Westport Innovations Inc. (USA) (WPRT): What’s Holding NG Vehicles Back?

Join Motley Fool analyst Brendan Byrnes for a conversation with Ian Scott, the executive vice president of Westport Innovations Inc. (USA) (NASDAQ:WPRT)‘ On-Road Systems segment, which works with OEM partners such as Ford, Volvo, Kenworth, and Peterbilt to produce natural gas-0powered vehicles in the U.S. and elsewhere.

In the following video, Scott describes the progress being made in natural gas infrastructure among companies such as Clean Energy Fuels and Royal Dutch Shell, with as many as 560 stations projected to be in place by the end of 2015.

Brendan Byrnes: When you look at some of the big companies using natural gas vehicles — Waste Management, UPS, FedEx — UPS actually is going to increase their natural gas fleet to 800 by the end of 2014. That’s up from 112 right now.

What do you think overall when you look at the landscape? What’s the biggest barrier for companies embracing natural gas? Is it the infrastructure? Is it companies like these that need to come in and really take the lead and show that it’s possible and the economics work? What do you think is the barrier?

Ian Scott: I think historically it’s been infrastructure, has been the biggest one. But now we see — and the UPS example is a great one — we see where infrastructure is no longer an impediment. I think we’re getting stronger infrastructure but we’re not at critical mass yet, where we need to be in order to just see massive adoption of natural gas.

Companies such as Clean Energy and Shell and ENN, they’re doing a great job in building out particularly liquid natural gas stations right now. I think that’s really going to help.

Our product costs more. It costs more than a diesel or a gasoline product, so what you’re doing is you’re paying up-front capital cost, but more than making that back in the fuel savings. We have to do our job as well, in order to get the product cost down, and we’re working aggressively to do that. That will come with volume, obviously, as well.

The stations are being built. We’re going to sell more product. That will allow more stations to be built, and I think we’re starting to see it really pick up right now.

Byrnes: Could you talk about infrastructure? We have America’s natural gas highway being built out by Clean Energy. What’s the improvement in infrastructure you’ve seen over a year or so, and where do you think this is going over the next couple of years?