Plugging in to the electric car revolution

The potential for electric vehicles has been talked about for decades. But a former Israeli software entrepreneur is developing a game-changing infrastructure that could finally make them feasible - a standardised network of charging stations where drivers can plug right in.

Futurists have been talking about battery-powered electric cars for as long as there have been futurists. We’ve had viable electric vehicles since before the turn of the last century - New York City was plugging in taxis as early as 1897. Electric vehicles (EVs) offered serious competition to gasoline cars and trucks at least until the 1920s. Henry Ford was fascinated with them, and collaborated with his close friend Thomas Edison on an ultimately unsuccessful plan to bring one to market. Groundswells of interest in EVs arose in the late 1960s, in the early 1970s following the Arab oil embargo, and again when the Iranian oil spigot went dry after the 1979 revolution.

Now we’re all excited about EVs again. Nissan and Renault are gearing up to produce an electric sedan for the mass market by 2012. California-based Tesla Motors, though it has deep financial problems, is starting to roll $100,000 EVs down a production line. Electric versions of the BMW Mini and the Smart car are being tested. Start-ups Aptera and Fisker Automotive are exploring different corners of the market.

Despite all this activity, battery EVs won’t become a mass-market phenomenon until and unless there’s a standardised network of charging stations to plug them in. People will need to charge their EVs (which often have a range of 100 miles or less) at home, at work, and while out shopping, too. Carmakers have been wary of anything but small demonstration projects because that network didn’t exist, and cities, states and countries are unlikely to commit millions to build such an infrastructure without readily available cars.

And that’s where Israeli-born Shai Agassi and his company, Better Place, come in. They are promoting a vision of an electric transportation future that includes a widespread charging network, with battery exchange stations (where, for longer trips, depleted packs are exchanged for new ones in just a few minutes), and their auto-company partners are planning to produce the electric cars and trucks that will be plugged into those stations.

Agassi, a former software entrepreneur, has been travelling throughout the world, targeting what he calls “transportation islands”, either actual islands or densely packed urban areas with plentiful commuters in a small area. He’s signed up nations (Israel, Denmark, Japan, Australia), states (Hawaii) and even cities (San Francisco) as partners. In some, but not all of those locations, Better Place is co-operating with the Renault-Nissan Alliance.

Nathan Ballard, a spokesman for San Francisco Mayor Gavin Newsom Better Place, says that the Better Place initiative in the Bay Area is a three-city coalition including San Jose and Oakland, with all three municipalities agreeing to work together on a nine-point plan to offer tax credits, speed up permitting and offer other administrative support for electric vehicle infrastructure. “What we’re doing,” says Ballard, “is taking a bet on the future, the idea that electric vehicles will replace fossil-fuel cars and trucks on the road”.

Agassi’s model is not based on traditional car dealerships and repair stations. Instead, he’s thinking about the cell-phone model, where the hand-held device is incidental to the deal customers make buying air time from a provider.

“We bring in three concepts,” Agassi told me. “The first is that we build the network ahead of the cars. The second is that the battery is part of the infrastructure - you own the car, but we own the batteries. Down the road, when there’s a magic battery with twice the capacity of the one in your car, we can swap it at no cost to you. And the third idea is that drivers will buy miles and pay as they consume them.”

Better Place hasn’t yet finalised its pricing structure. But Deutsche Bank analysts arrived at a hypothetical model in which customers would sign a contract agreeing to pay $550 a month for a year to buy enough electricity for 18,000 miles of travel. The payment includes not only use of the battery pack, but also recharging and unlimited use of the fully automated swapping stations. So there are some similarities to leasing, but the customer gets the fuel thrown in as part of the deal.

The perhaps unlikely catalyst for Better Place was Israeli President Shimon Peres. In 2005, Agassi became a member of the under-40 Young Global Leaders forum, which challenged its members to make the world “a better place” by 2020. Agassi’s answer to that challenge was to come up with the idea of a new infrastructure for EVs, and he unveiled it in 2006 at a meeting attended by Peres and Bill Clinton, among others, at the Brookings Institute’s Saban Center for Middle East Policy in Washington. Israel would be a good place to test his electric future, Agassi said. Soon after that, Peres called Agassi and urged him to make his lofty vision a reality.

Spurred by Peres’ encouragement, Agassi got to work. He quit his day job at software giant SAP and, in 2007, founded Better Place, which is based in Palo Alto, California. He raised $200 million, most of it from Idan Ofer, chairman of Israel’s largest holding company, Israel Corp. And Israel became its first customer. “We will have limited testing in Israel in 2009,” Agassi said. “By 2010 we will have 100,000 charge spots and be in full testing mode. We will be ready for the mass market by 2011.”