By on November 14, 2011

As Bertel pointed out earlier today, peak oil is here: the graph above is not from some fly-by-night EV firm, but Toyota, an auto industry giant. What years of environmental and security arguments failed to communicate, economics is now explaining with little difficulty. Namely, that demand for oil is growing faster than supply, forcing developed economies to look beyond oil for future growth. And, as you might expect from a conservative player in a conservative industry, Toyota argues that the solution to this growing disconnect is a portfolio of drivetrain technologies. But what if, instead of trying to adapt an existing business model to the new oil reality, you built a new business model from the ground up? That’s exactly what Project Better Place is trying to do, and the contrast between its approach and that of Toyota is fascinating to anyone interested in the future of the automobile.

Toyota’s approach to a world of constrained oil supply in the incremental manner that one would expect from a giant company selling millions of cars each year. In the words of Satoshi Ogiso

To control this gap, we must go multi track. We must improve gasoline and diesel engines. We must increase the number of hybrid models. We must produce the plug-in hybrid. We must develop city commuter electric vehicles. We already started small production of fuel cell vehicles.  We must do all these improvements at the same time.

That approach seeks to serve the entire global marketplace for cars, and places a huge demand on R&D efforts, requiring a company of Toyota’s size to execute the strategy. Better Place’s approach on the other hand couldn’t be more different. Rather than taking a multi-technology approach, BP is focused on one technology: EVs. And rather than building cars itself, BP is focused on providing the services, infrastructure and grid management tools to make EVs viable for more than “city commuter vehicles.” In short, whereas Toyota seeks to evolve, BP is attempting to create the circumstances under which EVs are the natural choice of technology for all automakers.

These vastly different approaches to the same problem have, at their cores, a conflict over philosophy. Toyota, along with the rest of the car industry, is trying to maintain the market for cars as best it can, while slowly introducing new technologies at higher prices which will then trickle down throughout the lineup. As conditions evolve, the market will demand different technologies from Toyota’s toolbox in different amounts. On the other hand, markets are notoriously bad at foreseeing and managing energy price spikes, as witnessed by the crazy segment fluctuations during and after the Summer of 2008. In contrast, rather than promising a steady evolution towards oil independence, BP offers the opportunity for a quantum leap. Its basic mechanism is the government, rather than markets, which can better prepare a nation for the future rather than relying on often-painful,inefficient market mechanisms. And with demand unlikely to drop below supply any time soon, Better Place is the only option for governments with enough political consensus to preemptively force themselves through petroleum-based transport withdrawals.

But just because Better Place is more fundamentally dependent on government assistance than its alternatives in the auto business does not mean it’s another Solyndra. In fact, Better Place has raised some $750m in equity financing, including a $200m round that was announced at the end of last week. Its backers now include, HSBC, Vantage Point, Lazard, Morgan Stanley, UBS, GE, and Israel Corp… none of which are blue-eyed dreamers. And their fiduciary reasons for backing BP appear to be well-grounded: although the company is “pre-revenue,” its valuation (post money valuation on a fully diluted basis) is now $2.25b. That’s an 8x increase for the first round of investors, who would have been hard-pressed to find a stronger return over the 2007-2011 period. So, where does all this value come from if there are no revenues yet? According to the firm’s communications director, Joe Paluska points to

the uniqueness of our model (i.e., investor confidence that we can unlock a hyper growth category for affordable electric cars) and the major trend lines of oil forecast to go up and battery prices continuing to decline with the delta being our operating margin.

