Better Place: Green Transportation & Mobility
I’ve heard Shai Agassi’s story for the first time in January 2007. It was at DLD Conference in Munich. Since then I am wondering about all the people he has already hooked up with: mayors, CEOs, investors, statesmen, car dealers … incredible carbon footprint … At one point, everybody marveled about Shai’s ability to convince you that the answers to the most challenging problems are easy and obvious. He tells you the story, and it sounds so simple.
Why don’t we have it today? Why isn’t it here already?
Three years later, in the beginning of 2010, Agassi’s vision can show first results. But let’s start with Shai Agassi, formerly known as the next SAP CEO. The topic: green transportation. Agassi is the founder and CEO of Better Place PLC, a new infrastructure creator and operator for the management of country-wide electric vehicle fleets. Better Place PLC works with governments, car makers, and financial institutes creating a large scale framework for rapid transformation of transport system away from fossil based energy into non-polluting oil free solutions. Green transportation for a Better Place called earth! Better Place is not in fact that another VIP is going green. No, it is the astonishing business model behind the idea and the simple fact that batteries are not included!
Batteries are not included!
Electric cars have long been a fetish object for environmentalists: electricity can be produced from wind, solar or nuclear sources with little or no CO2. Yet all these alternatives suffer from a common problem: refueling. The most advanced electric car currently for sale, the Tesla Roadster, runs for no more than 250 miles on a charge, and others can do only 50 miles or so; then they require two or more hours of plug-in time to recharge. The problem of refueling is so significant that fans of electric cars have a phrase for it: range anxiety, the nagging fear that you’ll run out of juice before you can find a charge spot and be stranded at the side of the road. It is the major reason that most people, even as they cheer on the development of low- or no-emissions vehicles, are leery of actually buying one. And if people won’t buy them, carmakers won’t make them.
Agassi’s solution is a dual system: Better Place aims to construct a worldwide network of millions of small-scale “charging spots,” parking-meter-like posts scattered around downtown areas and along highways. But crucially, Better Place is also building roadside robotized battery-swap stations that provide fresh, fully charged batteries without having to wait hours for a charge. You drive by and a robot will change your battery quickly. Agassi says: “If we can’t do this in less time than it takes to fill your gasoline tank, we don’t have a company.” The robot is designed to reach under the chassis of an electric car, pluck its battery out and replace it with a new one, much the same way you’d put new batteries in a child’s toy. At a presentation in front of a group of investors and employees the robot – a squat platform that moves on four dinner-plate-size white wheels – scuttled back and forth along a 20-foot-long set of metal rails. At one end of the rails, a huge blue battery, the size of a large suitcase, sat suspended in a frame. As we watched, the robot zipped up to the battery, made a nearly in-audible click, and pulled the battery downward. It ferried the battery over to the other end of the rails, dropped it off, picked up a new battery, hissed back over to the frame and, in one deft movement, snapped the new battery in the place of the old one. The total time: 45 seconds.
The Business Model
“If I can give you miles in a more convenient, cheaper way than gasoline, you will take them,” Agassi says. “If your neighbor is driving an electric car and paying me only $30 a week for the electricity, you’re going to buy an electric car, too. If I do it without killing your kids and the planet, then it won’t even matter if it’s cheaper or not; you will just do it.” Better Place came up with an astonishing business model, a model which is actually borrowed from the mobile phone industry. In the same way that wireless operators deploy a network of cell towers to provide an area of mobile phone coverage, Better Place will establish a network of charging spots and battery exchange stations to provide ubiquitous access to electricity to power electric vehicles. The company will partner with car makers and source batteries so that consumers who subscribe to the network can get subsidized vehicles which are cheaper to buy and operate than today’s fuel-based cars. Consumers will still own their cars and will have multiple car models to choose from.
What does this mean in numbers? Can a company become profitable based on this model? No doubt about that. Powering a car by electricity — even relatively expensive “clean” energy like wind or solar — costs far less than powering it by gasoline. And with the United States market for automobile gas at roughly $275 billion, Agassi figured that a company controlling a world network of charging stations would become so profitable so quickly that it could subsidize its customers’ electric cars, much the way mobile companies give out free phones to people who sign two-year contracts … e.g. 10 USD for 1000 miles, 20 USD for 3000 miles … car model A: 1000 USD, car model B 2000 USD, model C 0 USD.
Dream on or translate into action?
You can call it extraordinarily bold, requiring carmakers to fundamentally rethink the way they build cars. But the time might be just right! They are collapsing anyway … so Agassi’s solution might be a huge opportunity in crises for them.
In barely two years, Agassi has persuaded investors to contribute $400 million, and several cities, countries and states – including Israel, Denmark, Australia, Tokyo. The French automaker Renault is spending $600 million over three years to develop a car with swappable batteries, to be released in 2011. In Israel, where Better Place has already installed hundreds of its signature blue car-charging stations, Agassi is credited with convincing the nation’s jaded political class that they have an opportunity to actually wean their country off oil. And now Agassi is targeting China – the largest car country in the world – for a very good reason, he says: “If China goes electric, the world will go electric! It is as simple as this. The Chinese government is great in executing such ideas, they are very fast in deploying mass infrastructure. And they have the money to do so. They put a 9000 USD-incentive on every electric car in particular focussed on government vehicles and taxis, they are creating a new city for electric cars between Beijing and Tiangjing – the new Detroit if you want, they’ve put down the budgets for all of the 13 mayor cities to put the right infrastructure in place, they ban gasoline cars from the cities. They are definitely taking these ideas serious. All of that is driven top-down. But they are also creating a car industry bottom-up. And when the Chinese have a consumer product … nobody can beat them in price! So once the Chinese Market goes electric, the US has to go electric, Europe has to go electric … The Chinese today have the ability to be the risk takers and leaders and then the rest of the world will follow them!”
Shai Agassi is the founder and CEO of Better Place. He is focused on one of this century’s biggest challenges, moving the world from oil-based to sustainable transportation. Agassi works with government leaders, auto manufacturers, energy companies and others to make his vision – zero-emission vehicles powered by electricity from renewable sources – a reality in countries around the globe.