General Electric Company’s acquisition of as many as 25,000 battery –powered vehicles may encourage other large businesses to consider electric vehicles for their corporate fleets.
John Segrich of New York-based Gabelli & Company’s green research group says, “You’ll see some early adopters follow suit, people maybe like UPS or FedEx, and those are your logical first movers.”
GE’s 25,000 vehicle order consists of 12,000 GM models, including the 2011 Chevrolet Volt plug-in hybrid.
Managing partner Ray Lane of the venture capital firm Kleiner Perkins Caufield & Byers says fleet purchases, like the one by GE, are essential to the emerging electric auto market. He says, “Mass adoption by consumers of electric vehicles will happen slowly because of range anxiety and cost.” Lane’s company has invested upwards of $1.5 billion in domestic and foreign green automotive startup companies including Norway’s Think Global and California-based Fisker Automotive Incorporated.
Individual consumers remain somewhat skeptical toward battery-powered vehicles. J.D Power & Associates predicts the worldwide market share for electric vehicles, including hybrids, to reach a mere 7.3 percent over the next decade.
For fleet operators, however, Lane says, “The business case for electric vehicles is pretty good.”
Lane feels that corporations will be willing to absorb the slightly higher initial purchase price of battery-electric vehicles in order to take advantage of generous tax incentives and the lower cost of operating and maintaining electric vehicles. He adds, “It’s easier to install charging equipment at a fleet garage.”
As a producer of automotive charging stations, batteries and smart-grid systems, General Electric stands to benefit more from its investment in electric fleet vehicles than most corporations.
Huntington Asset Advisors Incorporated senior portfolio manager, Peter Sorrentino, says GE will also benefit from its early adopter position. “Being a first mover on this, they get not only the moral high ground, but also seize the initiative on charging-station technology.”
A number of other American corporations have already taken steps toward transitioning their fleets to alternative-fuel vehicles. Green vehicles, including hybrids, now account for about two percent of United Parcel Service Incorporated’s global fleet of 102,000 vehicles. Approximately 2.5 percent of the 75,000 vehicles in FedEx Corporation’s Express and Ground delivery fleets are alternative-fuel vehicles.
The two largest rental car companies in the U.S., Hertz Global Holdings Incorporated and Enterprise Holdings Incorporated, have also ordered electric vehicles for their fleets.
In a speech in London last month, GE CEO Jeffrey Immelt said he expects government spending on alternative-fuel technologies to wane in coming years. Lane echoed that sentiment and predicted that the newly elected Republican majority in the House of Representatives may block alternative-energy spending authorized under the 2007 energy bill.
Oliver Hazimeh, a partner with management consulting firm PRTM concurs and says,”We are in the infancy of this market, and there’s not going to be smooth sailing.”
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