Better Place also has another secret weapon that’s sure to attract investors: its CEO, Shai Agassi. The former software maven who created Better Place after being passed over for CEO of SAP, Agassi is one of those rare people who can communicate an idea as complex as Better Place’s network of battery swap stations, its decoupling of the EV and its battery, its under-covered grid management capabilities, and the macroeconomic backdrop that he insists will make it all work. Having met a number of brilliant and intimidating luminaries of the auto industry, it’s safe to say that none of them made quite the impact on me that Agassi did when I met with him earlier this fall. Between the sheer scope of his ideas, and his flinty, intellectual-street-fighter demeanor, it’s safe to say that Agassi is the closest to a truly historical figure that I’ve met in my years covering the auto business. And with the auto industry stuck in the model of slow technological evolution exemplified by Toyota, Agassi embraces the revolutionary approach that a clean break from the past is not only possible, but necessary.

When I ask Agassi if he wanted to “destroy the auto industry,” a charge often leveled against him by industry executives, he smiles and answers with another question:

Did Jeff Bezos want to destroy the publishing industry? Because that’s what he did. But he did it because he saw the potential for an entirely new business model with the Kindle. In effect, the world’s biggest bookseller killed off its existing business, selling paper books, in order to create an entirely new business in digital media.

No wonder then, that Better Place faces such resistance from the established forces in the auto industry, despite the market’s clear optimism for his approach. Thus far, only Renault has signed on to partner with BP; elsewhere, Agassi says the industry is deeply resistant to the idea that infrastructure can make electric cars viable for the majority of the auto market. He sketches a quick graph showing total cost of ownership over 300,000 miles: the cost of a car, gas and maintenance on one side, and the cost of a car, several batteries and electricity on the other. With battery prices near $500/kWh and headed downwards while gas heads upwards, he points to the difference and says

I don’t want to destroy the car industry, I want to destroy the oil industry. I want to share this money with the car companies. When was the last time they got a check from the oil companies?

It’s a question that’s as provocative as Better Place’s business plan, and the fact that it doesn’t convince the automakers shows how deeply conservative the industry is. But then, why get in bed with a plan that aims to kill off your entire gas-powered business when Better Place can’t even prove that there’s a market for their model?

That’s the challenge Better Place faces right now. Its first networks, in Israel and Denmark, are being built up as we speak, ahead of a slow rollout next year of the Project’s services and vehicles. And says Agassi, the first year will be slow and there will be problems. Like what kind of problems? Agassi smirks slightly and says

We’re going to find out. Imagine the first guys to install gas stations… you think they didn’t run into a few unexpected problems?

But it seems that Better Place’s problems thus far have little to do with implementation and everything to do with the fact that big ideas are scary and draw knee-jerk reactions. For example, take a recent Wall Street Journal [sub] piece which cites the concerns of one Moni Bar, chief executive of Budget Rental Cars Israel-Domicar Ltd. For example:

Mr. Bar said that he fears vehicles with switchable batteries might lose as much as 70% of their original value in four years

An interesting complaint, but one one that seems borne of paranoia rather than reality. After all, one of Better Place’s key advantages is that you don’t buy an EV battery, but just the car. The battery is owned by BP, which you then buy a mileage plan from, allowing you to swap batteries at will and insulate yourself  from the 70%-range depreciation that will afflict EVs where you do have to buy the battery. Though BP does not have a buy-back scheme to maintain resale values, it insists that the 70% depreciation number is way off. And with its new Fluence EVs selling for less than the Mazda3 (Israel’s most popular car) and offering a 20% improvement in Total Cost of Ownership (including gas and maintenance), it’s not too surprising that 400 of Israel’s largest corporate fleet owners have signed up to switch their fleets over to Better Place (the majority of new car sales in Israel are made through fleets). As Agassi puts it

We don’t have a demand issue, we have a rollout issue. The first year we are going to take care to have a carefully controlled rollout.

