Dude! Where Are All of GE's Electric Cars?

On Nov. 11, 2010, General Electric (NYSE: GE  ) made an announcement that shocked the automotive world: Over the next five years, the industrial powerhouse would convert half of its global corporate car fleet to electric power. At $1 billion in estimated value, GE noted that its commitment to purchase 25,000 electric cars -- that's what it worked out to -- was "the largest single EV commitment ever."

It was not, however, an entirely altruistic decision. As GE explained, the whole idea behind making this commitment was to help jump-start the electric vehicle industry. Corporate partner FedEx (NYSE: FDX  ) quickly endorsed the idea, pointing out that corporate fleets in America comprise some 16.3 million vehicles. Converting these fleets to electric, en masse, would be one of the quickest way to "drive initial ramp-up scale in the battery industry and OEM supply chains," and help get the e-car industry off the ground.

And once that happens, predicted GE: "From renewable power generation to smart grid transformers to EV chargers -- GE estimates that a wide-scale EV transformation will lead to up to $500 million in near-term business for GE." So not only would GE help "green up" the environment. Not only would it save money by switching from gasoline power to electric. The company would also quickly get back half its investment in the form of other e-car users buying infrastructure products from GE. In the process, GE would grab pole position in the race to build an infrastructure for a new wave of electric vehicles -- Ford's (NYSE: F  ) electric Focus and C-Max, Tesla's (Nasdaq: TSLA  ) Model S, Toyota's electric RAV4 (also made by Tesla), and on and on.

All of which sounds great. But it does beg one question: Why is GE dragging its feet?

Dude, where are all the electric cars?
It's been nearly 15 months since GE announced commitment to EVs. At the time, management elaborated that it intended to begin e-car purchases in 2011. First on GE's shopping list was General Motors' (NYSE: GM  ) new Chevy Volt, which went on sale that year. But in future years, GE was fully committed to buying e-cars from Nissan, Ford, Tesla, whomever -- just as soon "as manufacturers expand their EV portfolios."

And yet, it isn't. At least, not in any way that's moving the needle.

Electric math
How do we know this? Earlier this month, the good folks at GM and Nissan -- the two companies that have been quickest out of the gate with mass-produced e-cars -- revealed the 2011 sales figures for their Volt and Leaf, respectively.

Each company fell short of the 10,000 sales mark. GM rang up 7,671 Volt sales in 2011; Nissan moved 9,674 Leafs. ("Leaves?" I still don't know how to pluralize this car.) And while we don't know the precise identities of every person who bought these cars, The Wall Street Journal informs us that California residents accounted for 23% of GM's Volt sales, while residents of that sunny state snapped up roughly 60% of Nissan's Leaf production.

Result: We can reliably report that at least 7,569 of the 17,345 electric cars sold last year were not bought by General Electric. Maybe this means GE bought the other 9,776 cars GM and Nissan produced -- but I'm guessing it actually bought a whole lot less than that. (California is, after all, just one of several states where the cars are being marketed.)

Charged silence
After crunching these numbers, I got curious as to exactly how far along GE was in its commitment to buy "25,000 electric cars." Ringing up investor relations, I was informed first that GE (or at least its IR department) did not possess any "information about GE's electric vehicle purchases in 2011." (Which is strange, considering what a fuss GE's PR department made over the announcement just one year ago.) Pressing for more information, I was informed that "specific numbers" of EV purchases "are not disclosed, nor will future projections be given."

Which basically translates as: "Since making the announcement more than a year ago, we've done almost nothing to implement it. Now please stop asking questions."

Well alrighty then
Of course, this still leaves us with the question: If GE is not buying EVs in quantity, then why not? Why isn't GE doing everything it can to help kick-start an industry if it expects to reap "up to $500 million in near-term business" from it? Because judging from the anemic sales data I'm seeing at GM and Nissan, they clearly could use the help.

Personally, I can't think of a good reason...  and GE isn't telling.

The Motley Fool owns shares of FedEx and Ford Motor, and Motley Fool newsletter services have recommended buying shares of Ford Motor, Tesla Motors, FedEx, and General Motors, and establishing a synthetic long position in Ford Motor, but Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.


