General Electric (NYSE:GE) Co Chief Executive Jeff Immelt said people "may be disappointed in the adoption of the electric vehicle" but his company will continue investing in battery technology to reflect its confidence in an eventual uptick.
Speaking during an automotive conference in Detroit on Tuesday, Immelt -- whose company is a key supplier to automakers producing electric cars -- said GE is "committed to long-term development" of alternative-fuel vehicles. The executive shrugged off the perception that electric cars are just novelties and said the industry needs to find solutions to cost and infrastructure challenges.
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GE, after all, has a lot riding on the success of alternative-fuel vehicles. "For every dollar invested in electric vehicles GE has 10 cents of content," he said.
Several car companies, including General Motors Co, Nissan Motor Co, Toyota Motor Corp, Ford Motor Co and Tesla Motors Inc, have in recent years introduced cars that run partially or entirely on electric power.
Electric vehicles carry an expensive battery and typically cost more than a conventional vehicle of similar size. Sales of such vehicles have thus far been modest, and below some initial expectations.
COSTS, INFRASTRUCTURE ARE CHALLENGES
"You never can tell when this will reach a tipping point...a lot has to happen in order for this to take place," Immelt said.
Immelt said that GE executives share a Chevrolet Volt at the company's headquarters, and said driving the vehicle is an empowering experience.
However, "the near term challenge is going to be all about cost" and infrastructure, he said.
For instance, the battery used in an all-electric vehicle such as the Focus Electric, Ford's first all-electric passenger car, can cost between $12,000 and $15,000, company executives say. That would represent around a third of the Focus Electric's overall price of around $39,000.
By 2020, Ford expects hybrids, plug-in hybrids and electric vehicles will comprise 10 percent to 25 percent of its sales as oil prices rise and government standards on fuel economy and emissions grow stricter.
Others aren't as confident.
Boston Consulting Group predicts electric vehicles and plug-in hybrids will make up 5 percent of the market within eight years.
It would take 12 years to break even on a Chevy Volt with gas at $4 a gallon, auto research group Edmunds.com said. Ford research shows that consumers are more apt to buy electrified automobiles if they can recoup the higher vehicle cost in less than four years, assuming gasoline costs $4.50 a gallon.
Immelt is convinced the market for electric vehicles will not remain a small niche, adding that GE does not invest in technologies simply because they are popular trends.
"Novelties don't work in business," he said.
GE also announced a plan to add 300 jobs at its advanced manufacturing center in Van Buren Township, Michigan. And it will expand by 25 percent its summer internships and co-ops for college students at the Michigan locations.