General Electric plans to purchase 25,000 electric vehicles by 2015, giving the budding EV business a significant boost.
Initially, GE will purchase 12,000 vehicles from General Motors--starting with the Chevrolet Volt, which has just become available to early buyers this month. The company said it will be the biggest single fleet purchase of electric vehicles so far.
GE said that it intends to convert at least half of its fleet of 30,000 vehicles. But the move into electric vehicles is also geared at boosting demand at its grid equipment and fleet management businesses. GE sells an EV charging point called the WattStation as well as electrical equipment such as transformations and power electronics.
"Electric vehicle technology is real and ready for deployment and we are embracing the transformation with partners like GM and our fleet customers," GE CEO Jeff Immelt said in a statement. "By electrifying our own fleet, we will accelerate the adoption curve, drive scale, and move electric vehicles from anticipation to action."
GE expects that broader use of electric vehicles can deliver another $500 million in the near term to the company. Its fleet management business provides services to fleet operators, such as financing, maintenance, and fuel-economy services.
By using a large number of electric vehicles for salespeople, GE can prove that the technology is viable, which will help build demand for electric vehicles and equipment with its fleet customers, said Oliver Hazimeh, an auto analyst and the Global E-Mobility practice at management consulting company PRTM.
"When GM is talking to their lease customers and trying to convince them to go greener, if they can't prove it themselves, it's hard to win that argument," he said. "They are trying to take a leadership role."
For GM, it represents a large order for a car that is just starting to come off the assembly line. Although the company has received a lot of attention for the Volt, many people consider its $41,000 price tag relatively steep for consumers. The Volt is driven by an electric motor and has a gas tank that runs a generator to charge the batteries for rides over about 40 miles.
The Volt and the all-electric Nissan Leaf are proving to be popular with consumers eager to get access to new technology. But fleet operators have long been considered a key to making electric-vehicle use more widespread.
Fleet owners usually consider the total cost of ownership over several years when buying vehicles, rather than only the purchase price, and fleet drivers typically have predictable routes.
GE expects that it will lease about 10,000 vehicles to other fleet operators between now and 2015, according to GE spokesperson Jaime Loftus. The switch to using electricity as a fuel at its own fleet is expected to yield lower operating costs, she added.
Through its Ecomagination initiative, GE has made billions of dollars in many energy-related products, including wind turbines, smart meters, and hybrid locomotives. Moving aggressively into electric vehicles is an outgrowth of those efforts and helps build demand for products in its digital electric grid business.
"The power controls, the WattStation, the smart grid for energy management--all of these tie in to an end-to-end infrastructure. Through that and our fleet business, GE touches pretty much every part of it," said Loftus.
GE also announced today it will open electric vehicle "learning centers" for customers, employees, and researchers. The first two centers--one outside Detroit and another at GE's fleet management headquarters in Eden Prairie, Minn.--will evaluate EV performance, charging, and driver experiences.
The purchase of electric fleet vehicles may be large, but the bigger impact of GE's move is most likely to be internal, said Mark McGough, the president and CEO of Ioxus, an energy storage company that makes ultracapacitors.
"It doesn't create an (EV) industry in itself," said McGough. "But it's more than a publicity stunt because it puts GE businesses on notice that they need to take this seriously. It's a reminder that this is strategically important to the company."
Updated at 8:45 a.m. PT with additional comments.