Audi Clean Diesel

By Ian Grasso

03.04.2008

In their varied responses to questions regarding the future of automotive powertrains, executive’s statements usually have a common pattern: hybrid, turbo, fuel cell, ethanol, diesel, or some amalgamation of these technologically-advanced sounding nouns.

Audi is keeping it relatively simple by making a small wager on diesel in their Q7 SUV with the 50-state compliant TDI clean diesel engine. It is a bold move to bring this technology to the U.S., especially when diesel prices are far and away higher than gasoline, and Audi is suffering a rare bludgeoning in sales of its large SUV.


According to Edmunds, Audi is claiming that the Q7 TDI unofficially achieves about 25 MPG, which is a large improvement over the 16 MPG of the (premium only) gasoline powered version. However, the TDI system sounds expensive – it includes variable geometry turbocharging (which you can learn about here), direct injection, a load of sensors and computers, and the AdBlue system. Adding this expensive system to an already expensive vehicle with diesel prices already cracking $4 dollars a gallon is a risky move. Especially when Audi has suffered a 35% sales drop on the Q7 year to year in February – signaling what might be a huge decrease in demand for its Toureg/Cayenne derived luxo-boat.

AdBlue


AdBlue is a fancy trademark for selective catalytic reduction, which (break out your college chemistry book) uses urea to reduce nitrogen monoxide to oxygen, water, and carbon dioxide in the presence of a titanium or vanadium ceramic catalyst (the catalytic converter). While AdBlue makes the vehicle LEV-compliant in all 50 states, it requires a urea fill-up at every oil change. Of course, urea is the major component of yes, urine, and for years was derived organically from just that. Unfortunately, most urea is now made synthetically in a lab, so the new Audi will not provide an alternative to the rest stop on those long cross-country drives.

The move by Audi to bring its clean diesel technology to the United States is certainly a move forced by both changing market conditions and regulation. Volkswagen AG, which includes Audi, is in a bad spot for current and future CAFE fleet average fuel economy – so it only makes sense for the company to turn to its bread-and-butter TDI diesel engines that sell so well in other markets.

But while I love the performance characteristics and fuel economy of diesels (407 lb/ft of torque!), the refinery and supply system in this country is not yet set up for the fuel. The high cost of diesel here is a supply and demand problem. There is a high demand for diesel in commercial trucking and a currently limited supply due to the consumer preference for gasoline. This results in diesel being, on average, 50 cents more expensive than gas per gallon. It is common in most areas for there to be few or no diesel pumps at the local station, forcing a trip out to the truck stop for fuel. This opportunity cost of diesel, when added to the real cost of the fuel, is cause for all but the most devoted oil burners to prefer gasoline.

The major caveat some might raise is that the current gasoline powered Q7 requires premium gas, making the price differential between the two fuels minimal. Unfortunately for both Audi and perhaps the engine, most people, not even the wealthy, do not follow the advice on the gas cap when fuel costs are considered high – they use regular instead of the prescribed premium. So unless Audi can bring the price point of the TDI close to that of the gasoline Q7, the actual savings in purchasing an oil burner will be limited except over a very long term of ownership.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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3 Comments

  1. I thought when of the reasons diesel is more money in the US is that fuel is taxed on energy content and diesel has greater energy content per gallon than gasoline.

  2. I have never heard of this reasoning for the federal fuel excise tax. The tax on gasoline is lower, 18.4 cents a gallon compared to 24.4 cents for both diesel and kerosene (jet fuel). This alone would not account for the large difference in price between the fuels. Of course, there are various state excise taxes on fuel but the average difference between gasoline and diesel taxes at the state level is only about 2 cents, according to the EIA.

    It is, however, true that diesel and kerosene contain more hydrogen bonds, and therefore, more energy than gasoline. Diesel, when burned in test conditions releases about 15% more energy than gasoline. The difference in federal tax between the two fuels is 24.5%, so I don’t know if what you said is correct in this country.

  3. You know, I remember reading that same thing somewhere, about the energy content being taxed. I have no idea where I read it or if was true. But I do remember reading it somewhere.

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