Barbara Frenkel, member of the executive board for procurement at Porsche, (left) and Michael Steiner, member of the executive board for development and research fuel a 911 with e-fuel at a pilot plant, Punta Arenas, Chile.Porsche AGPorsche and several partners have started production of a climate neutral “e-fuel” aimed at replacing gasoline in vehicles with traditional internal combustion engines. The German automaker, owned by Volkswagen, said Tuesday that a pilot plant in Chile started commercial production of the alternative fuel. By mid-decade, Porsche is planning to produce millions of gallons of the e-fuel. Related investing news Porsche expects to initially use the fuel in motor sports and at its performance experience centers, followed by other uses in the years to come. Ultimately, the plan is for the fuel to be sold to oil companies and others for distribution to consumers. E-fuels are a type of synthetic methanol produced by a complex process using water, hydrogen and carbon dioxide. Companies say they enable the nearly CO2-neutral operation of gas-powered engines. Vehicles would still need to use oil to lubricate the engine. In the pilot phase, Porsche expects to produce around 130,000 liters (34,342 US gallons) of the e-fuel. Plans are to expand that to about 55 million liters (14.5 million US gallons) by mid-decade, and around 550 million liters (145.3 million US gallons) roughly two years later. The Chilean plant was initially announced with Porsche in late 2020, when the automaker said it would invest $24 million in the development of the plant and e-fuels. Partners include Chilean operating company Highly Innovative Fuels, Siemens’ renewable energy unit and others. Company officials say e-fuels can act like gasoline, allowing vehicle owners a more environmentally friendly way to drive. They could also use the same fueling infrastructure as gas, compared with the billions of dollars in investments needed to build a network of charging stations for electric vehicles. But entirely replacing traditional fossil fuels with e-fuels would be difficult and extremely costly. In 2021, about 134.83 billion gallons of finished motor gasoline were consumed in the US, an average of about 369 million gallons per day, according to the US Energy Information Administration. Still, production of such a fuel would allow Porsche and others a way to continuing producing vehicles such as Porsche’s iconic 911 sports car with a traditional engine alongside, or rather than, a new electric model. While electric vehicles can offer outstanding performance, their driving dynamics differ from traditional engines. Read more about electric vehicles from CNBC ProPorsche officials celebrated the beginning of the e-fuel production with the filling of a Porsche 911 with the first synthetic fuel produced at the site “The potential of eFuels is huge. There are currently more than 1.3 billion vehicles with combustion engines worldwide. Many of these will be on the roads for decades to come, and eFuels offer the owners of existing cars a nearly carbon-neutral alternative, Michael Steiner, Porsche’s director of research and development, said in a release. Steiner and others reiterated Tuesday that the development of the fuel does not change the company’s plans to have 80% of its lineup consisting of EVs by 2030.