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Diesels Won’t Do, Lutz Says
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Modern diesel engines are unlikely to appeal to Americans despite rising fuel prices, General Motors vice chairman Robert Lutz predicts.
Lutz emphasized GM is developing a full range of diesel engines for use around the world. However, overall diesel penetration is likely to remain in single digits for the foreseeable future, Lutz said, dismissing claims by European automakers and suppliers that diesel has a bright future in the U.S. as fuel prices increase.
"Frankly in the United States, with diesel fuel the same price as (gasoline), I don't think that many Americans are going to pay a $3,000 or $4,000 premium for a modern diesel engine," Lutz said.
"On top of the normal diesel premium, you now have advanced emission systems. Unless we decide to eat the cost, which unfortunately we can't afford to do, I think customers are going to say, 'Wait a minute. At equal fuel prices I'm paying $4,000 more for this,'" he said. "It will not be like Germany," Lutz said during the question and answer period following a speech at the Automotive News World Congress in Detroit.
Consequently, the vast majority of Americans will continue to favor internal combustion engines that use gasoline, which are significantly cheaper than diesel engines, he predicted.
The penetration of diesel-powered passenger vehicles in will be "more like it is in Switzerland," 8 percent to 10 percent, at best, added Lutz, noting the tax system in the U.S. simply does not favor diesel power the way it does in Germany. In Germany and other parts of western Europe, the taxes on gasoline are much higher than on diesel fuel, which skews demand towards diesel motors, he said. In the U.S. gasoline and diesel fuel are taxed basically the same and thus cost the same at the pump. The emission standards in Europe also are not as strict as they are in the U.S., Lutz said.
"In those European markets where diesel exceeds 40, 50 percent or 60 percent penetration, you have to know there is a tax differential. Gasoline is $8 per gallon, diesel fuel is $4 per gallon," he said. "With that kind of price disparity everyone is going to buy a diesel.”
"In the countries where gasoline and diesel is about the same, percentages are much lower. They're much higher than they are in the States but they are down around 10 percent or 12 percent.
"I'm not advocating taxes hikes or calling for higher fuel prices," Lutz said. "I'm just explaining the difference between the European fleet and our own.”
"In America instead of raising fuel prices, we'll wind up raising new vehicle prices because of the increased use of lightweight material and fuel-saving technology. By the way, clean diesels do not come for free especially not when they are emissionized [to meet new standards], which mean thousand of dollars per vehicle and that in turn is going to cause people to hang on to their vehicle," he said. "People are going to say,'Whoa a $35,000 Chevy Malibu. I think I'll hang on to the one I've got for a while.”
Lutz also said the use of flex-fuel vehicles running on ethanol represents the best way to address the issue of U.S. dependence on foreign oil and the chronic insecurity it breeds. The wider use of ethanol as motor fuel could reduce U.S. dependence on imported oil, he said.
"Nothing we can do in the next five or 10 years gets even close to that kind of impact," he said.
Ethanol also is cleaner than gasoline and adaptable to the current re-fueling infrastructure, he said. It also doesn't require a major shift in consumer behavior, Lutz said.
Lutz emphasized GM is developing a full range of diesel engines for use around the world. However, overall diesel penetration is likely to remain in single digits for the foreseeable future, Lutz said, dismissing claims by European automakers and suppliers that diesel has a bright future in the U.S. as fuel prices increase.
"Frankly in the United States, with diesel fuel the same price as (gasoline), I don't think that many Americans are going to pay a $3,000 or $4,000 premium for a modern diesel engine," Lutz said.
"On top of the normal diesel premium, you now have advanced emission systems. Unless we decide to eat the cost, which unfortunately we can't afford to do, I think customers are going to say, 'Wait a minute. At equal fuel prices I'm paying $4,000 more for this,'" he said. "It will not be like Germany," Lutz said during the question and answer period following a speech at the Automotive News World Congress in Detroit.
Consequently, the vast majority of Americans will continue to favor internal combustion engines that use gasoline, which are significantly cheaper than diesel engines, he predicted.
The penetration of diesel-powered passenger vehicles in will be "more like it is in Switzerland," 8 percent to 10 percent, at best, added Lutz, noting the tax system in the U.S. simply does not favor diesel power the way it does in Germany. In Germany and other parts of western Europe, the taxes on gasoline are much higher than on diesel fuel, which skews demand towards diesel motors, he said. In the U.S. gasoline and diesel fuel are taxed basically the same and thus cost the same at the pump. The emission standards in Europe also are not as strict as they are in the U.S., Lutz said.
"In those European markets where diesel exceeds 40, 50 percent or 60 percent penetration, you have to know there is a tax differential. Gasoline is $8 per gallon, diesel fuel is $4 per gallon," he said. "With that kind of price disparity everyone is going to buy a diesel.”
"In the countries where gasoline and diesel is about the same, percentages are much lower. They're much higher than they are in the States but they are down around 10 percent or 12 percent.
"I'm not advocating taxes hikes or calling for higher fuel prices," Lutz said. "I'm just explaining the difference between the European fleet and our own.”
