Of Course GE Will Order 'Tens of Thousands' of Electric Vehicles

Electric vehicle technology is exciting, but expensive. For example, according to current pricing estimates you'd have to drive the new Nissan Leaf over 167,000 miles before you break even on energy saving costs compared to the Hyundai Elantra, even with the big government credit. Yet, according to news today General Electric plans to buy "tens of thousands" of electric vehicles in about a week. How does this make sense from a corporate cost perspective? In fact, GE has already bet big on electric vehicles, so this move helps sway the odds in its favor.

Don't confuse this decision to overpay for vehicles from a cost perspective as mere green generosity. GE has a lot to gain if the electric vehicle market succeeds. One of its new product lines include its WattStation electric car charger. This is a clear complement to the electric cars they purchase. Here's a new ad GE ad for the charger you might have seen on TV:

And that's not all. GE is also the largest shareholder of a company called A123 Systems Inc., which supplies batteries for electric vehicles. If electric vehicles do well, then so will GE.

So in a sense, the money it overpays for electric vehicles versus gasoline powered vehicles is a sort of investment. If the vehicle makers experience better sales and demand, then GE will be better off as well, as more chargers and batteries will sell when the market expands. It would sort of be like if AT&T had bought tens of thousands of iPhones for its business communications back in 2007 when the device was first released.

This isn't to say that it isn't good that GE is buying these electric vehicles. Certainly, if the electricity they run on doesn't come from fossil fuel-burning power plants, then that's better for the environment than gasoline. But in light of GE's interest in seeing the electric vehicle market succeed, the move shouldn't shock anyone.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

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