Getting that rollout right is the major challenge for better place, a it is not evolving an existing product to changing times, but is rather attempting to change entire parts of the world all at once. Today it’s Israel and Denmark, next it will be Australia (which Agassi describes as “two and a half Israels, linked by a freeway). Perhaps someday it will be the San Francisco Bay Area, a market Agassi also compares to Israel. Like everyone else, Better Place needs to build scale in order to bring prices down to the point where unlimited-range, limited-depreciation EVs can compete on pure economics; unlike everyone else, BP can be patient while it rolls out its first networks. After all, it doesn’t need to spend huge amounts researching multiple solutions… it just needs for gas prices to march ever upward and battery prices to keep dropping. And when the next big gas price spike arrives, you can bet that a number of governments with overnight mandates to solve, not “work towards solving” oil dependence, will be calling up Agassi. After all, if you want to “shoot the moon” in the race free private mobility from oil dependence, Better Place seems to be the only option out there.

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72 Comments on “In The Battle For The Post-Oil Auto, Big Investors Are Shooting The Moon...”


  • avatar
    Wheatridger

    Bravo!

    “Make no little plans. They have no magic to stir men’s blood and probably will not themselves be realized.” — Daniel Burnham, the famed 19th Century architect.

  • avatar
    european

    OMG unbelievable azzkissing.
    i hope you’re getting paid for it.

    p.s. dont you dare delete this comment.

    • 0 avatar
      V572625694

      You mean like this?

      Better Place also has another secret weapon that’s sure to attract investors: its CEO, Shai Agassi. The former software maven who created Better Place after being passed over for CEO of SAP, Agassi is one of those rare people who can communicate an idea as complex as Better Place’s network …Having met a number of brilliant and intimidating luminaries of the auto industry, it’s safe to say that none of them made quite the impact on me that Agassi did when I met with him earlier this fall.

      You should at least correct the grammatical mistakes in the press release before passing it off as your own work.

      • 0 avatar

        Don’t be a troll. If you think the Editor-in-Chief lacks brains and integrity, go to some other automotive website. I’ll stay here.

        I don’t particularly like the idea of Better Place. The car, in my life, has been a freedom machine, capable of taking me anywhere in this country, including — in my early childhood, to be sure — as far as a couple of hours off of the beaten path, somewhere in Nevada, until, after seeing no more than a couple of cars in that time, my father realized he’d taken a wrong turn. You can’t get taht far off the beaten path in an EV and still get back, but we had no trouble getting back in the 1950 Studebaker. But unless there’s a revolution in battery tech, EVs will be tethered to well-populated areas, and they won’t be going on long voyages. And automotive adventure will keep shrinking. But I have to keep telling myself that the more people drive EVs, the longer the gas will last.

    • 0 avatar

      Just the truth as I see it. I was neither paid for this piece nor did I “pass off” a BPP release as my own work. Was I affected by meeting Agassi? Sure. He really is the only person I’ve met who struck me as a potential “next Henry Ford” and that couldn’t help but affect my approach to the story. Which is why I mention the meeting. I don’t mind people disagreeing with my piece or BP’s plans, but I do mind the implication that I could only be intrigued by this unique global gamble because I was somehow compensated for it.

      I’m not saying that BP is THE ANSWER, I’m trying to juxtapose its approach with that of Toyota. But to be clear, BP really is the only “total solution” that’s being offered to policymakers right now… I think that reality, rather than any of the marginal benefits of the plan, is what gives BP its chance at success. As someone who generally prefers market solutions, I’m more prone to favor the Toyota/industry approach… but if you aren’t going to let the market determine your energy policy, I think BP is the only real solution currently on offer.

  • avatar
    th009

    The concept is good. Whether it works our remains to be seen. But at least it’s a daring attempt (gamble?) to make EVs practical.

  • avatar
    fred schumacher

    Better Place’s model is the inkjet printer: cheap printer, with profit and cash flow generated by expensive ink. By controlling the “fuel” for an electric car, BP produces virtually guaranteed income, which is why private investors are willing to jump in. BP’s lock on the battery market would produce a cash cow.

    However, by using battery swap technology, BP is multiplying the number of storage units, the most expensive part of the vehicle, required to keep a battery powered fleet running. Somebody has to pay for those extra battery packs, and it will be the end users.