"In America instead of raising fuel prices, we'll wind up raising new vehicle prices because of the increased use of lightweight material and fuel-saving technology. By the way, clean diesels do not come for free especially not when they are emissionized [to meet new standards], which mean thousand of dollars per vehicle and that in turn is going to cause people to hang on to their vehicle," he said. "People are going to say,'Whoa a $35,000 Chevy Malibu. I think I'll hang on to the one I've got for a while.”
Lutz also said the use of flex-fuel vehicles running on ethanol represents the best way to address the issue of U.S. dependence on foreign oil and the chronic insecurity it breeds. The wider use of ethanol as motor fuel could reduce U.S. dependence on imported oil, he said.
"Nothing we can do in the next five or 10 years gets even close to that kind of impact," he said.
Ethanol also is cleaner than gasoline and adaptable to the current re-fueling infrastructure, he said. It also doesn't require a major shift in consumer behavior, Lutz said.
Responses (22 total)
By Torr | Posted: Feb 6th 2008, 11:21:38 PM
Darryl, thank you for some clarification on the diesels. If the fuel price falls in the summer it will pretty much make up for the initial cost incurred by the diesel purchase. I havent really been paying attention closely on the prices during the summer months, but still thought it was more expensive here where I live. Maybe because we have so many diesels running around here the demand is greater than where you are at. I still think the diesel stinks more at the pump, but it also could be because of a few of the people putting it in their vehicle are not as careful as they should be. Creating a constant mess at the pumps. I have worked in the car business for ten years and every time I fill up a diesel, not very often, I get that sick smell on my hands. Once you are in it, it doesnt affect me as much, but riding my motorcycle in the summer I hate following a diesel, even a late model truck with all the emssions mandated by 2007. I dont like being behind a mid '80s or older car either for the same reason. I think the gas smell from the pump dissipates quicker than does diesel. I am sure that in a few years all my concerns will be taken care of, but we are talking about right now.
By Darryl Ross | Posted: Feb 6th 2008, 06:00:37 PM
Another thing. When filling up with diesel fuel, I either use rubber gloves, a few paper towels or a diesel mitt that they give you if you ask for it. So getting the fuel on your hands is really a non-issue whether it is diesel or gasoline. Also, diesel is no more smelly than gasoline!
By Darryl Ross | Posted: Feb 6th 2008, 05:56:06 PM
To answer a few questions or comments. Modern diesels cars have glow plugs to address starting in the cold. You turn the ignition key half a turn. When you see the glow plug light go out, you turn the key all the way and the car starts without a problem. This takes about 5 to 10 seconds in very cold weather. I don't know if the trucks being referred to by Torr have glow plugs. In extremely cold climates, you have to plug up any car, not just a diesel. I witnessed this myself in Idaho and those cars were not diesels. As to the diesel price differential, diesel fuel is winterized with an additive to prevent gelling during winter months. This causes the price of the fuel to therefore increase. However, during the summer months no additive is needed and the price of the fuel falls. Diesel fuel prices has been coming down in recent weeks. Anyone who has followed diesel prices in general witnesses that diesel fuel price increases and decreases usually lag behind those for gasoline. Since I have owned diesel cars it appears that their fuel prices are generally lower than gasoline in part due to the business industry -- the principal users of the fuel. Trucks and buses use a lot of it to transport passengers and goods. To make diesel fuel prices high would only mean that the additional costs would be passed onto consumers and the public being transported. It is true that the diesel fuel price has been boosted over the past year due to the removal of sulfur from the fuel -- representing additional refinement. If you live near any highway or interstate, diesel fuel is readily available. As to the pricing of diesel vehicles, you will probably be able to purchase a reasonably priced one when they are available in numbers again (e.g., VW and Honda). This is more likely if VW makes a decision to bring over the sub-Rabbit sized and priced Polo with a diesel. Diesel cars were available at a reasonable price in the past. For instance, in 2002 when Corollas and Civics were selling between $13,000 base and $18,000 loaded, I paid $18,000 for pretty loaded Beetle with a diesel. If I wanted to pay less, I could have either gotten a few less options (e.g., alloy wheels, upgraded stereo system) or gotten a Rabbit (i.e., Golf) with a diesel which would have been around $16,000. The VW was better in that it had as standard equipment things that were not available or only available as an option on the Honda or Toyota like an alarm, four wheel disc anti-lock brakes, and a full size spare tire. The fact that VW's are affordable premium vehicles made the decision to go with a diesel version icing on the cake. For the person seeking a station wagon with a diesel, VW has one coming for you. At the auto show that I just attended, VW had a 2008-2009 Jetta TDI (i.e., diesel) station wagon that will be coming out soon. It looked good! Hopefully, it will have an all wheel drive (i.e., 4 motion) option for you.
By Bill Pierce | Posted: Feb 3rd 2008, 03:58:12 AM
This kind of thinking is making GM slide backwards in the American market. I love my VW TDI. It has been completely reliable, unlike the GMs I have owned. On top of that, I average 48mpg.
I will not buy another American car until they start building what I want to own. It will be sad if GM goes out business as a result of poor management. They do have the resources to change.
