With a name like General Electric, why wouldn’t GE embrace the electric car? The company has announced plans to buy 25,000 of them by 2015.
Jeffrey Immelt, GE’s CEO, said the company would convert half of its corporate fleet to electric vehicles (EV) by 2015 in an effort to jump start the technology and help develop a potentially big new market for the company.
“By electrifying our own fleet, we will accelerate the adoption curve, drive scale, and move electric vehicles from anticipation to action,” Immelt said in a statement The company had hinted at the plan in late September.
GE builds natural gas-fired generators for utilities, electric motors, advanced electric meters and a home electric car charging station called the WattStation, all of which could be in higher demand if drivers buy electric cars. It stands to reason they could also build motors for EVs as well as expand sales of its charging stations.
GE estimates the expanding market could bring it up to $500 million in new revenue over the next three years. The first mass-market electric cars are expected to go on sale next month, including the Chevy Volt and the Nissan Leaf.
GE said it will buy 12,000 GM vehicles starting next year, beginning with the Volt. It plans to add others as manufacturers expand their electric car offerings. Every major automaker has plans to introduce cars that can be powered by electricity over the next two years.
EVs are cheaper to fuel and operate than gasoline powered cars, but they are more expensive to buy, mainly because of the high cost of batteries. The battery that powers the $33,000 Nissan Leaf costs about $12,000, nearly the price of a gasoline-powered car the Leaf’s size — although the Leaf’s lithium-ion batteries are guaranteed for 100,000 miles or 8 years, and can be replaced a cell at a time, which wculd stretch out the expense.
Carmakers hope to be able to sharply reduce the cost of the batteries over time, but in order to do so they need to sell more electric cars. That’s where GE comes in. GE is hoping that its planned purchase will help drive down costs by increasing production volumes and assuring carmakers that they will have at least one big buyer.
Electric utilities, and local governments which would also benefit from the adoption of electric cars, are also expected to buy thousands of vehicles. The feds are offering $7,500 tax credits to electric car buyers to help make the cars more affordable and some states and cities offer additional subsidies that can reach $8,000. Washington State offers $3,500.
Still, only 30,000 electric vehicles are expected to be sold next year, out of a projected 13 million new cars. J.D. Power and Associates predicts that by 2020 that number will grow to 275,000, still only about 2 percent of total car sales.