The Volkswagen Group has stopped development on new cars powered by compressed natural gas. CEO Herbert Diess recently told top executives the powertrain would be phased out so the automaker had more to spend on its electrification shift, according to German business newspaper Handlesblatt.
Diess added that CNG development costs "are higher than potential revenues,” the report said. VW has committed to spending almost $50 billion on electric vehicles, more than any other automaker. The result of that investment will be at least 70 electric cars.
The phase out will not affect current production of VW Groups CNG cars. Volkswagen’s head of light commercial vehicles head, Thomas Sedran, said the recently unveiled fifth-generation Caddy will be available with a CNG powertrain. VW Group Spanish subsidiary Seat has unveiled a CNG version of the recently new Leon compact car.
At the 2018 Geneva auto show VW Czech subsidiary Skoda presented the Vision X crossover concept that featured a gasoline-CNG engine supported by an electric motor powered by a 48-volt battery.
News of the potential end of CNG cars at VW Group comes just two years after former Seat CEO Luca de Meo said “CNG has great business potential for the automotive industry.” De Meo, who takes over as Renault CEO later this year, was VW Group's de facto CNG chief because his brand was assigned responsibility for developing CNG technology.
A Seat source told Automotive News Europe that CNG has always been viewed as a transition technology. The powertrain is only popular in Italy, which accounted for 38,615 out of 68,581 registrations in Europe last year, according to industry association ACEA.
With 19 CNG models in its range, VW Group has Europe's largest portfolio. In Italy, VW Group models held nine spots on the top 10 sellers' list last year, according to importer association UNRAE. The VW Golf was No. 1 followed by the CNG versions of the VW Up and Fiat Panda minicars.
The CNG and liquefied petroleum gas (LPG) markets have historically been the main alternatives to gasoline and diesel models in Europe. Neither alternative fuel has ever caught on Europewide.
The LPG market is bigger than the CNG sector. LPG sales rose 11 percent to 180,229 last year, according to ACEA. Italy also leads the LPG market. The country's registrations were up 8.7 percent to 135,484 last year. Second-place Spain had just 19,715.
The main players in the LPG market are Fiat Chrysler Automobiles and Renault. Last year the Duster from Renault budget brand Dacia was Italy's top-selling LPG model followed by the Panda and Lancia Ypsilon minicars.
While VW Group is moving away from the CNG niche, Renault earlier this month announced it would offer the Clio and Captur small cars with its dual-fuel powertrain combining LPG and gasoline.