Guest Commentary: Diesels in The U.S.

Forbes.Com Editorial Commentary: By Jerry Flint

With gasoline in the U.S. likely to stay north of $2 per gallon, I am hearing more and more discussions about saving fuel. Such dialog always comes around to diesel motors. Practically everyone seems to like the idea, but diesels still aren't happening in this country. Yes, a few thousand German diesel cars are being imported, but that's it. Even the fuel-conscious Japanese don't sell diesels here. Instead, they are focusing on hybrids.

Diesels have both pluses and minuses.

Diesels burn fuel that's similar to the oil in a home furnace. The engines get about 30% more miles per gallon on average than gasoline engines. Diesel motors emit 15% to 20% less carbon dioxide per mile driven than gasoline motors. Many scientists believe that carbon dioxide contributes to global warming; if they are right, diesel engines are better in this respect than gasoline engines.

Half the new cars bought in Europe today carry diesels, and this percentage will probably grow as manufacturers expand production capacity. Due to higher taxes, gasoline costs around $5 a gallon in Europe. But the taxes on diesel fuel are much lower over there, so diesel is sort of a bargain.

Diesel engines have become much better than they used to be. They aren't as noisy or smelly, they are easier to start and they have lots of low-end torque so they deliver acceptable acceleration. Diesels have been used in big over-the-road trucks for decades. Many car companies such as Volkswagen, Mercedes, BMW, Peugeot, Renault and Fiat have plenty of experience in building diesels.

Those are the advantages. Now here are some drawbacks:

Diesels cost more to build. These motors need to be heavier and stronger than gasoline engines because they operate at greater compression ratios. I figure that even the smallest diesels for passenger cars cost $1,000 to $2,000 more to manufacture.

Ford Motor had a program with Navistar International to create a diesel for the best-selling Ford F-150 pickup. I hear that the project was killed before production began because the diesel cost an extra $4,000 to $5,000 and Ford didn't think the market would tolerate this expense. The head of a German luxury car builder told me that his company knocks $1,000 to $2,000 off the price of their car diesels sold in Germany. This means that they charge a smaller than normal premium for the diesel.

Despite the recent refinements, diesel motors are still are noisier than gasoline engines and the smell hasn't been completely eliminated. That's my opinion.

The newest and best diesels in Europe run on clean diesel fuel from which most of the sulfur has been removed. The American oil companies have resisted this change, but are now under a government mandate to remove sulfur starting in 2006. So we've got to wait until then to be able to run the cleanest diesels here. Diesel fuel sold in the U.S. needs other improvements to be as good as the fuel sold in Europe. The shortage of refining capacity in the U.S. only adds to this problem.

While diesels come out slightly ahead on some gaseous emissions, they aren't as clean when it comes to oxides of nitrogen and particulate emissions. Our 2007 standards are tougher than the European regulations. The U.S. Environmental Protection Agency says that long-term exposure to diesel fumes is likely to pose a lung cancer hazard, and that the particulate emissions from diesels are associated with increased risk of heart and respiratory problems. In fact, California, New York and a few other states bar even the latest diesel cars from VW and Mercedes.

The top engine executives at General Motors and Ford say they are not sure if they will be able to meet the future tailpipe standards for diesels. It is worth pointing out that automakers must not only meet pollution regulations when a car comes out of the factory, they must also warranty pollution-control equipment for 100,000 miles. U.S. car companies haven't completely ruled out diesels, but it's tough to authorize a $1 billion investment if you aren't absolutely sure you can meet the standards.

I think the biggest reason why diesels haven't caught on here is that old Detroit really doesn't know much about diesels. Most of the U.S. auto executives I've met don't like diesels and they have discouraged their European subsidiaries from pushing diesels over there, even as the diesel boom started. Thus Ford and GM fell behind everybody else in Europe. Now Ford is getting help from Peugeot, and GM from Fiat and Isuzu.

Right now Americans can buy a diesel in Volkswagen's New Beetle, Golf, Jetta, Passat and even in the Touareg sport utility vehicle. Mercedes is putting some into the E Class car. And Chrysler, which, like Mercedes, is part of DaimlerChrysler , will import diesels next year for 5,000 Jeep Liberty SUVs. But add them all together and I figure fewer than 50,000 diesels will be sold here in 2004 against 200,000 hybrid vehicles.

So what's going to happen? I think that the domestics will put diesels into their standard-size pickups (diesels are already offered in the super-big pickups). We'll also see diesels in the biggest, thirstiest SUVs. Suppliers--International, Isuzu and Cummins --make the diesel engines for Detroit. In 2006, when the diesel fuel is cleaner, I think that some diesels will find their way into some U.S. light trucks.

But I don't think Detroit will ever participate in a meaningful way in the U.S. passenger car diesel market.