By on April 18, 2012

Compressed natural gas may cost the equivalent of $1.89 per gallon of gasoline, but retrofitting your GMC Sierra or Chevrolet Silverado will cost you $11,000 – and GM still think it will save you money.

According to GM, “…Customers could save $5,000 to $10,000 over a three-year period, depending on their driving habits.” How GM came to this number is a bit of a mystery, and we’re doing some digging to try and figure it out – because it’s a conversion, there is no EPA rating on it and data is difficult to find.

What we did notice was this little tidbit

Businesses are looking for ways to control their costs while reducing vehicle emissions and becoming less dependent on fluctuating gas prices. The low cost of ownership makes these vehicles a realistic solution,” 

$11,000 is a lot of cash for a business to tie up in one truck. In the absence of any data on how many miles it would take to break even (as well as the gas price number used to come up with it), it appears that GM is hoping to sway buyers with the prospect of unstable or rising fuel prices in the future. Emissions are almost certainly a secondary concern. It’s a wonder that GM didn’t promote the fact that CNG can legitimately claim to be a domestically sourced form of clean energy, seeing as they (barely) did back in March.

We contacted GM to try and get more information on the CNG conversion, and more specifically, how they came to their savings figures. Please leave all accusations of anti-GM bias, skulduggery and wrongdoing in the comments section.

EDIT: General Motors says that they calculated the savings based on a truck driving 24,000 miles a year, with gas prices at $4 per gallon and a CNG gallon equivalent of $2. GM’s Mike Jones, Product Manager for Fleet and Commercial Operations, thinks that there will continue to be “…a pretty significant price separation…” between gasoline and CNG.

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31 Comments on “GM’s Pickup Truck CNG Conversion Costs $11,000...”

  • avatar
    Felix Hoenikker

    Just one comment – Nuts!

  • avatar

    Worth every penny.

  • avatar
    Chicago Dude

    Hi Derek,

    A business owner is going to look at the Net Present Value of the conversion to see whether to lock up $11,000 right now.

    So, is the NPV of a converted Silverado more or less than $11,000?

    Let’s see…

    If you have a constant yearly fuel savings of $3333 per year ($10,000 over 3 years as claimed by GM):

    If your discount rate is
    3%: NPV is $12,389 after 4 years.
    4%: NPV is $12,098 after 4 years.
    5%: NPV is $11,818 after 4 years.
    6%: NPV is $11,549 after 4 years.
    7%: NPV is $11,289 after 4 years.
    8%: NPV is $11,039 after 4 years.
    9%: NPV is $10,797 after 4 years.

    Now, if your yearly fuel savings are the lower bound ($5,000 over 3 years) = $1667 per year, then:

    If your discount rate is
    3%: NPV is $11,701 after 8 years.
    4%: NPV is $11,223 after 8 years.
    5%: NPV is $11,848 after 9 years.
    6%: NPV is $11,338 after 9 years.
    7%: NPV is $11,708 after 10 years.

    So… If you can really save $3333 per year, you only need 4 years for it to be a good business decision. Do most business buyers keep a work truck for more than 4 years? Highly likely.

    On the other hand, if you are only saving $1667 per year, it doesn’t look good at all.

    If I were in the market, I would be really interested in discovering which side of the GM forecast my use of the truck would fall under. One side is a no-brainer, the other side is a definite NO.

  • avatar

    $11K is an outrageous price for a gas conversion but I’m sure once Ford and Chrysler have competing products that the resulting competition will cut that price in half.

    • 0 avatar

      It isn’t outrageous. It is very fair. The conversion cost today is $10K to $15K per unit.

      Oh, and if Ford could do it for half price, they would have done it AGES ago on CNG Panthers to the taxi/livery industry.

      I looked into doing CNG conversion(s) of my vehicle(s) and was stunned how much it costs. If our ‘guberment wants to hand out $7.5K tax credits to reduce energy independence I would rather they spend the money encouraging CNG conversions for the average slob. But even at $3.5K post rebate the math is hard to justify for many people.

      It is expensive to do the conversion.

