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Westport Fuel Systems Uprising With New Bus Sales, Truck Sales Set To Rocket About: Westport Fuel Systems, Inc. (WPRT), Includes: CLNE SummaryWestport Fuel Systems is solidifying sales deals for the next several years in California. California massively converts and re-converts to CNG and RNG engines. County and City agencies testing out one or two engines may each buy hundreds. American cities are converting their bus fleets to the new Near-Zero NOx Westport Fuel Systems (NASDAQ:WPRT) engines. This represents a major boost to Westport revenues. LA Metro, the agency that manages the Los Angeles County bus system, recently voted to purchase 295 near-zero NOx buses, with an option to purchase another 305 buses. The buses run on compressed natural gas or renewable compressed natural gas (RCNG). Some weeks before this vote, Clean Energy Fuels (NASDAQ:CLNE) announced that it had struck a deal to supply renewable natural gas to LA Metro. At that time, I emailed LA Metro and asked them if they were going to convert the entire bus fleet, which I assumed to number 2200, over to the Westport Fuel Systems near-zero NOx engines. LA Metro kindly replied to me with this email, whose entirety is quoted here:
NGT News called the initial purchase of 295 buses "Massive" in their headlines. This is entirely true for a company as small and struggling as Westport Fuel Systems. Now consider that LA Metro's entire CNG bus fleet will be converted to the new engine over the course of seven years. "Massive" sales of the new engines will be made to this one agency every year. San Antonio, Texas, one of the largest cities in the nation, is purchasing hundreds of Near-Zero NOx buses. Santa Monica, California has committed to buying 100 Near-Zero NOx Westport buses. Riverside, California, another large Southern California city is converting its all-CNG fleet to the Westport buses. The buses are manufactured by a Cummins-Westport joint venture, so a major U.S. truck corporation is backing the whole transition effort. With 56,000 transit buses being run in the United States, the future of busing is NOT diesel. And in fact, the rest of the world seems eager to convert away from diesel even faster than the U.S. The total number of buses worldwide is likely around 8 million. The rest of the world gets around on buses. The global market for buses will expand by nearly 5% each year through 2021 to well over 600,000 per year, and a growing portion of annual sales are for non-diesel buses. The bus market will likely follow in the footsteps of the sanitation truck market in the United States, where most new trucks run on natural gas. Yes, it's an image thing; we deal in trash, but our engines run clean, one might say. But much of the transition to natural gas and electric will be mandated by local and provincial governments, as well as visionary national governments in Europe and Asia. The vast majority of the buses bought to replace diesel buses have been natural gas buses, preferably RCNG buses, as they reduce greenhouse emissions by a comparable amount to electric buses powered by grid electricity. And the conversion to something not diesel has everything to do with lowering emissions and NOx pollution. So far, two of the biggest electric bus companies operating in the United States, Proterra and BYD, have sold and delivered a little more than 200 buses. The $750K price tag is very steep to pay for a relatively untested technology system. In Europe, BYD recently surpassed orders for 100 buses. In contrast, Westport recently widely expanded its partnership with Suzuki in Italy to convert gasoline-based vehicles to natural gas-powered vehicles. The two have already converted over 12,000 engines to natural gas or bi-fuels orientation. A similar Westport deal was struck with Honda in Turkey in September. In India, one city plans on buying 400 CNG buses along with 400 diesel buses. Here is the response from one pedestrians' organization; it's telling:
Enough about buses. The truck market easily overshadows the bus market, and Cummins-Westport is working to convert heavy-duty trucking to natural gas, much like sanitation trucks have converted. One of the largest concentration of trucks in North America is at the ports of LA and Long Beach, where about 16,000 trucks operate. The two cities are now revising regulations to require the conversion of high-polluting trucks to low or zero-polluting trucks. Truck drivers, some of whom may soon strike for better pay, are stuck in the middle, fearful of paying more for nat gas and electric trucks. The natural gas vehicle supporters claim that the best compromise between environment and union workers is the RCNG trucks made by Westport. The cities will make their ultimate decision this summer. Whether the cities decide that trucks must be zero-emissions by 2035 (one possibility) or if they decide on something less stringent, Westport will almost certainly be selling thousands of trucks to port operators over the medium-term. And of course, that is just one high-pollution port. How about Houston-Galveston? Or New York City? As California goes, so goes the nation. Recently Barnum Bailey Ringling Brothers went out of business. Just enough people felt just queasy enough about the circus's treatment of elephants to completely shut down traditional circus culture in America. The same thing will happen with diesel; no need for hugging trees, as enough city and state governments feel just politically and ethically uneasy about diesel pollution and cancer that the diesel bus and truck business will eventually cease to exist. What replaces it worldwide will be a combination of natural gas and electric vehicles, depending on costs and regulations. One key will be the increase in supply of renewable natural gas, which lowers total emissions to a degree comparable to electricity from the grid. After all, electricity from the grid still largely comes from burning coal and natural gas. With energy giants like BP rumbling their way into RNG production, the supply will balloon, one beneficiary being Clean Energy Fuels . Demand for Westport's near-zero NOx vehicles is similarly inflating. Disclosure: I am/we are long WPRT, CLNE. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. |
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