Marchionne, chief executive officer of Fiat and Chrysler Group L.L.C., says natural gas engines offer a better way to cut emissions because they're cheaper than competing technologies. He also argues that electric cars, which General Motors Co. and Toyota Motor Corp. are betting on, present "too many obstacles" such as the recharge time for batteries.

Fiat is the market leader in Europe in natural gas engines, with an 80 percent share of methane-powered cars and 55 percent of light commercial vehicles. The United States has the natural gas supply for the engines after becoming the world's largest producer last year.

"Fiat will use its technological leadership in natural gas, in a region discovered to have huge reserves," said Giuliano Noci, a professor at the MIP management school of Milan's Polytechnic university. "It's almost a mandatory strategy. Fiat should lead the natural gas car market as it's far behind in the electric-vehicle sector."

Natural gas is a "more affordable solution" because it is less expensive to produce, transport, and distribute than other fuel sources, Alfredo Altavilla, who heads Fiat's Iveco truck unit, said in September. The additional cost for an engine using natural gas is $3,000, compared with $3,300 for diesel and $8,000 for an electric hybrid, he said.

The United States overtook Russia last year as the largest producer of natural gas, as output of gas trapped in shale rock - such as Pennsylvania's Marcellus region - rose to 10 percent of total U.S. supplies from 2 percent in 1990.

GM just began selling vehicles with natural gas engines in the country this year for fleet buyers. Honda Motor Co. Ltd. is the only automaker selling cars with compressed natural gas engines to retail customers in the United States.