General Electric's move to buy as many as 25,000 rechargeable cars, almost half of them from General Motors, may herald more purchases of electric vehicles for corporate fleets.
LOS ANGELES — General Electric’s move to buy as many as 25,000 rechargeable cars, almost half of them from General Motors, may herald more purchases of electric vehicles for corporate fleets.
“You’ll see some early adopters follow suit, people maybe like UPS or FedEx, and those are your logical first movers,” said John Segrich, who leads the green research group for Gabelli & Co. and manages the SRI Green Fund. “You are going to see large corporations move this way.”
GE unveiled its order Thursday as automakers prepare a new generation of battery-powered autos, including GM’s Chevrolet Volt and Nissan’s Leaf, to reach showrooms as early as the end of this year. GM’s portion of the order is 12,000 vehicles, including the 2011 Volt.
Corporate purchases can help nurture a viable commercial market for the cars, because initial demand among retail buyers will be muted, said Ray Lane, managing partner at the venture capital firm Kleiner Perkins Caufield & Byers.
Most Read Business Stories
- 'A dream come true': Original players rescue hipster chain Rudy's Barbershop from bankruptcy
- 'Hundreds of millions of dollars' lost in Washington to unemployment fraud amid coronavirus joblessness surge
- Mitsubishi cuts hundreds of jobs, shuts Washington operations as it slashes SpaceJet budget
- PCC Markets CEO Cate Hardy leaving to run huge wine company
- Even if you want to buy a home, it's harder now to get a loan. Or tap home equity.
“Mass adoption by consumers of electric vehicles will happen slowly because of range anxiety and cost,” said Lane, who said his Menlo Park, Calif.-based firm has invested more than $1.5 billion in green-technology startups.
While purchase prices may be higher, corporations would reap savings from tax credits and lower costs for electricity than gasoline, Lane said. Another advantage: “It’s easier to install charging equipment at a fleet garage,” he said.
GE would see an additional boost, because Chief Executive Officer Jeffrey Immelt is positioning the company to benefit from energy-efficient technologies by producing batteries, car-charging stations and smart-grid systems.
“Being a first mover on this, they get not only the moral high ground, but also seize the initiative on charging-station technology,” said Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors, which held about 5.48 million GE shares as of last month.
At United Parcel Service, hybrids and other alternative-fuel vehicles account for about 2 percent of a global fleet of 102,000. FedEx said its total is about 2.5 percent of the 75,000 vehicles in its Express and Ground units, excluding its freight operations. Neither company has adopted a timetable for adding more green vehicles. Between them, UPS and FedEx deliver about 80 percent of all packages in the U.S.
The $41,000 Volt is designed to go 25 to 50 miles on electric drive before an onboard gasoline engine starts charging the battery. Buyers will be eligible for a $7,500 rebate from the U.S. government.
Business backing for new technology such as advanced autos is going to be more important as government spending wanes, Immelt said in a speech in London last month. Lane said Republican control of the U.S. House of Representatives in the new Congress next year may curb future incentives.
“It seems there is some uncertainty as to what’s going to happen,” said Oliver Hazimeh, partner and head of the global e-Mobility practice at management consultant PRTM. “We are in the infancy of this market, and there’s not going to be smooth sailing.”