American car companies are moving ahead with a plan to produce natural gas powered cars and trucks for public fleets in state-sponsored efforts to create a wider public market for the vehicles.

Representatives of the Big Three carmakers, and Honda, as well as auto dealers and companies that convert conventional engines to run on compressed natural gas, met with leaders of a consortium of states in Oklahoma City this month to discuss a request for proposal that has been issued by the states to the car makers.

The carmakers have been invited to bid on production of seven vehicle categories from compact cars to four-ton trucks to cargo vans. The bids are due by September 7 and will be announced in early October, based on demand from participating states and other levels of local government.

The RFP follows a memorandum of understanding initially issued by four states late last year, and now signed by 10 others, calling on the carmakers to produce CNG vehicles that would be purchased by state, county and municipal fleets, creating demand for the vehicles and, they hope, stimulating their increased use by businesses and individuals.

A total of 22 states have now joined the RFP process, and all others, plus counties and municipalities, are welcome to join, said Oklahoma’s Republican Governor Mary Fallin, who has led the initiative, along with Colorado Governor John Hickenlooper, a Democrat.

In the interests of stimulating public demand for the vehicles, the RFP requires that NGVs produced under the initiative are comparably priced to equivalent gasoline models, and that they are subject to the same standards of reliability and warranty.

“More people are becoming aware of what we are doing with this initiative to create demand for CNG vehicles,” Gov. Fallin told Breaking Energy.

Soaking up each region’s gas

Natural gas vehicles are a potentially major source of demand for the current abundance of shale gas that’s being produced by states including Oklahoma, Colorado, Wyoming and Pennsylvania, all of whom have signed the MOU.

Low-priced natural gas could save money for cash-strapped state and local governments while helping them meet federal clean-air standards, and reducing US dependence on volatile sources of foreign oil, the initiative’s backers argue.

But widespread adoption of NGVs is challenged by a shortage of natural gas filling stations, of which only about 1,000 currently exist nationwide, Gov. Fallin said in an interview.

She said public acceptance of the vehicles – which are typically used currently by fleets such as transit, refuse and delivery services — is subject to a “chicken-and-egg” question over whether to build the vehicles or the refueling infrastructure first.

“We hope to create market demand so that there will be more infrastructure built,” she said.

The number of NGVs resulting from the initiative won’t be known until the RFP bids are in but Gov. Fallin said a total of 5,000 vehicles built in the first year would be seen as a success.

One automaker has indicated that 2,000 orders for a sedan car would be enough to spur production of such a model for the private market, she said.

Robert Schmitt, Director of Fleet Operations for Chrysler, said the August 8 meeting was an opportunity for automakers and other interested parties to ask questions about the RFP process. He said Chrysler has no specific targets for the number of NGVs it will produce under the initiative but said there is a good level of interest across the industry.

“We believe the market for these vehicles will grow,” he said.