      • 0 avatar

        GM is only using type 3 aluminum tanks with wrapping. Hardly as expensive as type 4 carbon fiber tanks. With steel type 1 tanks I could make a $2000 CNG setup with room for 15 gge setup.

        This CNG option is double what it costs in parts and installation costs. GM though priced it right to make a hefty profit as they and consumer try to measure the cost benefit of using CNG vs. gas and want consumer to pay the most for the option. One GM executive has said publicly if gas went below a certain point the chevy volt wouldn’t save users any money and, hence not sell.

  • avatar

    It’s expensive, but it is worth it. Gasoline is ~$4.29 a gallon. CNG is $2.40 per GGE. Let’s say the truck gets 13mpg. Over the span of 100,000 miles, you would save > $14k. If you use the quoted CNG price of $1.89 per GGE, then you would save > $18k

    As with hybrid cars and EV’s, it’s not just the theoretical savings. It’s also a hedge against future gasoline price swings. Natural gas price is at an all time low. Oil price is near an all time high. Which way do you want to bet?

    • 0 avatar

      “Natural gas price is at an all time low. Oil price is near an all time high. Which way do you want to bet?”

      That oil prices will go down and natural gas prices will go up. That’s the nature of commodity price behavior.

      • 0 avatar

        Sure, but it could take a long time:

        For the TL;DR crowd:
        * There’s a glut of natural gas.
        * The drillers keep drilling to hold onto their leases.
        * The drillers can make enough money off of the drilling byproducts (pentane, butane, etc) that they could almost give away the natural gas and still turn a profit.

        All of this leads me to believe that we’ll have cheap natural gas for a while. What’s the difference in fuel economy and engine output on natural gas versus gasoline?

      • 0 avatar

        There seem to be more, not fewer, natural gas plays. That should put downward pressure on natural gas prices.

    • 0 avatar

      In California, specifically Los Angeles which is a very large car market (I’m told the largest truck market) to get 1 GGE of CNG it is $2.89 vs. $4.03 for 1 gallon of gasoline.

      I wouldn’t make the initial investment to get a CNG option at that price mentioned in the article. I wouldn’t be able to fill it up all the time so the minor cost savings wouldn’t be near the maximum potential savings. Plus since CNG isn’t as dense energy wise the mileage and power of my vehicle would drop at least 15%. (CNG civic HP is 110 vs 140 for the gasoline version). Thus the price difference is drastically eroded. Ergo for me at least 30 years to pay off the option….

      In Utah I hear people only need to pay $1.30 for 1 GGE, while cheaper, again the power penalty and lower mileage kills the option as remotely viable.

  • avatar

    But what does it cost for an aftermarket conversion? 11k sounds like a lot… Maybe the same guys who prices the $400 mud flaps priced this.

    • 0 avatar

      After market conversions are very common in the taxi/livery industry as many cities, airports, and ports of entry are forcing “green” requirements on the industry and the average businessperson doesn’t want to be picked up in a Prius. The cost? $10K to $15K per unit.

  • avatar

    I apologize if I am too lazy to Google this. How much more is a CNG Civic compared to a regular Civic? How much of the $11,000 premium can we expect to get back when we sell the truck after 100,000 Miles? How much do third party conversion kits for trucks cost now?

    • 0 avatar

      The last Civic GX we bought new was ~$5000 over a roughly comparably equipped LX model, before tax credits. I dont have an idea why the GM conversion would be more than double. BTW, we got every penny back, and more, at resale time.

    • 0 avatar

      Third party conversions cost $10K to $15K, nikita is correct that the premium is about $5K for a CNG Civic.

  • avatar
    Robert Schwartz

    It would be much better if Shell invested the money in a big GTL plant that would churn out liquid hydrocarbons that would not require any adaptation.

    But, where did you get ng being equal to $1.89 gasoline. Right now, natural gas at Henry Hub is about $1.90 per million BTUs. One million BTUs = 1055 MJ. 1 Liter of gasoline = 34 MJ so 1 gal US of gasoline = 129 MJ and 1 MBTU of gasoline is 8.2 gallons of gaoline. (1 imp gal = 155 MJ and 1MBTU ng = 6.8 imp gal of gasoline).

