Are fleet sales the future of electric cars? GE will take 25,000, please

GE announced plans yesterday to make the largest purchase in the history of electric vehicles — 25,000 cars by 2015.

The company said it will convert at least half of its 30,000-strong global fleet, and purchase 12,000 electric cars from GM, starting with the range extender Chevy Volt (pictured), which will start hitting dealerships next month. The purchases will be for its own fleet and for its Capital Fleet Services business, where customers can lease electric cars through GE.

GE has a big stake in the future of electric vehicle infrastructure. The company introduced its WattStation electric vehicle charger last summer and has teamed with electric vehicle infrastructure startup Better Place to accelerate electric car adoption. In fact, the company estimates it will reap $500 million in near-term revenues from electric vehicle infrastructure alone. Siemens has fired back with a charger of its own and teamed up with Better Place rival Coulomb.

GM’s Volt is an interesting choice for GE given that the Volt isn’t all-electric and the GM brand still suffers from some poor consumer sentiment, but it’s worth noting that GM does big business in fleet sales. In fact, fleet sales look like they’re going to be a key part of electric vehicle adoption. For GE, the Volt is a good, conservative baby step to electric vehicles. The car switches to gas power after going 25 to 50 miles on its battery, so drivers aren’t entirely dependent on the battery. Although startups like Coulomb are quickly rolling out more and more charging stations across the country, it’ll be awhile before there’s a full web of charging infrastructure in place nationwide.

“By electrifying our own fleet, we will accelerate the adoption curve, drive scale, and move electric vehicles from anticipation to action,” CEO Jeffrey Immelt said in a company statement.

Indeed, BusinessWeek has suggested that enormous orders from a heavyweight like GE could do a lot to push prices down and speed adoption. And this purchase underscores that fleets will be a big segment in electric vehicle sales. Corporate fleets sound a little less sexy than individual sales, but they make a lot of sense and are lucrative. Electric car startup Coda (which lost its CEO last week) has said it wants to sell 14,000 of its electric sedans by the end of 2011 and expects 40 to 50 percent of those sales to go to fleets. It’s a strategy that almost every electric car player is pursuing.

Coda has inked a deal to provide 100 cars to Enterprise Rent-A-Car and recently hired fleet sales executives with backgrounds from GE, Mercedes-Benz and Chrysler. Its higher-profile competitor, the Nissan all-electric Leaf, has also landed a deal with Hertz car rentals.

Smith Electric Vehicles has done a steady business in fleet sales of its electric trucks — it’s been chosen by Frito-Lay to supply 171 electric trucks in the snack giant’s delivery truck fleet. Better Place is bringing an electric taxi program to San Francisco after the success of a similar pilot in Tokyo. With delivery services, the cars drive a fixed route, making it easier to manage charging. Since taxis typically can’t wait for charge time, Better Place is bringing its signature battery-swapping technology to the program, where depleted batteries are quickly switched out for fully-charged ones. (In fact, I wonder if Tesla’s much-anticipated Model S sedan in 2012 will target fleet sales.)

By all accounts, electric vehicles still face a long road to adoption. One recent report forecast that electric and hybrid vehicles combined would only account for seven percent of passenger vehicle sales by 2020. And yes, there are some serious consumer education barriers when it comes to electric cars, plus lingering issues about battery lifetime and the higher cost of the car. But they’re still the most visible, sexiest facet of the cleantech movement, and GE’s purchase gives the segment a definite boost.

Of course, not everyone’s on board with electric vehicles. Daimler’s CEO has called them overhyped — but also called for more government incentives to cut the price tag on electric vehicles.

Companies are also trying to get a foothold in the Chinese market, where the government is heavily pushing electric cars and charging infrastructure rollout — to the tune of 5 million planned electric cars on the roads by 2020. Companies like the domestic carmaker BYD are surely poised to benefit, but other players like Nissan, Daimler and Volkswagen are also planning electric cars for the Chinese market.