Honda's New Solution: Home Fueling

Honda announced they will begin selling home fueling stations for natural gas cars in the spring of 2005 . Priced at $2000, Honda will only sell the stations in California but may eventually expand nationwide. The fueling stations, known as Phill, connect to natural gas lines in homes and take approximately six hours to refuel. Introducing the home fueling stations is an attempt of overcoming the biggest obstacle for natural gas vehicles. Marketed as a company fleet car, Honda Civic GX will now be looking to target individuals with their new “personalized solution”. Will more people make the switch to compressed natural gas once the fueling unit is conveniently available at home?

For the last decade, Honda has been developing natural gas cars. They thought the low-price benefits of a natural gas car would outweigh the high cost of gasoline. Honda has now realized that there needs to be more incentives than just price. In this case, convenience plays a great role. The convenience of refueling at home is quite an incentive. Along with convenience, Honda is also promoting the natural gas as a solution for environmental concerns such as the limited supply of petroleum in the United States and pollution. Natural gas is cheaper and more abundant than gasoline. It could be a replacement for petroleum. Natural gas also provides a way out for strict emission rules. I think that Honda has carefully evaluated this issue from an economical standpoint. If Honda has studied other areas such as introducing and marketing Phill, I believe they will be successful with their new product.

1 comment:

Dr. Tufte said...

This is interesting.

Part of the problem with "alternative" transportation is that we all benefit from a huge positive externality in that there are gas stations all over the place making it easier to own a car. In order for an "alternative" car to be successful, it has to compensate you for that benefit that you don't have to pay for.

A similar case to this was the failure of the introduction of dollar coins in the U.S. about a decade ago. Dollar coins failed because people wanted a bigger valued coin primarily for use in vending machines (they didn't used to accept paper dollars). But, the vending machine makers didn't want to invest in making machines that would accept dollar coins until they saw a market. Neither side was willing to commit first, and the introduction of the coin failed. Honda has at least realized that if they are serious about this that they need to take some big steps.