    Israel is a postage stamp of a country with a mild climate. It is dense, and it isn’t very far to anywhere. BP’s plan can work there. I’m very skeptical of it working in Australia.

    For a true paradigm shift in private transportation, I have to go back to my comments in the first of these two articles on automotive future: the essential problem is not drive system but vehicle morphology. We use the wrong tool for the primary task at hand, which is to move one person on a regular daily route. We use a big machine to move a small payload, whether that machine is powered by liquid fuel or stored electrical energy.

    The morphology to provide maximum utility with minimum energy expenditure needs to be based on the motorcycle, not the automobile. An aerodynamic three-wheel enclosed two-seat motorcycle would provide inexpensive fuel-efficient transportation. If that were the primary mode of transportation to satisfy the primary transportation need of most people, fuel use could be cut to one-fifth of present, making a whole lot of other options possible.

    • 0 avatar
      mad_science

      Ah, but the problem with the “commuter pod” is that peak/max demand drives purchases, not the most common use.

      As an oversimplified example, take a two-car home with one parent solo-commuting and one hauling 2.3 kids around. If solo-commuter swaps a 4-door Civic for a 1-seat pod, there’s a lot of utlity lost, all but necessitating the purchase of a 3rd vehicle. Commuter pod + 3rd vehicle is more expensive than just having a minivan and Civic.

      …assuming gas prices aren’t like 3x what they are now, at which point having an 80-150mpg commuter pod starts to pay for itself, depending on initial purchase price.

      • 0 avatar
        fred schumacher

        You’re right. Vehicle choice is based on ultimate use, not modal (most common) use. That’s the problem, and that’s how we end up using the wrong tool.

        A two-earner family would be the ideal market for single-purpose vehicles. Instead of two multi-purpose vehicles being used for commuting, one multi-purpose vehicle is retained but not used for commuting, which is accomplished by two single-purpose vehicles, which together cost as much or less than the other multi-purpose vehicle, which they replace. The two single-purpose vehicles would fit into one standard garage slot, requiring no change in storage infrastructure.

    • 0 avatar

      the notion of BP working all over australia seems nuts to me. A country almost the size of the lower 48 with about 1/15th the population. Unless people in Sydney never leave Sydney, and people in Melbin never leave Melbin, and people in Alice Springs NEVER leave Alice Springs, and are content to live that way, it ain’t happening. Unless there’s a revolution in battery tech. Israel, Denmark, very different story.

      • 0 avatar
        ydnas7

        As an Aussie, it seems quite reasonable for me.
        We have about 12 million cars, 22 million population, 2.1 kids per family. you do the maths. we also have a land mass very close in size to the lower 48 US states or China
        We all have second cars, our outside power sockets are 240V 15 amps. (10 amps for inside sockets)

        In NSW they also obey the speed limits ’cause the fines are too high. that means longer EV range..

        I’ll either drive more than 1,000km a day or I will drive less than 150km per day. For the 1,000km a day the choice would either my petrol car or battery swap along the highway. At 150km per day, it would only require night time recharge required.

        What i don’t need is a 300km battery, my driving is either less than 150km or around 1000km per day.

  • avatar
    ihatetrees

    Color me skeptical. I’ll put my money on Toyota’s strategy. Peak oil may be a problem – never discount the power of incentives to increase production.

    And the EV hype discounts another possible alternative – the industry will move to natural gas.

  • avatar

    Whether the fuel is gasoline, electricity or hydrogen,
    smaller and lighter cars uses less fuel

    However, small cars are less safe in collisions because of the basic laws of physics.

    I have three US patents for making small cars safer.
    Please help me get some support for the inventions.

    safersmallcars.com

  • avatar
    Pch101

    Electric cars have existed for over 100 years.

    Battery pack swapping is just not a disruptive technology. It’s not innovative, but an effort to cope with the same problems that batteries have always had: lengthy charge times and limited storage capacities.

