Better Place Takes Big Leap Forward with Israel Electric-Car Pilot

Reporting from Tel Aviv, Israel

Better Place, the electric car start-up, made clear when it unveiled its first vehicle demo center near Tel Aviv this week that far more is at stake in its Israel transportation trial than green clout.

"Israel is detaching itself from oil," said Shai Agassi (photo), the 41-year-old, Israeli-born founder of the company. The government "really wants this to happen," he said. "It is a national project."

Better Place builds the charging infrastructure for electric cars and sells vehicles made by Renault and its partner, Nissan.

In 2008, Israel's leaders vowed tax breaks for purchasers of the clean cars. Now it is the public's turn to give its verdict.

At the Better Place demo center, drivers will be able to take the prototype electric car for a spin. "Every one of them will sign up," a confident Agassi told reporters.

The venture-backed firm, launched in 2007 and based in Palo Alto, Calif., aims to create networks of electric cars worldwide. Deals have been announced in other densely packed "transportation islands," as Agassi calls them, in Denmark, Australia, San Francisco, Hawaii, the west coast of Canada, along with a small taxi scheme in Japan.

For now, much is riding on the Israel trial, though, which will begin running a few hundred cars this year.

Renault-Nissan has already bet a billion dollars that Better Place will be the global electric car model of choice. In January, major investors, including HSBC and Morgan Stanley, gave the company a $350 million jolt. For their part, Better Place executives are banking on nothing short of an iconic international brand.

In three to four years, the turquoise blue logo of Better Place will become like the "swoosh of the Nike or the apple of Apple," said the fast-talking Agassi.

In Israel so far, the firm has signed up 17 municipalities, including Jerusalem. Over 90 companies, covering 45,000 cars, agreed to lease a fraction of their fleets from the firm. This week, Better Place announced an agreement with Dor Alon Energy to set up battery switch points at some of its 170 gas stations.

If all goes as planned, 1,000 electric cars will hit the roads each month starting in 2011, Better Place said, serviced by 70 to 100 battery service stations and thousands of charge spots. In total, 100,000 cars will be running in Israel and Denmark by 2016, according to figures by Renault-Nissan.

"Those numbers will be much higher," predicted Tal Agassi, Shai's sprightly younger brother and head of global deployment for Better Place.

On cost, Tal Agassi said each battery station will come in at around half a million dollars. The price of the car, however, remains a big mystery. Better Place will only reveal that it will be cheaper than its gas-powered counterpart.

In oil-bereft Israel, where gas costs around $7 a gallon, the firm's business model could be a lure. Subscribers pay for per-mile plans, just like cell phone minutes, or they can pay a flat rate to drive as much as they want.

Better Place will provide the expensive lithium-ion batteries and the infrastructure — the charging spots at home, at work and in public spaces, and the switch stations to replace empty batteries.

Mark Norbury, an associate director of global special opportunities at HSBC, called the Better Place business plan "outstanding."

"We have haven't found any other business model that allows for the mass adoption of electric vehicles," Norbury told SolveClimate.

However, not everyone is swooning at the idea of turning tiny, car-packed Israel into an electric-car lab.

Some environmentalists are concerned about a model that could make it cheaper to drive more.