General Electric Co. will buy 25,000 electric vehicles, almost half of them from General Motors Co., by 2015 in the biggest such order ever.
The purchase will account for at least half of GE’s own 30,000-car fleet and will include vehicles customers can lease from its GE Capital unit, the company said in a statement today. GM’s portion of the order is for 12,000 vehicles including the 2011 Chevrolet Volt. Financial terms weren’t disclosed.
Chief Executive Officer Jeffrey Immelt is positioning Fairfield, Connecticut-based GE to benefit from more energy- efficient technologies by producing batteries, car-charging stations and smart-grid systems. GE said it’s in a “strong position” to help 65,000 leasing customers convert to electric vehicles and sees the electric-car market adding as much as $500 million in sales in the next three years.
“Wide-scale adoption of electric vehicles will also drive clean-energy innovation, strengthen energy security and deliver economic value,” Immelt said in the statement. GE’s power-plant equipment generates one-third of the world’s electricity, and the need for vehicle-charging stations may spur demand for more power from its utility customers.
GM Share Sale
GE’s order is a boost for the Volt as Detroit-based GM prepares for an initial public offering after its 2009 restructuring in bankruptcy. The deal will help both companies, said Jim Hall, principal of automotive consulting firm 2953 Analytics in Birmingham, Michigan.
“Fleet sales will always help; it might also get other companies interested,” Hall said. “Any co-marketing with a large company has potential.”
GE fell 20 cents, or 1.2 percent, to $16.35 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have gained 8.1 percent this year.
Immelt said in a speech in London last month that he planned to order “tens of thousands” of electric vehicles as part of an effort to urge increased private spending on renewable-energy investments.
The CEO is boosting research and development at the company by 18 percent this year and spending $20 billion on it in the two years ending in 2012. GE, which unveiled its WattStation plug-in charger in July, this month plans to announce winners in its $200 million SmartGrid contest.
GE wants “to own a big chunk of the vehicle-charging business,” Hall said.
In the U.S., President Barack Obama’s administration has committed more than $11 billion in taxpayer aid to help car and battery makers start producing electric autos.
“Electric vehicles are a real-world technology that can reduce both emissions and our dependence on oil,” GM CEO Dan Akerson said in the statement.
The company plans to start delivering Volts to retail customers by the end of this year, he said. The sedan has an electric motor to drive the wheels and a gasoline engine to recharge the batteries once they’re spent.
Other automakers preparing to sell vehicles powered solely by batteries in the next 18 months include Nissan Motor Co., which starts delivering Leaf hatchbacks late this year; Ford Motor Co., readying electric versions of its Transit Connect delivery van and Focus compact car; and Toyota Motor Corp., which will sell a rechargeable RAV4 sport-utility vehicle.
By buying so many vehicles, GE is helping drive down their price, which will spur production and increase demand for battery plants and other parts-makers, Fred Smith, chairman of the Electrification Coalition, a Washington-based organization of transportation and energy executives, said in the statement. Smith is CEO of FedEx Corp.
‘Acceptable to the Public’
The move will “make electric vehicles more visible and acceptable to the public at large,” Smith said. “This is good for GE, good for our economy and good for our nation.”
GE will open two customer centers to evaluate vehicle-charging, driver experience and maintenance requirements and to display an array of models and manufacturers. One will be near Detroit in Van Buren Township, Michigan, as part of a new technology center GE announced last year, and the other in Eden Prairie, Minnesota, where GE Capital Fleet Services is based, according to the statement.
GE is investing $10 billion in the next five years in clean energy across its business lines. Its products include lithium-ion batteries for cars and trucks via a venture with A123 Systems Inc. and sodium-based batteries for use in large vehicles such as locomotives.
GE Energy Infrastructure is the company’s biggest industrial unit, accounting for $37 billion of the parent company’s $157 billion in revenue last year. GE is also the world’s largest maker of locomotives, jet engines, medical-imaging equipment and related information technology systems.