    The punchline here is that the 16 gallons of gasoline it takes to fill up my Accord costs me all most $50. The energy equivalent of that is $4 of ng.

    • 0 avatar

      I have feeling this will be a “oh, dang, I knew that” the minute you answer this but, what is MJ? BTU= British Thermal Unit.

    • 0 avatar

      The retail price of CNG at the pump is about $1.89 an equivalent gallon of gasoline. There are taxes, compression cost (expensive electricity in CA), overhead of operating a station and maybe profit. We dont pay for gasoline by the price of crude in energy content alone.

  • avatar

    It certainly seems that NatGas suppliers should be offering incentive programs for businesses to buy/undergo conversions. My residential supplier offers incentives to upgrade my furnace to a more efficient model, why not vehicles? It would certainly help underpin demand, and thus prices.

    • 0 avatar

      Completely agree. I had looked into converting my commuter vehicle last year (plan to keep 5 to 6 years) and was stunned at how much it cost. Researched a number of providers but the lowest cost I could fine was around $12K.

      • 0 avatar

        Those conversion prices are insane. When I was stationed in Europe during the 1970s I bought a used LNG/gasoline Opel to scoot around in on the Heidelberg autobahn, to and from work. Ran great.

        Granted that was in the days before emission and computer controls, and it was only a six cylinder engine, but still, it wasn’t that complicated.

        The LNG was injected under the throttle body and gasoline fuel injectors were disabled by shutting off the gas pump with an electrical switch.

        Once you ran out of LNG you switched to gasoline by manually flipping the electrical switch in the glove compartment to power up the electric gasoline pump.

        There was also a manual valve to turn the LNG on/off, in addition to the relay valves that shot LNG into the engine under the throttle body.

        Eleven grand for a conversion? Maybe we need to have some Europeans, i.e. Germans, Dutch, Belgian or French auto mechanics show us how its done. LNG/CNG and LPG conversions are routinely done in Europe. And they don’t cost $11K to do, either.

      • 0 avatar

        You sure that Opel was not LPG instead of LNG?.. HUGE difference in conversion cost.

        What are the tax incentives for fleets to go CNG?

        Frito-Lay just announced that they are buying more CNG large trucks for their delivery fleet, very quick payoff.

      • 0 avatar

        Herm, that Opel ran on gasoline or Liquified Natural Gas, the cold variety in the thermos bottle tank. Although LNG was cheaper than Esso regular gas with BX gas-coupons, I got farther on gasoline than on LNG.

        Here in my area, several ranchers use 1-ton pickup trucks that run on LPG with a 50-gallon tank in the bed. You can smell them against the wind.

        Which brings to mind, if Compressed Natural Gas conversions cost $11K, why not convert to LPG instead since there is already a very large infrastructure for LPG and the conversion of natgas to LPG is relatively simple and GTL suppliers plentiful?

  • avatar

    This is great. Independent small fleet owners are already converting on their own so I think it’s safe to say there is enough return. Also as the volume goes up the cost comes down. Keep the price profitable, make money, and develop a market, what a concept for GM. And like all other prices it’s negotiable.

  • avatar

    According to the photo, I like the Chrome bumper. Even the “Jay Leno” chin ends are subdued.

    That’s all I can add…

  • avatar

    Dang, and I thought the latest fad was bio-diesel.

  • avatar

    Does anybody here know if there are periodic testing/recertification requirements for the CNG tanks, much as there is for SCUBA tanks and compressed gas cylinders?

    That may affect the payback period slightly as well.

    I’m just thinking down the road about these CNG vehicles becoming more widely available on the used market, and if they are going to link vehicle registration to having a current tank cert.

  • avatar

    The $11,000 price is steep but for people who drive 30,000 miles a year it would be a good option. If these big trucks average 15 mpg then that would be 2000 gal per year at $2 savings is $4000 a year. The return on investment is less than 3 years. The CNG option makes the resale value higher also. Look at the prices for a 2003 cng Silverado (the last full year GM made cng. The big thing is the fluctuation in fuel prices and the expectation for the future. There is a good site that explains this
    The problem isn’t the price of the truck, it is the availability of places to but cng!

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