The Future of the Automotive Diesel Engine Industry is Brighter than it Appears

The Future of the Automotive Diesel Engine Industry is Brighter than it Appears

The global automotive diesel engine industry has gotten a lot of bad press since 2015, when Volkswagen was caught cheating on emissions tests.  Company-installed software allowed diesel automobiles to meet US standards for nitrogen oxides (NOx) in testing but emit up to 40 times more pollutants in real world driving conditions.  As the Volkswagen emissions scandal progressed, many media outlets began to question the future viability of automotive diesel engines. 

Subsequent events made matters worse.  In late 2016, a number of major cities around the world experienced severe smog, which was blamed on diesel engine emissions.  For example, the mayors of Athens, Madrid, Mexico City, and Paris all announced in December 2016 that their cities would ban the use of diesel automobiles and vans by 2025.  Then, on January 12 2017 the EPA accused Fiat Chrysler of also rigging its diesel engines to cheat on emissions tests. 

Many in the media called into question the ability of diesel engines to comply with emissions standards.  As in the past, diesel engines were widely portrayed as a dirty, retrograde technology.  However, this view is oversimplified and lacks nuance. 

Multiple Factors Make Diesel Engines Competitive in the Long-Term

Diesel engines will continue to be viable for the foreseeable future for several reasons.  First and foremost, diesel models will continue to account for the overwhelming majority of global medium and heavy motor vehicle engines because they offer greater torque, and are more durable and fuel-efficient than comparable gasoline engines.  Diesel engines also have a longer lifespan, lower maintenance requirements, and higher residual value.  Second, diesel engine fuel is less expensive than gasoline in numerous countries, helping make diesel light vehicles popular in these areas. 

Third, while electric and hybrid vehicles are expected to capture market share from diesel models in mature markets with demanding emissions regulations, this will only have a limited impact on demand at the global level.  The infrastructure required for widespread electric vehicle is still lacking in most countries and will take years to develop.  Advanced diesel models can also get better mileage than some gasoline-electric hybrid vehicles. 

Finally, the automotive diesel engine industry has a long-tradition of technological innovation.  Since 1990, the design of diesel engines has improved considerably, and a wide range of performance-improving and emission-cutting technologies have been introduced.  Portraying diesel engines as a technology of the past ignores this record of innovation. 

New Diesel Models have been Well Received

Looking forward, the future for light vehicle diesel engines is bright.  A number of recently introduced diesel light vehicles have been very well received by consumers, and several manufacturers have announced plans to expand their diesel model portfolios.  General Motors is one notable example.  Because of the widespread success of its diesel Chevrolet Colorado and GMC Canyon light trucks in the US, GM has announced plans to offer a new turbodiesel Chevrolet Cruze compact car in 2017 and a diesel Chevrolet Equinox sport utility vehicle (SUV) in 2018.  Ford has also noticed the growing popularity of light diesel trucks and plans to offer a diesel F-150 in the US in mid-2018.  Japan’s Mazda announced that it will introduce a diesel version of the CX-5 SUV in the US in the second half of 2017. 

Success through Technological Innovation

Motor vehicle companies around the world are currently developing the next generation of diesel engines, which will be more competitive with other technologies.  While some new models will offer superior performance, others will be more environmentally friendly.  For example, in May 2016 BMW announced that it is developing a high-performance, 394-horse power (hp) diesel engine for its 750d xDrive luxury sedan.  The new engine will have two low pressure and two higher pressure turbo chargers and a new fuel-injection system that operates at over 36,000 pounds per square inch (psi), making it more powerful and efficient than the previous model. 

In 2015, Toyota introduced a 2.8-liter 1GD-FTV direct-injection turbo diesel engine combines a common rail fuel injection system, an SCR system, exhaust gas recirculation (EGR), a variable geometry turbocharger, and Thermo Swing Wall Insulation Technology (for thermal efficiency), which has 25 percent more torque and 15 percent more fuel efficiency.  This engine, which eliminates 99 percent of NOx emissions, is able to comply with emissions standards around the world and operates more quietly than other diesel engines.  Production of these engines began in 2016. 

In early 2017, General Motors announced plans to essentially exit the European automotive industry by selling its Opel/Vauxhall subsidiary and GM Financial European operations to PSA Group.  However, the company’s Torino engineering center in Turin, Italy was not part of the deal, attesting to the importance of both diesel automobiles and technological innovation to GM’s growth strategy. GM’s Torino engineering center develops diesel engines and was responsible for designing the engine used in the Chevrolet Cruze Diesel compact car and in the Chevrolet Equinox Diesel being introduced this spring. 

Despite the bad press it has received recently, the automotive diesel engine industry will continue to grow, and motor vehicle companies will invest heavily in associated research and development.  To find additional information about technological innovation in the global diesel engine industry, see The Freedonia Group’s Global Diesel Engine Market study. 

About the Author:

Gleb Mytko is an Industry Analyst at The Freedonia Group, where his work covers the global automotive, transportation, and machinery markets.