    A truly disruptive invention would provide an alternative to the battery. Better Place doesn’t offer that.

    • 0 avatar
      bryanska

      Your objections are valid, but your conclusions are moot and/or misplaced.

      Lengthy charge times (objection 1) are eliminated with the Better Place model. You won’t be concerned with charging. The station owner is.

      Limited storage capacities (objection 2) are also a problem with gas tanks, so this is not a new problem. Range on one “tank” may be slightly decreased, but you can’t drive unlimited distances on one tank of gasoline anyway.

      EVs and gas vehicles will exist side-by-side for a long time.

    • 0 avatar
      Pch101

      your conclusions are moot and/or misplaced.

      My conclusion is that it isn’t a “disruptive technology.” Research what that is, and then explain to me what makes this “disruptive” as the term is used with the technology field.

      Even if it succeeds, the Better Place business model would be evolutionary, not disruptive. It doesn’t fix what ails the battery, it just attempts to cope with it, which suggests that it isn’t disruptive.

      In other words, Agassi is misusing “disruption”, offering it as an empty buzz word and using the term incorrectly. He’s overselling his product, and when I see someone who is overselling something, my BS detector gets activated.

      • 0 avatar
        carlisimo

        It’s not disruptive in a technological sense, but it is in terms of infrastructure.

      • 0 avatar
        Pch101

        It’s not disruptive in a technological sense, but it is in terms of infrastructure.

        The infrastructure doesn’t exist, and there doesn’t seem to be a path for creating enough of it fast enough for this to be at all effective.

        As far as solutions go, this one is far from elegant. There isn’t much motivation for private operators to pay for lots of costly real estate in order to both serve the customers and hold the inventory.

        As it is today, gas stations are a low-margin business, with many of them just breaking even on the fuel and making their profits from their convenience stores. The downstream end of the energy chain is not at all lucrative; the profits are made at the source, not so much at retail.

        Operating a battery recharge station would require a lot of space for the batteries, plus a labor pool trained to deal with the batteries. That cost structure pretty much torpedoes this before they’ve even started.

  • avatar
    gslippy

    Gee, that’s the same curve they showed me in grade school for the 1970 – 1990 time period. Didn’t happen that way, though.

    Peak oil is a myth, just like 12/21/12. Peak production was first predicted in 1956 to occur between 1965 and 1970, but the latest estimates put it at 2020. It’s easy to make a wild future prediction that must be addressed NOW (I’m talking to you global-warming proponents).

    The earth continues to produce oil for us, and the only way we’ll hit a peak in production is to over-regulate ourselves so that we can’t pump it out of the ground.

    • 0 avatar
      fred schumacher

      Peak oil between 1965 and 1970 did occur. It referred to U.S. production, alone, not world production, and was known as Hubbard’s Peak, after the geologist who come up with the methodology for predicting it.

      Because of the adoption of new technologies, such as hydrofracking and angle drilling, a higher percentage of the oil in fields has been made extractable, smoothing the peak oil curve and extending it. This doesn’t change the fact that oil is a finite commodity, and like all mined, finite commodities, has an end.

      • 0 avatar
        gslippy

        Oil has never been proven to be a “fossil fuel”, nor a finite commodity. If it’s a “fossil fuel”, how does it appear in extraterrestrial places?
        http://www.space.com/8313-strange-spots-pluto-tar-frost.html

      • 0 avatar
        Luke42

        @gslippy: “Oil has never been proven to be a “fossil fuel”, nor a finite commodity.”

        Good luck with that claim… It’s just plain wrong. My brother is a tenured professor of geology, and the mechanisms for making oil are reasonably well understood.

        As for hydrocarbons on other planets, yes, they exist. Hydrocardbons can be produced by biological and non-biological processes (like the Fischer-Tropsch). You missed the methane oceans on Titan. It’s likely been formed by a mechanism other than the decomposition of a subducted swamp over millions and millions of years.