Read/Post Comments (8) | Recommend This Article (6)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 31, 2012, at 12:12 PM, NCIC wrote:

    Ahhhh, quit being a bully. They aren't buying them until all the bugs get worked out of them. They were probably writing the check when the Volt batteries caught fire and probably just delayed the decision. They still have over three years to kick the tires on the choices out there and see which cars will be hot purchases (pun intended). But thanks for bringing it to their attention and maybe we might actually see some movement on their part!

  • Report this Comment On January 31, 2012, at 12:16 PM, Brent2223 wrote:

    Funny how almost every major story around electronic cars over the past 20 years ends in the same way, after alot of fanfare and publicity they all sputter out with no official explanation.

    We need to start getting some facts on the table, we're not seeing the full picture.

  • Report this Comment On January 31, 2012, at 1:21 PM, Darwin22 wrote:

    Amazing how uninformed the writer of this article is. Over 20 000 Leafs have been produced, the Leaf is also sold in Europe and in Japan, and the only problem is a supply problem, with waiting lists on all 3 continents. The Leaf and the Volt have only been for sale in a few states in the US. The Volt had some production problems in the first half of the year, which limited its availability.

    So, will this article be corrected?

  • Report this Comment On January 31, 2012, at 1:48 PM, Hawmps wrote:

    >> "Nissan moved 9,674 Leafs. ("Leaves?" I still don't know how to pluralize this car.)"

    An excellent question for gramattical correctness. Which way do you go? On the one hand, "leaves" is the correct plural use of the word, but on the other hand, it is the name of some physical thing so therefore The Leaf could qualify as a proper noun so then "leafs" might be correct in this case. Oh, quite the quandary.

    Ok, meat and potatoes... GE said 5 years from November, 2010, 25,000 cars. Any prudent business operator would not go out and buy 25,000 of these cars. They would buy a few hundred or so, work out the kinks in integrating them into their fleet, and you have to give the fleet maintenance personell time to figure out how to deal with these new fangled contraptions. Then I'd expect to see them buy a few hundred more the next year and thousand or so more the next year and after five years when they got the logistics worked out, I wouldn't be surprised to see them drop the hammer on 15,000+ units in year 5. By that time their unit cost will be much less and they will want to make public spectacle of the event when they have inventory that supports EVs to sell to the public. Timing in business.

    I'd like to see GE get behind a company like Tesla; good things could happen for them.

  • Report this Comment On January 31, 2012, at 5:08 PM, TMFDitty wrote:

    Actually, @Darwin22:

    The Leaf was introduced slowly, but ended 2011authorized for sale in 30 states:

    http://blogs.cars.com/kickingtires/2011/12/nissan-leaf-now-a...

    Volt also started slow, but was taking orders nationwide as early as June, and available for sale in all 50 states before the end of 2011:

    http://www.autoblog.com/2011/06/10/2012-chevrolet-volt-price...

    TMFDitty

  • Report this Comment On January 31, 2012, at 7:32 PM, gsned57 wrote:

    When these companies only had 10000 of these cars for sale in the first year (aside from November and decemberthe volt was production limited and the leaf was production limited all year) they would have ticked off a lot of early adopting purchasers if these cars went to fleet sales. I would imagine gm and nIssan wanted everyone on the waiting lists to get their cars first then let ge get a few. If we don't see fleet sales in 2012 write this article again and I'll be concerned

  • Report this Comment On January 31, 2012, at 10:01 PM, bluebill55 wrote:

    The fact that GE hasn't purchased these cars doesn't surprise too many people. They are new, untried, they only replace one energy for another. Fossil fuels will still be required to produce the energy to FUEL these vehicles. They will be an expensive power draw in the colder states and Canada to run, warm up and keep plugged in to prevent the motor from freezing up. The cost of power paid by citizens is astronomical as it is. Eventually it will be rammed down our throats and we will have no choice. In other words, it is what it is!

  • Report this Comment On February 01, 2012, at 1:51 PM, MaudieNmandevill wrote:

    My, my; So many excuses to choose from. You'd think, just maybe, GE's IR department would have a few of these on their smorgasbord of canned responses for impudent investors. Rather, they went from "not possessing any information" to knowing that "specific numbers of EV purchases are not disclosed, nor will future projections be given." So five years down the road, we can all just say they purchased 25,000 and feel good…No wait…um, 50,000. Ya, 50,000!

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