Despite a clear pricing advantage, new technology that provides pristine emissions and decades of hard-won credibility in Europe, diesel engines are losing an early advantage and now are in a horse race with hybrid-electric propulsion systems for future alternative-powertrain leadership in the U.S.
At an off-site seminar in Detroit coinciding with SAE World Congress and sponsored by the French Embassy Trade Office Chicago-Detroit and French American Automotive Business Assn., Kevin Riddell, J.D. Power & Associates manager-Powertrain Forecasting, tells attendees diesels now are projected to control only 8.7% of the U.S. market by 2015. Hybrid-electric vehicles are predicted to have a nearly identical 8.6% share.
This still represents a big increase for light-duty diesels, which typically have averaged less than 2% of light-duty vehicle sales overall and less than 1% of U.S. car sales. But it also represents a stronger outlook for HEVs than foreseen several years ago and a loss of momentum for oil burners.
Volatile diesel-fuel prices, fears about old consumer prejudices and a flurry of cancelled or postponed engine programs caused by the economic crisis have subdued an invasion of new clean-diesel light vehicles in the U.S. and caused forecasters to go back to the drawing board on their predictions for how popular various alternative powertrains will be in the near future.
Influenced by aggressive plans by Detroit auto makers to introduce light-duty diesels on high-volume fullsize pickup trucks beginning in 2009, J.D. Power released a study in 2006 that predicted U.S. demand for diesel-powered vehicles would nearly triple during the next 10 years, from 3.2% in 2005 to more than 10% by 2015.
Some supplier projections were even more ambitious, forecasting a 10% market share by 2010 and 15% by 2015.
Meanwhile, HEVs were predicted to have only a 4.9% share of the U.S. market by 2013, with only marginal growth in following years.
But public opinion, investment dollars, and state and federal legislation in the U.S. consistently have shifted in favor of HEVs and electric cars, even while diesel proponents point out that plug-ins, for instance, are not zero-emission vehicles if they are recharged with electricity from coal-fired power plants.
The cool reception of diesels in the U.S. is particularly confounding to European auto makers, because diesels enjoy a nearly 50% share in their home markets, thanks to favorable government policies that focus more on the reduction of carbon-dioxide than oxides of nitrogen emissions, plus consumer acceptance.
France's diesel installation rates are among Europe's highest, hitting 78% last year, and the country now is trying to enhance its reputation as a global center of diesel technology development.
Most European experts agree overall diesel penetration in Europe is at or past its peak, and auto makers and suppliers now would like to export vehicles and technology to the U.S. and Asia, where clean diesels can help meet CO2-reduction rules.
Jeffrey Breneman, executive director-U.S. Coalition for Advanced Diesel Cars, is championing a new supplier-sponsored effort to make sure the benefits of diesel technology are fully understood by U.S. consumers and regulators.
He says one of the main goals of his organization is that government regulations remain technology neutral rather than specify one solution – such as HEVs or ethanol – as the remedy for greenhouse-gas reduction.
That is a battle the diesel engine has been fighting for years, initially causing it to be left out of fuel-efficiency income-tax breaks originally aimed at HEVs, Breneman says, not to mention being banished from California for years by the toughest NOx tailpipe emissions standards in the world.
Breneman also is fighting for diesels to be allowed in California's highly desired high-occupancy lanes, where HEVs currently are the only alternative-powertrain vehicles allowed, even though diesels, not hybrids, offer big fuel-efficiency gains on the highway.
"Let's not lose sight of the good in the search for the perfect (solution for global warming)," Breneman warns.
But General Motors Corp., Kia Motors Corp., Toyota Motor Corp., Honda Motor Co. Ltd.,Motor Co. and Chrysler LLC all have cancelled or postponed plans to introduce light-duty diesels during the next several years.
Nissan Motor Co. Ltd. was expected to introduce a new diesel-powered Maxima sedan in the U.S. in April 2010, with an engine supplied by parent French alliance partner Renault SA, but this looks doubtful now as the auto maker cuts costs and scales back programs to cope with a dramatic slowdown in global vehicle sales.
Meanwhile, Ford, Honda and Toyota all are introducing HEVs that offer an improved value proposition, Riddell says, and European auto makers such as Porsche AG, Daimler AG and BMW AG are introducing new luxury HEVs in 2010.
Riddell acknowledges the diesel price premium, even with expensive new selective catalyst reduction systems, is only about $2,000, compared with $5,000 for HEVs, but he says a survey conducted by J.D. Power last year when diesel-fuel prices were starting to soar showed a very low level of interest in diesels among consumers.
The collapse in full-size pickup sales has hurt the popularity and prospects for diesels, Riddell says, although sales of work-oriented pickups eventually are expected to recover.
Hybrid demand also has been negatively impacted by lower fuel prices, and what appears to be a consumer reluctance to pay extra for green products in a down economy, Riddell says.
Despite the depressed market, panelists at the conference agree the U.S. still offers substantial growth opportunities for both diesels and HEVs due to toughening fuel-economy and emissions standards, a growing environmental awareness among Americans and the relatively overall low fuel efficiency of the U.S. vehicle fleet – which has to improve dramatically and quickly.