Volvo Ready for E20 but Where is the Fuel?

Volvo has expressed a desire to take part in the Thai Government's E20 campaign, which effectively allows for a 5% price drop on cars compatible with the E20 fuel specification. This has already resulted in large price drops on Honda, Ford, Nissan, Mazda and Mitsubishi cars.

If Volvo were to benefit from the tax reduction, it could see prices of some models fall by as much as THB 200,000 - THB 300,000, which would improve the competitiveness of Volvo in the small, and very competitive, luxury car market.

Volvo are prepared to launch new cars this year which would be E20 capable, but unlike the likes of Ford who dived in and got burned 2-years ago, they are likely to wait until their is actually some E20 fuel available at the pumps first, and will study the E20 campaign further, and seek a clearer understanding of the specification and standard of the proposed E20 fuel from the Thai Government.

My local PTT station now has an E20 pump installed, but there isn't any fuel in it, and no pricing information yet.

So what is this E20 stuff anyway?

Well, essentially E20 fuel is a blend of petrol and ethanol in the ratio of 80:20. So the "E" denotes the percentage of the fuel that is ethanol (20% in this case). Gasahol is E10 or 10% ethanol. E20 is a relatively small step, and I think it highlights a lack of decisiveness in the fuel strategy here in Thailand.

The hold up here is not in engine technology, after all several companies have E100 capable engines on the market in other countries, and there is no reason that it would be any more difficult for them to launch them here, than to bring E20, and then in a few years E40 and so on. For example, Ford have had flex-fuel engines for years, which are capable of running on regular petrol or E100 (pure ethanol), or any blend in between, including E20!

The current government strategy is to encourage the use and deployment of E20 through tax breaks. This leads to cheaper cars, and will stimulate sales. If the E20 is cheaper than Gasahol, then the folks that buy the E20 capable cars will probably buy that fuel, but this isn't for sure. After all, most people have E10 capable cars, but are slow to adopt that fuel.

Let's assume that this goes well, and the adoption of E20 is high: what next? Well, after that the government might look to increase local ethanol production and if that is going well, then another campaign to promote E40 might take place a few years from now.

This "small-step" approach might be logical from a production perspective, but the queuing system at the petrol station is going to get complex when we have Gasahol 91, Gasahol 95, E20, E30, E40, E50, E85 and E100! You see, at each step owners of the cars that the last step promoted are left on the previous step, and naturally they will still need fuel.

Flex-fuel now!

The solution would be to introduce flex-fuel vehicles in Thailand right now. They will work with Gasahol 91, they will work with E20, and eventually E85 and E100 will not be a problem either.

Back to Volvo, they will have no problem introducing models that will support the E20 fuel specification, and even claim to be ready for E85 or E100 in any market!

Volvo, why don't you just do that then! After all, an E100 vehicle will run on E20 also, and so, would qualify for the 5% reduction. Buyers would also enjoy a vehicle that could follow the potential path that the government will take us on to E100 compatibility.

Should we buy into E20 at all?

Although right now there is a lot of buzz around E20, as manufactures are fast to adopt the standard and enjoy the associated price reduction benefits, is there really a good reason for the consumer to actively seek to enter the E20 game buy trading up (or down) to an E20 capable vehicle?

If you need to buy a car right now, then of course E20 compatibility would be worth considering, but so would NGV and diesel. Think about it this way: If E20 fuel is not going to be substantially cheaper than regular petrol or diesel - and there are no indications that it will be - then what is the benefit to the motorist? In the long term NGV is much cheaper, and even diesel will probably offer better economical sense as a litre of fuel will take you further for your money.

If you don't absolutely need a car right now, then you would be better following Volvo's lead and playing a wait and see strategy. Don't get caught up in the hype, E20 is not the answer folks. It is a step in one direction that may well turn out to be the right direction, but your E20 car will never reach that destination.