Synergy has been used too often in marketing campaigns, but it’s still a wonderful word, and it does describe an emerging trend in the electric vehicle (EV) market. Electric cars are the future of the clean transportation industry, but it may be a distant future. The plug-in-hybrid and electric-vehicle premium that attaches to the early production-line models will scare away most consumers. Automobile manufacturers need economies of scale to kick in so they can advance the technology, and bring prices down to a point where a mass market is created.
Many corporations want the clean transportation industry to succeed because the new technology will create new markets and new opportunities for them. That’s exactly the thinking at GE, which recently announced that it will purchase 12,000 electric or plug-in electric cars from GM, beginning with the soon-to-be-released Chevy Volt. The company pledges that half of its 30,000 vehicle electric fleet will be electric by 2015 — an impressive stat by any measure.
In doing so, GE is helping itself in a couple of ways, so there is a method to the company’s madness. GE recently designed and created the WattStation electric vehicle charger, and it could sell hundreds of thousands of units if groups like Better Place can promote electric car technology, and the EV market kicks into high gear.
Yet there’s more to it than that. GE is banking on renewable energy, and the EV industry is incredibly important to utilities and renewable energy producers because it potentially offers millions of portable battery storage devices that can help smooth demand during peak periods. Later in the evening, when demand dips precipitously, and rates and emissions are lower EVs can recharge. It works out especially well when renewable sources of electricity are available.
Of course, GE is one of the renewable energy industry’s biggest players. The company predicts that it can exceed more than $500 million in near term revenues just from working the EV infrastructure market. You have to think EV manufacturers are paying attention. Certainly most are targeting fleet sales for a significant percentage of their first and second year quotas. Coda automotive, which hopes to sell 14,000 cars in 2011, expects that at least 40 percent of sales will be to fleets.
The EV industry does face an uphill battle, but I expect we’ll see more and more deals like the one announced by GE. It makes sense for several industries — the utility industry in particular — to become early adopters, and help bring prices down.