By Torr | Posted: Jan 31st 2008, 01:58:40 PM
SEL - its obvious by your post that you are a jerk. And you dont read the post previous very well either. I live in a climate where you do have to plug in your diesel and all Kodiak and Topkick diesel trucks have an intank agitator to allow them to run more biodiesel than B5. Even if you seem to be correct, your statements prove that you are here simply to vent some of your pathetic anger towards someone you cant see. In person you are probably a nicer person, but behind your computer keyboard you are seen for what you are, a jerk! Typical poster who thinks they are right and everyone else is wrong. YOU are whats wrong with this country and until you can understand that we are all here to give input for better understanding, not just to vent and make ourselves feel better about your pathetic life then stay inside your little box of joy and dont spread your poison!
By SEL | Posted: Jan 31st 2008, 04:25:57 AM
Bio Diesel separates? in-tank agitator? Ummm, no. You should really do some research before you post.
The oldest Diesel engine known to man can run Bio-flawlessly, The only thing you have to watch out for is the gelling point in cold temps but that only is a problem if you are running it almost straight.Also Bio is a better solvent than Dino-D so your fuel filter my clog(from the old crud left from the Dino-D) if you run it straight the first time, unless it brand new.
Illinois has B11 in most of their stations already(speedways anyway), they are trying to push it state wide.
Is big american OIL scared of diesels? Maybe because you can make Bio for less than $1 a gallon in your garage with waste Veggy oil and its something an average Joe could do. That plus they get 50mpg HWY some even push there Jettas to 60MPG.
Europe has Diesels comparable to GMs joke sub-compacts that get 70MPG! You know the mini cooper(we get the watered down version,possibly thinking most americans are to Sheepish to see a good thing and jump on it)? Well yea, 70MPG and gives off less CO2 than any Hybrid(those calculations are based on running on Dino-D, imagine BIO)
Why is there this stigma about diesels?
My 98 TDI gets 40MPG CITY, it doesn't stink ,I don't have to "Plug it in(who told that uninformed retard that)?" for it to start below 0 and I wouldn't trade it for any 2009 GM model(well maybe just to sell the big boat and get a 2009 TDI), my 98 will probably be worth more than it in 3 years from now after the Boat is driven off the lot.
Diesel engines are much stronger(reason for the premium) and last 300,000 miles or more. Would you even consider buying a gasser with 200,000 miles on it? A diesel just got broken in around 130,000
By Torr | Posted: Jan 30th 2008, 03:56:05 PM
Kirk, I like the sound of biodiesel, but I also know that it seperates so you need an in-tank agitator to keep it from seperating. Currently Gm's diesel will run on upto B5 diesel but any higher and it will seperate too quickly. I am sure this will be remedied eventually, but it just proves my point that it isnt a mainstream option yet, not to mention availability. I have never even seen a biodiesel pump.
By jr | Posted: Jan 30th 2008, 12:00:10 AM
Lutz may be correct in that diesels may not make up a large percentage of the market, but it will grow. If GM fails to make a marketable diesel engine for auto and trucks, their market share will continue to drop. They need to quit telling themselves what the customers want and start producing diesels and let the market decide.
They did the " we know what the customers want" and made a small pickup truck that needs to be more refined to compete in that market. They need to work on improving their brands, period.
I like to have a small vehicle with a diesel engine that was reliable, etc. Or a truck
jr
By Torr | Posted: Jan 29th 2008, 11:58:41 PM
I think its great that diesel technology is getting better, but that doesnt change the fact that it stinks at the pump and the smell stays on your hands alot longer than gas if you accidentally get some on you. Even with the new clean burn technology, you can still tell when a diesel is in front of you, especially if you are on a motorcycle. By 2012 that might not be the case as they will be cleaned up even further. Even with John T getting 30 % better mileage as compared to 40% as he misquoted, (24 for gas vs 34 for diesel) it still takes 2 years and ten months to recoup the cost you spent getting the diesel. Thats if you paid cash for the difference not counting interest on a loan. I am just saying that most people will make their decision based on their pocketbook. Unless the buying majority see a significant reduction in difference between the two technologies diesel will not become mainstream. Someone give me input based on less luxurious vehicles that dont have such a premium already. Looking at heavy duty trucks offered by the big three, all of them charge substantially more for the diesel. The only two that anyone has given examples for , the MB and the VW, both cost significantly more than comparable sized cars in their class. Maybe the difference isnt that great because even when you get the gas version, you are paying for the diesel. (Spreading the cost over the whole line.)
By Kirk L | Posted: Jan 29th 2008, 11:52:47 PM
I agree Lutz is off track, and I don't understand the diesel cost differences. Why would a diesel engine cost so much more? Why is diesel fuel so much more? It costs less to produce.
Seems to me there's a US auto and petro marketing bias against diesel, a simpler and superior engine and fuel. Doesn't make sense.
And for Torr, try biodiesel. Smells much better and it's sustainable, eh?
I don't visit this site regularly, so if you have some answers for me about the US diesel bias, please respond to me at kirkleon@spiritone.com.
Thanks Darryl and John for some rational insights.
Kirk
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