Charging ahead in push for electric cars
A Palo Alto start-up company wants to electrify the global auto industry, one place at a time.
Better Place created a stir last month when it announced an ambitious plan to install thousands of electric-car charging sites and battery-replacement stations around the Bay Area.
The idea is to jump-start the adoption of electric vehicles by providing places where people can easily charge them, leading, the company’s founder hopes, to a reduction in global dependence on oil.
Better Place and its competitors are betting that providing a variety of charging choices will help overcome the chicken-and-egg question that bedevils electric cars -- which do you build first, the cars or the infrastructure to keep them running?
If they succeed, the result could be the upending of Detroit’s century-old business model -- an objective that Better Place founder Shai Agassi calls Car 2.0.
In this vision of the automotive future, cars will run on emission-free power supplied from renewable energy sources while being connected to a wireless network of charging stations, battery monitors and payment channels.
While the Detroit automakers are looking to Washington for money to stay in business, a growing number of policymakers, car companies and entrepreneurs think the industry needs a reboot instead of a rescue.
In addition to Better Place, companies such as Ener1 -- a New York battery provider that has developed a charging station that can deliver an 80% charge in 20 minutes -- and Coulomb Technologies Inc. of Campbell, Calif., are launching business models based on a future of electrified driving.
Agassi, a 40-year-old dot-com-bust survivor who abandoned a top post at software provider SAP to pursue his vision of an electric car future, has generated plenty of media buzz with his idea for a new approach to four-wheeled mobility.
He’s also made some powerful allies, including Carlos Ghosn, head of global automaker Nissan-Renault; Israeli President Shimon Peres; and U.S. politicians such as San Francisco Mayor Gavin Newsom.
Agassi is simultaneously thinking big and small. He wants to electrify the world’s car fleet, but he wants to do it by piecing together his vehicle-charging network one “island” at a time. Those could be virtual islands -- small nations such as Israel or Denmark, or regional communities such as the cities ringing San Francisco Bay. Or they could be actual islands -- Hawaii, for instance, where officials have endorsed Better Place’s plans for a vehicle-charging network. The idea is to create a concentration of charging options that will provide relief from “range anxiety” -- the fear among electric car owners that they will be stranded with a dead battery and have no place to charge up.
Better Place has developed a business plan that borrows heavily from the model used by cellphone providers. Rather than sell cars, the company would sell charging time at the thousands of plug-in stations that Better Place plans to install around the Bay Area and its other “islands.”
The charging stations -- early versions installed in Israel this month are parking-meter-like posts with plug-in ports for two cars -- would be located where motorists typically leave their cars long enough to recharge their batteries. To facilitate a large-scale adoption of electric vehicles, a metropolitan area would need tens of thousands of these charging spots in parking garages at workplaces, malls, strip centers and movie theaters.
Customers would sign contracts based on the number of miles they expect to drive each month. Non-subscribers would be able to use the charging stations on a per-use basis, similar to the cellphone concept of roaming.
In addition, Better Place wants to set up dozens of stations that would allow subscribers to swap depleted batteries for ones that are fully charged. The idea is to have a backup system ready in case a customer needs to make an unexpected trip and doesn’t have time to wait several hours for a battery charge.
On Dec. 8, Better Place unveiled its first charging stations in Israel, where it is working with a venture partner on a project that aims to have 100,000 charging spots in place across the country by 2010. It is working on similar projects in Denmark in partnership with the country’s biggest utility company and in Australia, where a major infrastructure financing firm is working on raising funds for a charging station network.
As of right now, Better Place has $200 million in financing and is talking to lenders to raise more. Fully wiring the Bay Area for electric vehicles could cost as much as $1 billion, the company estimates.
Jason Wolf, who is responsible for business development in North America for Better Place, estimates that the company needs 100,000 to 200,000 charging spots and several dozen battery-swapping stations to be able to handle 100,000 subscribers in the Bay Area by 2015.
That first phase could be accomplished for $150 million to $250 million, Wolf said, “and if you can get to 100,000 subscribers in four years, you have a profitable business.”
He contends that powering cars with electricity makes sense for consumers even in the face of falling gasoline prices.
But the technical challenges of developing a system that quickly and smoothly switches out automotive batteries weighing hundreds of pounds are formidable.
Electric cars planned by Nissan and its corporate cousin, Renault, eventually will feature “swappable” batteries that could work with the Better Place system. But General Motors Corp. and Toyota Motor Corp., the world’s two biggest automakers, said they were not interested in selling cars with swappable batteries.
Beyond the technical challenges -- for example, how to meet stringent safety standards while making the batteries easily removable -- there’s the issue of standardization.
“Every manufacturer probably won’t have the same strategy as to the size of the battery,” said John Hanson, a spokesman for Toyota. “You’re almost trying to standardize the kind of vehicle you’re going to build and assuming that every manufacturer is going to buy in to this. And I don’t think they will.”
Another big question, of course, is whether there will be enough electric cars on the road to justify building even regional networks of charging stations.
Certainly, there is no shortage of automakers pushing ahead with plans for electric cars. Tesla Motors Inc. of San Carlos, Calif., is building an electric sports car designed to go more than 200 miles between charges, while Think of Norway is claiming a 100-mile-plus range for the electric car it’s producing for the European market.
At last month’s L.A. Auto Show, Nissan-Renault announced plans to begin selling a competitively priced electric car in Oregon in 2010, with mass market availability by 2012. Hours later, BMW unveiled an electric version of its popular Mini coupe.
Toyota, GM and other carmakers are pushing ahead with plans for plug-in hybrids, which would have limited electric-only driving capability.
But these cars are being produced only in small batches or are still in early test phases. GM is promising its Volt plug-in hybrid by late 2010. But the car is expected to be pricey -- close to $40,000 by some estimates, limiting its mass-market appeal.
Toyota says its plug-in hybrid will be ready late next year. But the first copies are going to fleet use in what amounts to a large-scale test program.
There currently are only a few thousand electric vehicles on the road in California, according to estimates by the state Air Resources Board. The board expects that number to rise to 7,500 to 25,000 by 2014 as California’s latest clean-air mandates kick in.
What the automakers and Bay Area government officials do like is the idea of a vehicle-charging infrastructure that gets built without the use of tax dollars or money from cash-strapped corporate coffers. Getting the driving public to embrace electric vehicles or even plug-in hybrids will require such a charging network. And if Better Place, Coulomb or Ener1 think there’s money to be made in installing those networks, some local governments seem willing to let them give it a shot.
Last month, the mayors of San Francisco, San Jose and Oakland pledged to streamline permitting procedures to make it easier for owners of electric cars and plug-in hybrids to install home charging systems.
“We’re not trying to pick winners,” said San Jose Mayor Chuck Reed, whose city is working with Coulomb on a test project. “But we know that if the electric vehicle is going to succeed in the marketplace, people have to have a place to charge them besides at home.”
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