The Chinese natural gas commercial vehicle (CV) market is on an upward trend due to the improved economy, infrastructure development and government subsidies, according to a new report from Frost & Sullivan.
With the Chinese government implementing and supporting the new energy resource policy launched by the Department of Science & Technology and State Environmental Protection Administration, the report says the prospect for compressed and liquefied natural gas manufacturers looks bright.
The study, which covers medium- and heavy-duty natural gas trucks and buses, finds that the total natural gas CV sales volumes stood at 78,200 units in 2013 and estimates this to reach 246,000 units by 2020, at a compound annual growth rate of 17.8%.
‘The central government is promoting green transportation in more than 100 cities within China, and every regional government is adapting and coordinating accordingly,’ says Ming Lih Chan, a research associate at Frost & Sullivan. ‘In fact, Shanghai, Chengdu, Xinjiang and Hebei have already replaced more than 85 percent of their existing fleets with NG buses.’
However, the report says the supply of natural gas and components of automobiles that use this fuel continues to be limited. Main issues revolve around the geological structure of the country – gas reserves are deeper than in the U.S. – and technical problems surrounding energy supply, quality control and assurance of the fuel.
As a result, the report says many fleets are operating in markedly tight conditions in order to keep up with the government's natural gas infrastructure plan. The study says this, along with the high cost of natural gas technology components in commercial vehicles, acts as a major deterrent to expanded usage.
Furthermore, the report says poor consumer perception of natural gas technology and the lack of filling stations in China have also set back the market. Nevertheless, the study says improving performance of natural gas CVs – and an expected increase in the number of filling stations from the 4,000 in 2013 to 18,000 by 2020 – will do away with the initial apprehensions.
‘NG supply shortages are also set to become a thing of the past due to the large shale gas reserve base in China,’ notes Chan. ‘Not only will this boost the value proposition of NG commercial vehicles, but it will bring down NG prices.’