It is astounding how often failed ideas are rehashed as bright new inventions.
Nikola Tesla was a brilliant inventor, the father of alternating current. It is
Tesla’s vision that makes it possible to transmit electricity over long
distances economically. It is Tesla’s vision that enables us to power TVs,
refrigerators, washing machines, computers or any other convenience. The idea of
the electric car is as old as alternating current.
Better Place didn’t
invent the electric car, it reintroduced it with a twist: Better Place owns the
battery you, own the car.
Everybody loves the electric car; it is quiet
and doesn’t emit any visible fumes. Evaluating the electric car’s full
life-cycle impact, however, reveals an invisible tail-pipe stretching all the
way to the power plant. In countries relying on coal to generate electricity,
the carbon footprint of the electric car can be bigger than that of a gasoline
car, a study conducted by The Norwegian University of Science and Technology has
The study, published in the Journal of Industrial Ecology, also
found that “The global warming potential from electric vehicle production is
about twice that of conventional vehicles.” Furthermore, the manufacture of
batteries and electric motors requires a lot of toxic minerals such as nickel,
copper and aluminum.
We tend to think of the battery as an energy source,
however, the battery is merely energy storage – the actual power source is the
power plant. The battery has always been the weak link in commercializing the
electric car. Some of the shortcomings of the battery include high cost – up to
a third of the cost of the car – heavy weight, and limited utility. To address
the battery issues, Better Place introduced a subscription-based business model,
wherein customers entered into agreements to purchase driving distance; the
subscription cost includes the cost of the battery and electricity.
removing the cost of the battery from the sticker price of the car, consumers
were able to purchase electric cars at a comparable price to conventional cars.
However, in the end the inherent limitations of the electric car, namely high
cost and limited driving distance, doomed Better Place. In Israel Better Place
sold around 750 cars and lost $500 million, which comes out to over $600,000 per
car; expensive even for Sheldon Adelson.
To forestall its pending demise,
Better Place’s CEO Shai Agassi attempted to enter the solar energy business. To
build his solar farm, Agassi approached the government and requested free land
in the Negev equivalent to the area of four million parked cars. To put this in
perspective, that’s an area the size of the city of Ashkelon.
government turned him down. Expanding operations into solar energy would have
only exacerbated Better Place’s financial woes.
The lure of free solar
energy is very enticing. However, in practice large-scale solar operations are
very expensive, require vast areas of land, and can serve only as a secondary
source of electricity.
Even if all of the Negev were tiled with solar
panels, it would not generate enough electricity to meet Israel’s needs. By
contrast, Tamar’s offshore gas operation, with a footprint of only a few
football fields, will generate enough gas to meet all of Israel’s electricity
needs for decades to come. To date the only sustainable green energy ventures
have been those feeding at the tax payers’ trough. Can you say Solyndra?
President Barack Obama touted Solyndra as the technology of the future and
awarded the company $535m. in loan guarantees. The wealthy investors returned
the favor with generous contributions to President Obama’s election campaign.
Shortly after receiving the loan guarantee Solyndra declared bankruptcy. But
don’t worry, the billionaire investors made money like bandits. Taxpayers got
stuck with the bill. It is estimated that the US government has spent over $90
trillion on failed green energy initiatives.
In a last-ditch effort to
save Better Place, Agassi asked the government for a $150m. cash
Thankfully the government said no. Israel cannot afford
Is solar energy useless? The answer is unequivocal no! Solar
energy is indispensable for numerous vertical applications.
solar energy makes satellite communication and GPS possible; there are no power
plants in space. Deploying the Hubble telescope, to unlock the secrets of the
universe, was possible thanks to solar energy. Electric cars made moon
exploration possible. In small, remote islands, which depend on shipping, solar
energy can be economical.
It is when we attempt to force a square peg
into a round hole that we get into trouble.
Gasoline cars are affordable
and convenient, electric cars are neither.
Given the freedom of choice,
consumers will always choose affordable and convenient products.
other day I watched a documentary on TV about an enterprising inventor who
proposed to build affordable and reliable personal flying machines.
would be smart autonomous machines communicating with each other to avoid
Imagine the cost savings from expensive roads infrastructure,
no more traffic jams, zipping from point A to B quickly. When markets are
allowed to be free, the best solutions inevitably win. The best part of free
markets is that the cost of the failed ventures is borne by rich and willing
investors and not by the hard-working taxpayers.
The author is an
engineer by training living in Silicon Valley California, and a great believer
in free markets and individual liberty.