and it’s often the beancounters that pull the strings. The things that E85 have over diesel from a beancounter’s point of view are: it’s easier, it’s marketable and it’s emerging.
It’s easier because Saab already have the technology for making its models E85 compatible all nailed down. The software’s been written. The fuel lines and tank linings are all sorted. By making the vehicles E85 compatible they gain all the advantages of renewable fuel whilst not penalising a buyer for choosing it.
They purchaser can still get the mileage they want by running the car on gasoline. Or they can feel like a treehugger when they fill up with E85. They can feel like Carlsson when they plant thier foot down on a tankfull of cornjuice.
My bet is that all Saab models will be flex-fuel, E85 and gasoline compatible, from 2008 onwards.
It’s marketable because it’s green, or yellow, or whatever. And it doesn’t have the bad history that diesel has in the US. Many intelligent, thinking people – deep down – want to feel like they’re doing something a little more positive for the world around them, even when they’re zooming around a racetrack with a huge grin and a tankfull of dinojuice. Saab and GM can play on this with E85 as it’s genuinely renewable and genuinely produces a smaller volume of damaging emissions. Once the average person understand what it means, they could even benefit from the fact that it’s potentially carbon-neutral.
It’s emerging, not for the first time, as an alternative fuel source and I guess the difference now is that it’s emerging at a time where technology is advanced enough to make its production more efficient, balancing the energy equation between production and use. My guess is that Saab are hoping to ride on the crest of this wave, a wave more powerful with solid backing from government in Sweden and symbolic backing from government in the US.
The case for diesel is based on solid performance but subject to consumer acceptance. At face value, it’s a solid bet for a car company given the positive reviews that successful European diesels are getting in the US motoring press. They go like rockets. The no longer smoke, gurgle like a train, or stink. They go for miles longer on a tank and if you’re game, you can even make your own fuel at home (though you won’t hear the companies telling you that – the warranty consequences would be unthinkable).
The downsides, from a business-case point-of-view?
Investment. E85 capability is basically an alteration to an existing petrol engine and fuel system. Diesel is a completely new donk, meaning a whole bucketload of compliance testing, training for service staff, and perhaps something we don’t think of too often: a near-enough-to-doubling of demonstrator vehicle stock.
There’s a much larger parallel between the existing gasoline engine and an E85 setup. That means easier compliance with standards, easier training and if they do go all-Biopower as I suspect they will, no excess demonstrator stock.
Bigger companies like VW, MB and BMW can all afford the investment. It seems obvious to me that GM believe that a small unit such as Saab can’t afford it. But many suporters of diesel will perhaps say that Saab can’t afford not to ride the new diesel wave in the US.
Interest is growing every month as motoring journals write more and more about the European diesels that they can’t get their hands on…..yet. Later this year new sulfur content laws come into play to make diesel a viable option for companies selling cars in the US. And a few have already indicated they will be taking advantage. The cars they will be bringing to market will be clean, fast, quiet and surprisingly easier on the wallet than what your average consumer in the US will expect. The companies that do it right will reap the benefits, not just in terms of sales, but also in terms of reputation.
Diesel acceptance in Europe has skyrocketed in the last decade or so, with some companies saying that up to 60% of their vehicle sales are now diesel models. The uptake isn’t likely to be as high in the US, but the potential market is still huge in dollar terms for a small player like Saab.
The US has more cashed-up buyers than any other country in the world and the upside potential for Saab is huge. Whether Saab USA can capitalise on that will depend on the model-mix they bring to market and the way they promote them. At this point they’ve chosen to put their eggs in the E85 basket. Time will tell about the wisdom of that decision.