Diesel turns up the volume in the U.S.

  • 27-Mar-2015 12:16 EDT
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U.S. market diesel vehicle registrations have risen 70% from the 2010-2014 period, a 14.3% compound annual growth rate (CAGR).

The diesel advocacy movement is making an aggressive public pitch for greater acceptance, asking that the diesel engine be included among all technology choices used to meet U.S. Corporate Average Fuel Economy standards.

Diesel sales in the U.S. are rising at impressive rates. Yet "diesel isn't for everyone," conceded Allen Schaeffer, executive director of the Diesel Technology Forum (DTF), an industry group of 20 suppliers and carmakers. He and two of his organization's OEM members participated in a panel session at a recent meeting of the International Motor Press Assoc. attended by Automotive Engineering.

Diesel price premiums

GM's Gary Arvan, Chief Engineer for the 6.6-L Duramax, noted the price premium for a turbodiesel on a heavy-duty pickup is about $8000. But that figure, he argues, buys the potential for 1 million miles (1.6M km) of operation with high torque and improved fuel economy. For these reasons diesel currently holds 70% of the HD pickup market.

GM also is offering 2.5-L and 2.8-L four-cylinder turbodiesels in the midsize Colorado pickups in Asia and the Brazilian market. The 2.8-L will be available in U.S.-market Colorado/GMC Canyon for the 2016 model year. And on FCA's light-duty Ram 1500, the successful VM Motori-built 3.0-L V6 diesel option commands a $3000 premium over the 5.7-L gasoline Hemi V8.

Volkswagen has long been in the dieselization vanguard. On its car models, the premium for a four-cylinder diesel is less definitive than on the U.S. pickups, because of the way its trim packages are arranged. The 2.0-L four-cylinder Clean Diesel model may be priced as little as a few hundred dollars above a gasoline-engine model on a Golf/Jetta and about $800 extra on Passat. But on the Touareg SUV, the price premium for the 3.0-L V6 diesel is about $7500. 

DTF's data shows the percentage of U.S. customers considering a diesel has risen to 39%. The average price premium they'd accept is in the $1200-$1400 range.

DTF also looked at a 54-month return on investment based on Energy Information Administration (EIA) data of $3.59/gal for regular gas, $3.85/gal for diesel in April 2013. This produced an estimate of $2300 in fuel savings for an SUV, although the price premium of the fuel vs. gasoline was at a seasonal near-low. The saving compares roughly with the price premium for the Chevrolet Cruze's 1.6-L turbodiesel.

VW's experience

Starting from an admittedly small application base for Class 1-3 vehicles, annual turbodiesel sales in the U.S. have shown a high percentage increase in the U.S. DTF's Schaeffer said annual sales rose 70% in the 2010-2014 period from 326,001 to 556,193 vehicles. This was despite a slowdown in 2013-2014 for VW/Audi as it phased in the Gen-3 version of its 2.0-L Clean Diesel with low-pressure EGR and variable valve timing. Those upgrades were added to the SCR (Selective Catalyst Reduction) technology that came in on the Gen 2 model introduced in 2011.

The third IMPA panelist, Marcel Zirwes, Manager of VW Group of America's Powertrain Product Office, said his company's customers attest to their vehicles achieving better fuel economy than the window sticker ratings. He attributed part of that to drivers doing more highway mileage than in the EPA city/highway (55/45) test cycles.

However, Zirwes also cited a series of Consumer Reports tests that showed the 2012-14 Passat Clean Diesel was the only one of five midsize cars the organization tested that delivered better fuel economy (by 3.0 mpg) than their EPA ratings.

Although VW's smaller diesel models deliver the highest mileage of any of its non-hybrid products (Jetta at 31 city/46 highway), most buyers are focused on midsize cars and SUV models, Zirwes noted.

He said the Passat four-cylinder diesel, which enjoys a 30% take rate, delivers about 50% better mileage (30 city/44 highway) than the 3.6-L gasoline V6 (20/28). For the SUV Touareg, the 3.0 V6 diesel's take rate (52%) is even higher. It results in a high-torque vehicle (406 lb·ft/550 N·m vs. 266 lb·ft/360 N·m for the gasoline version), as well as superior window sticker fuel economy—20/29 vs. 17/23 mpg. 

Only 11% of Beetle and 15% of Jetta buyers order the diesel—but it also goes into 34% of Golfs, 80% of Sportwagens—both comparatively low-volume vehicles in the U.S.

Fuel issues

A significant part of the better fuel economy of a diesel is the higher BTU content of the fuel (129,500 BTU for No. 2 diesel, 112,000-114,000 for gasoline). But the conversion efficiency of diesel also is higher. Zirwes said that comparing VW Passat's best gasoline engine with its diesel showed a 25% efficiency advantage for the diesel.

The available diesel fuel supply has been a question raised over the years, but DTF's Schaeffer said the U.S. presently is producing more diesel fuel than it uses. Excess production is shipped to the European market, which in turn ships excess gasoline production to the U.S.

The European imbalance is caused by the fact that over 50% of cars sold on the continent are diesels. In the U.S. the reverse is true, due in part to the relatively small diesel motor-vehicle population. Crude-oil supply and refinery capacity utilization (motor fuel vs. heating oil) are other issues for the diesel industry. According to Marathon Oil Co., there is a 6-8% possible swing in gasoline vs. diesel production at the typical refinery.

Further, the EIA states U.S. home-heating-oil usage has been on the decline, from 20% in 1980 to just 6% by 2009. Home heating oil and diesel fuel are made from the same crude fraction, so lower heating oil use increases diesel fuel availability. The far lower cost of heating with natural gas vs. oil, $1024 vs. $2525 in 2012, according to the EIA, would normally be expected to accelerate the trend. But it requires running gas pipelines to areas not presently served. A $10,000 conversion cost also is an impediment.

Diesel's potential growth in the U.S. faces two headwinds: the fuel's average retail-price delta vs. gasoline ($0.42/gal more expensive), and the initially higher cost for the engine, according to Schaeffer. Not everyone will wait for the eventual payoff, hence his "not for everyone" assessment.

VW's Zirwes said that improvements in SCR and DPF (diesel particulate filtration) are the approaches that enabled the Clean Diesel to meet the new LEV-III/Tier 3 regulations for light-duty vehicles in 2014, ahead of the mandate.

He told IMPA that SCR was 90% efficient when introduced in 2011. "Now 95% is standard and we're going to reach 97%," he said. 

Although GM diesels are validated for use with B20, a biofuel mixture that contains 20% biodiesel, Duramax engineer Arvan conceded that biodiesel does present problems. In storage it oxidizes and degrades at a rate that requires careful production and distribution management.

For this reason DTG supports a 5% (B5) blend as a manageable percentage with the potential for crude oil and CO₂ emissions reduction.

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