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.
"The private car is a big problem in Israel, whether it’s electric or not," said Yael Coen Paran, CEO of the Israel Energy Forum, a non-profit organization promoting sustainable energy policy in the country.
A better bet, she said, is a shift to a sustainable transportation system, with more trains and bike lanes. This is "not going to be solved by Better Place."
Better Place is trying to solve one problem only, said Tal Agassi. That is, "how to get Israel off oil."
Coal-Fired Cars: Clean or Not?
Green groups have another concern — that Israel’s new fleet of electric cars will be powered by dirty coal.
The sunburnt desert nation, a global solar technology pioneer, ironically has a clean power capacity of about zero. Around 65 percent of the national fuel mix comes from burning coal; most of the rest comes from natural gas.
Tal Agassi said the Better Place goal is to get every bit of electricity it squeezes out of Israel, and the world, from clean sources. It is even willing to fork over extra money for greener power.
But that ball is in the Israeli government’s court, he said. And today, the utility-scale renewable energy picture isn’t very pretty, though a shift is in the air. Currently, a 250-MW solar power park is in the works in the Negev desert and may be completed in 2013.
"Perhaps Better Place will give them another incentive to make [solar] happen," Tal Agassi said.
Paran sees it differently. She claims the government’s absolute embrace of Better Place is pulling its attention away from promoting clean electricity solutions.
Green power or not, Better Place is adamant that its fleet of tailpipe-less cars make for carbon-friendly vehicles and cleaner cities.
Even if the cars run off coal, "the emissions impact is the difference between a full glass of water on oil and a drop of water on battery," said Shai Agassi. Citing a study by the Israel Electric Corporation, the Better Place head said the nation could switch all of its cars to electric without requiring any new generation.
The reason is the company’s so-called "smart batteries." The giant, 550-pound power packs will contain "bi-directional" charging that will allow parked cars to feed power back to the grid, turning them into petite power plants.
The technology, known as vehicle to grid, or V2G, is still in its infancy. Tal Agassi said that between 2013 to 2015, when large amounts of cars are running, the company will be able to deploy it but not before. Theoretically, he said, a half a million electric vehicles could send one gigawatt of power back to the grid — equivalent to about 10 percent of Israel’s electricity consumption in a single day.
If true, it’s a bonus not lost on the green groups.
If Better Place is here to say, then a smart grid would be absolutely vital, said Paran.
Battery Swapping vs. PHEVs, the ‘Fax Machines’ of Cars
Worldwide, nothing in the business plan has caused more controversy than Better Place’s battery swapping system, a core technology of its system.
A Better Place car can cruise for 100 miles without a charge or a switch. Drivers can recharge overnight by plugging into an outlet. On long trips they can pull into a switching station where a machine will swap the spent battery for a fresh one. A pile of 10 to 15 of the massive batteries will be in stock at each of the switch lanes.
The swap gives drivers the freedom of driving short and long distances, said Tal Agassi. And the entire process takes just 70 seconds.
Some opponents are not buying it. Their biggest concern is that the Better Place system demands a uniform battery and infrastructure now, at a time when the technology is rapidly advancing. The fear is that the company is reshaping the auto industry around a battery that may not be the best solution in a few years’ time.
According to Tal Agassi, battery technology is bound to improve but not that quickly. This first round of Better Place parts are like the first generation of Apple iPod, he said. "And you have to start at the iPod to get to the better iPod."
A recent analysis by consultancy Pike Research on the future of electric cars said that a "new era of electrified vehicles is upon us," but "battery swapping is not likely to be a significant industry."
For mass-market clean transportation in the short term, some analysts see plug-in hybrid electric vehicles (PHEV) as the safer bet. PHEVs, unlike pure electric vehicles, are able to run on batteries much of the time but shift to liquid fuel when the electric power supply runs out.
They require none of the messy swapping infrastructure but would save fuel. In many cases, drivers with short commutes would only need to fill up with gas a few times a year.
By the end of 2010, GM will launch its $40,000 Volt, its long-awaited PHEV with a 40-mile electric range. The car is expected to be a breakthrough for the flailing auto industry.
"We treat the PHEV like a fax machine," said Tal Agassi. Just as the fax was the bridge between snail mail and e-mail, PHEVs are a stopover to all-electric cars, he said.
Better Place and Renault-Nissan Stand Alone, for Now
Renault is the only car giant that has taken the Better Place plunge. But Shai Agassi suggested others will soon follow suit.
"I assume that we will announce additional companies … in the course of this year," he said. "A lot of them are in discussions with us on how they can catch up to the amazing advantage."
Further, the company said it has been in talks with leaders and investors from every major Western country. And it is keeping its eye on the Chinese prize.
China, the world’s second-largest oil consumer behind the U.S., beat out America in car sales last year with 45 percent growth, at a time when its environmental pollution has reached crisis level.
Already, there is reported interest from China-based Chery-Quantum to churn out a jeep that would fit the Better Place specs. The company is a joint venture with Better Place shareholder Israel Corporation and Chinese carmaker Chery Automobile.
Tal Agasssi confirmed that Better Place is "speaking with Chinese entities" although he would not disclose cities or investors.
"We believe that China is going to be a very, very strong player when it comes to finding an alternative to gasoline cars. We would be very happy to work with them," he said.