Baby you can drive my electric car

Shai Agassi to launch the world’s first fleet of all-electric cars in Israel.

Shai Agassi (photo credit: courtesty)
Shai Agassi
(photo credit: courtesty)
Shai Agassi is out front and loving it. Four years after announcing he would launch the world’s first national network for all-electric cars in Israel, his Better Place company is in pole position on the starting-grid in what appears to be a one-car race.
In January, the first consignment of 100 Renault Fluence ZE (“Zero Emissions”) family sedans arrived in Israel. By the end of 2012, hundreds of Israelis will be driving around the country in cars powered only by electric batteries supplied by Better Place. They will be able to tricklecharge their vehicles over several hours at thousands of charge spots at their office, in the streets of major cities, at public parking lots or overnight at their homes. Each full-charged battery will fuel about 100 miles of driving.
For longer distances, drivers will be able to use a national network of swap stations where spent batteries will be replaced by fully-charged batteries in an automated process that takes less time than filling a gasoline tank.
Agassi, a whiz-kid programmer who sold his first company for $400 million in his early thirties, says he is amazed that four years on, with the Israeli network about to go live and more networks under construction in Denmark and Australia – as well as pilot programs in Canada, California and Hawaii – Better Place has no serious competitors.
No competition “There has never been a technology disruption of this magnitude where one company was left to run with an idea, where no competition showed up in the span of four years,” Agassi tells The Jerusalem Report.
“That to me is astonishing. It’s as if somebody would have left Apple for four years to build an MP3 empire and expected to catch up. In technology, usually one year is enough to create an advantage that is really hard to catch up afterwards.
“We all thought that the car industry would be more pro-active in catching up and what we’re seeing is that the car industry is extremely conservative,” he says.
Agassi, who drove an electric car to commute to his office in Palo Alto before relocating back to Israel, where he was born in 1968, to launch Better Place, is passionate that electric cars are not just a passing trend but a mass-market phenomenon that will sweep the automobile industry. He believes the all-electric Renault Fluence ZE will become a top-selling car in both Israel and in Denmark, where the second Better Place network is planned.
Agassi says the plan he originally announced in 2008 is on track. “By and large we were scarily accurate on most of the predictions that we made,” he says.
“We needed a few less stations than we originally thought, less public charge spots than we thought. Most of the charge spots are actually at people’s homes, not in the public area,” he says.
One surprise is that early applicants are not limited to people driving shorter distances, but include heavy users driving up to 30,000 miles a year. In the past few months, Better Place has signed deals with 400 corporate fleets and three of Israel’s top five leasing companies. They include major corporations like cellphone companies whose fleets are on the road all the time, clocking up high mileage.
The Fluence ZE is being sold to private customers for NIS 122,900 ($33,000), a comparable price to the regular model. Customers then purchase a mileage package from Better Place that includes the battery, recharging and swapping, up to a certain mileage per year – similar to a cellphone package. A basic 20,000 km (12,427 miles) per year costs NIS 1,090 ($295) per month, while 30,000 km (18,641 miles) costs NIS 1,599 ($432) per month. Better Place says customers will save about 15 percent in fuel costs and more in lower maintenance and insurance compared to a gas-fueled vehicle.
A special package costing NIS 157,500 ($42,600) includes the Fluence ZE and all-inclusive service for three years for those driving up to 25,000 km (15,534 miles), giving an estimated saving of 35% over a similar gas-powered car.
“They are actually showing up for financial reasons, less than for altruistic reasons,” says Agassi.
“When you get a car that is actually cheaper than the gasoline equivalent, you open up a much broader market than just the niche early adopters,” he says.
When he launched the project in 2008, Agassi said he was also inspired to rid the world of its dependency on oil and the pollution it creates. He predicted that oil prices would continue to rise, increasing the advantage of electrically powered vehicles.
“Within a decade, the cost of energy for a single year of fuel supply for a combustion car should cost more than the cost of energy for an electric car’s entire life, even when taking the cost of battery into consideration,” Agassi said.
Today he is even more convinced of that calculation.
“The odds of the world oil prices actually going down, given everything we’re seeing around us today, I wouldn’t take that bet. If anyone’s betting on a two-digit number in the next three years, they either found a way to create world peace or they found a way to bring oil from places we don’t know yet,” he says.
“Nothing in the macro conditions, short, medium and long-term, indicates oil’s going to go below $100 a barrel.”
He also points to China, where Better Place buys its batteries. The Chinese are looking at the Better Place model very closely and may well launch their own competing network, if the company does well in Israel and Denmark.
“Just in the next five years with growth of seven to eight percent in China, you’re adding almost all the cars in Western Europe in China in the next five years,” Agassi says.
His confidence is shared by some of the savviest investors in the game.
Nissan-Renault has poured more than half a billion dollars into developing the new sedans and expects to supply more than 70,000 electric cars for Better Place drivers in Israel over the next three years.
Leading funds have lined up to provide Better Place with more cash than Agassi expected. Last year, the company raised $200 million from investors, bringing the total to around $750 million. New investors include America’s General Electric conglomerate and the Swiss UBS banking group. The company is now valued at approximately $2.25 billion.
“Of all the clean tech we looked at in the area of transportation, nothing compares to Better Place. The business model is highly attractive,” says Anthony Bernbaum, the global head of direct principal investments at HSBC, Britain’s international banking corporation, which has sunk $150 million into Better Place so far.
Agassi says the new investment will allow Better Place to start expanding into other areas.
“The real next big networks will most likely happen in Western Europe,” he says, but Better Place is already looking further afield with future plans dependent on the success of its first three networks.
“Think of Israel’s network as a single cell organism, integrated and covering the entire country. Denmark is roughly the same. Think of Australia as a three and-a-half cell organism with one network connecting it. Melbourne is a cell roughly the size of Israel, same thing for Sydney, same thing for Brisbane and a half cell for Canberra, connected with a freeway that is roughly the same length as the freeway between San Diego and Seattle,” says Agassi.
“When we prove that we can do a cell, it’s not that hard to expand it to do multi-cell. Once you do multicell, you prove that you can actually do places like the US ,” he says.