Mr. Disruptor: Shai Agassi's Electric Car Plan
By Bill Moore
Imagine your cellphone transforming into an electric car. Sound far-fetched?
Not if you're Shai Agassi, the founder of Project Better Place (PBP), and you believe you've come up with a concept that could transform the notion of car ownership. The underlying premise of his paradigm-changing business plan is to sell clean, green transportation services on the cellular telephone model.
Israeli-born Agassi's idea, for which he's received some $200 million in venture funding -- led by Israel Corp -- is to set up the electric car equivalent of a cellphone network. Where forests of cellular phone towers and repeaters are the most visible manifestation of the networks that make cellphone service possible, in PBP's case, the network will consist of hundreds of thousands of battery charging stanchions and scores of battery swapping centers. Just as it isn't the cellphone that generates revenue for the likes of Sprint, Verizon and ATT&T, it won't be the electric cars in Agassi's model. Instead, it will be the convenient, affordable and environmentally-sustainable transportation services that he hopes to offer.
As currently envisioned, PBP foresees offering various service plan levels akin to cellular phone service. A basic level might enable individuals to purchase x-number of miles the way you buy pre-paid cellular telephone minutes from Virgin Mobile or Trac Phone. The price of the service would be pegged to the price of gasoline in the country or even by zip code. Mike Granoff, one of the early investors in BPB, stresses that the Project's plans will continue to evolve over the next two-to-three years as they deploy their network of charging stations, 10,000 of which will be in place in Israel by the end of 2008, according to Agassi.
Other levels of service involving longer commitments are also in development, including extended service plans out to five years, at the end of which the customer will own the electric car free and clear.
Presumably while anyone with an electric car could join any of the plans, only those cars that are marketed through PBP and its Renault-Nissan Alliance partner will have the onboard GPS navigation system that will identify and reserve one of the tens of thousands of charging stanchions for the customer that will be a part of the community or nationwide network. Having the system find you a handy parking spot (assuming a non-electric car hasn't parked in it illegally) near your home or place of business could be worth the price of the service alone, Granoff commented.
Since the battery in the car is the responsibility PBP and there are hundreds of swapping stations in the network, concerns about replacing the car's power pack are minimized. If the operating range of the car begins to decrease -- usually a sign that some of the modules have failed -- you simply drive it to the nearest exchange station, to which the GPS system will direct you, and they will replace it in five minutes or less for free as part of your service agreement.
Why not simply do the same thing with gasoline or diesel cars?
Two reasons: Project Better Place's purpose is to help transform the world into a "Better Place," a phrase originating from the 2004 World Economic Forum in Davos, Switzerland. Challenged to come up with ideas that would make the world a better place by 2020, Agassi developed his electric car service plan. EVs offer the promise of eventually eliminating reliance on petroleum. That, in turn, reduces the creation of climate altering greenhouse gases, especially when the electricity is generated from renewable energy sources like Negev Desert sunlight or Baltic Sea winds.
The second reason -- and the one that is the financial foundation underpinning the idea -- is that electric cars are cheaper to operate on a per mile basis than gasoline cars. By some reckonings, the per mile operating cost can be anywhere from one-quarter that of a gasoline car to as little as one-tenth the cost.
It is this cost difference that offers Agassi and his backers the promise of turning a profit. Where the price of oil is only headed north -- and OPEC officials are warning of $200 a barrel oil in the not-too-distant future -- renewably-generated electricity will remain stable for decades into the future. In addition, there is a lot of underused generating capacity at night that is sufficient to power literally hundreds of millions of cars.
The concept is appealing enough to have garnered the support first of Israel and now Denmark, whose governments both see it as a means to eventually eliminate their dependence on petroleum, a particularly sensitive issue for Israel, which has no reserves of its own, and relies larger on imports from Egypt. The Danish government sees it as a way to use its excess offshore wind power capacity, which its wind farm operators currently are compelled to sell at wholesale to neighboring countries. Selling it to local Danish customers at a retail rate through Project Better Place offers a better return on the wind power company's investment.
So far, PBP has signed agreements to build out a network of 500,000 electric car charging stanchions and 130 battery swapping stations in both Israel and Denmark. While it is PBP's policy to not comment on additional countries with whom it may be in discussions, it is assumed that other projects are in the works and will be announced as agreements are signed. A recent study of Project Better Place's plan by Deutsche Bank concluded that not only can it be financially successful, but that it has the potential to "wipe out gasoline cars."
In both countries' cases, driving distances are relatively short; in Israel most of the major cities are less than 50 miles apart. A trip from Tel Aviv to Haifa and back will involve one battery swap or a couple hours recharging while taking a business meeting or visiting a friend. Israel has also significantly lowered the excise tax on electric cars by 70 percent, adding yet another important financial incentive to switch to electric.
As for the electric cars themselves, these are being developed by the Renault Nissan Alliance with the enthusiastic support of the Alliance CEO, Carlos Ghosn, who plans to start shipping state-of-the-art, all-electric cars to Israel and Denmark by 2012, with early demonstration prototypes arriving even sooner. Both Renault and Nissan have extensive experience in electric car technology. The new electric cars will likely will have ranges of around 100+ miles and be fully highway-capable. Their Nissan-NEC developed battery packs will be exchangeable in as little as one minute's time, Agassi predicts.
The current prototype vehicle, a Renault conversion done by PBP engineers in Israel, has a top speed of 160 km/hr (100 mph), a range of 160 km (100 miles) on lithium ion batteries and 0-to-60 acceleration in the sub-eight second range. Another 49 cars are being built in Israel and by 2009, Agassi hopes to have had 50,000 Israelis test drive one of them.
The pay-off for the customer is a new, efficient, affordable, green vehicle that is quiet and fun to drive, one that gets them pretty much anywhere they need to go, even the 326 km (202 miles) drive from Jerusalem down to Eliat on the Red Sea coast. It also benefits the country, as a whole, because you're not using increasingly expensive and politically volatile oil. And you're helping the planet by reducing your carbon footprint, while enhancing your nation's energy security.
And what about all those used batteries, you ask? Project Better Place has already begun thinking about this issue and sees several potential opportunities that could include repositioning batteries with ranges of less than 100 miles into island markets, for example, or selling them to utilities or businesses who might wish to use them for load shifting services, buying off-peak power at night and using it during more expensive day time loads. Eventually, the batteries would be recycled with the lithium and other components finding their way back into future batteries.
So, assuming all the pieces fall neatly into place -- and admittedly, that remains a substantial if -- Mister Agassi will have come up with a way to do what he set out to do, make the world a better place.
Now AvailableExclusive EV World MP3 interview with Shai Agassi in which he reveals more details about his innovative plan to jump-start the EV world.
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