g-mobility (CNG and RNG) is the fast-track solution to reduce greenhouse gas emissions
in the transportation sector. In 2020, Hexagon’s CNG Light-Duty Vehicle (LDV) business enabled its customers to avoid producing almost 30,000 metric tons of CO2 through its supply of high-pressure CNG/RNG tanks. This is equivalent to planting 39,000 acres of trees. In January 2021, the CNG LDV business was transferred from Hexagon Purus to Hexagon Composites ASA.
Hexagon CNG-LDV generated NOK 157 (397) million in revenue and recorded EBITDA of NOK -17 (73) million in 2020. The decrease in revenues was due to the relocation of key customer Volkswagen's Golf production from Zwickau to Wolfsburg and the subsequent hold of call-offs for several months. Read more in the Board of Directors’ report.
The business’ principal OEM customers are located in Europe, where key CNG markets (Germany, Italy, Spain, Sweden, Czech Republic and Belgium) drive demand. There are currently almost 4,000 CNG filling stations available in Europe, where leading car manufacturer Volkswagen Group is dominant with its portfolio of 19 available CNG models. Hexagon supplies CNG tanks for the VW Golf, Audi A3, SEAT Leon and Skoda Octavia.
Hexagon is the largest serial production supplier of CNG composite pressure tanks for the automotive industry. The company has developed a strong and competitive position with European car manufacturers for its Type 4 tanks. Currently, steel cylinders dominate the European light-duty vehicle market because of price. Steel cylinders are heavier and vulnerable to corrosion, inducing major car manufacturers to consider noncorrosive composite cylinders. The superior product properties of composite cyliinders, combined with extensive systems knowledge, offer significant growth potential in this competitive market.
The demand for clean fuels in Europe continues to gain momentum. In 2021, the Company expects that the EU will properly classify respectively CNG as a climate transition fuel and RNG as a climate adaption fuel in the upcoming Taxonomy Delegated Act. This would be beneficial to Hexagon’s customers and further encourage the transition from diesel to alternative fuels.
The temporary global shortage of semiconductors due to COVID-19-related supply issues impacted the automotive industry at the beginning of 2021. Production by key customer Volkswagen is expected to significantly drop in the first quarter of 2021. Consequently, revenues in Hexagon CNG LDV are expected to be lower in the first part of the year.