        Anyway, you’re missing the forest for the trees. You seriously need to get an education in the basic sciences.

        Here’s a relevant place to start:
        http://en.wikipedia.org/wiki/Petroleum_geology
        Also, my brother’s introductory geology class would be a good place to start, though they do end up having to waste a surprising amount of time convincing people whose religions have done them an educational disservice that the world is more than 6000 years old.

    • 0 avatar
      Crosley

      Exactly, it’s really no different than when one of these wacko church cults says the world is going to end on a certain date, they get it wrong, and then immediately give another date, then another, etc. The difference is, the media treats the Peak Oil crowd with undying respect.

      The original theorists of Peak Oil (Hubbert) have nothing but egg on their face, they theorized everything would come apart in the 1970′s. Our “oil shocks” are the result of geopolitical brinksmanship, not actual supply shortages.

      The only problem we have with the supply of oil are the stupid government bureaucrats that create these shortages to appease private-jet riding Hollywood celebrities and international cartels that are able to price fix their commodities as a result of our inability to produce our own oil supply.

      • 0 avatar
        fred schumacher

        An excellent source for energy supply information is The Oil Drum website. Right now there is an extended conversation going on about Peak Oil and U.S. and Canada production. See http://www.theoildrum.com/node/8597#more

      • 0 avatar
        LectroByte

        Hubbert was correct on the US peak, and not too far off on the world peak. Depending on whose numbers you believe, worldwide production is flat from 2005~2006 on. It was never about running out of oil, but about running out of cheap, easily-obtained oil. Why else resort to things like trying to bake oil out of tar sands and deep-water drilling?

      • 0 avatar
        Crosley

        Hubberts numbers were WAYY off, he theorized that any child born after 1965 would see the world’s oil used up in their lifetime.

        http://online.wsj.com/article/SB10001424053111904060604576572552998674340.html

      • 0 avatar
        Frownsworth

        Regardless whether or not oil can be extracted indefinitely, do we really want to extract oil from the oil sands, and the arctic region ? Is it really worth degrading our environment this much to sustain the way we live and expect growth after growth ?

        Even if we buy the argument of uncertainty that nearly all the organic materials in the upper crust can be made into oil by the earth then extracted at our will, surely at some point of time, the number of people (and cars) we can put on this planet will exceed our living comforts as it is (ask Beijing).

        To top it off, while organic compounds occur else where in space, our organic compound known as oil is most likely from fossil sources. Science is about the most probable explanations, not the most remote. Just ask any petroleum geologist about paleontology and its use in finding petroleum.

    • 0 avatar
      Xeranar

      Why do people treat oil as if we should want to use it? It produces CO2 that once released into our atmosphere heats the planet up. On top of that it is a very finite supply. Hubbard was absolutely correct and we’ll see reasonable oil reserves depleted in my lifetime (I’m under 30). The only reason why in the 1980s we didn’t have further oil crises was that Saudi Arabia and some other countries opted to push out as much oil as possible rather than conserve simply because America was willing to pay at any price. Once the emerging markets showed up the excess oil we were getting on the cheap dried up.

      The literal verifiable truth is all oil pumped today is less than oil pumped yesterday. Peak oil production was reached and now is on the downswing. Barring a major oil deposit showing up that dwarfs Saudi Arabia and Iraq our oil supplies will be exhausted in 30-40 years. I was going to say 50 but China is using so much I feel shaving off 10 years is fair. Which gives us just enough time to switch to an electric/hydrogen based energy generation society and leave oil for lubrication and plastics.

      • 0 avatar
        gslippy

        “Why do people treat oil as if we should want to use it?”

        Because it’s cheap and effective. I suspect you use it, too.

        “It produces CO2 that once released into our atmosphere heats the planet up.”

        *Hotly* debated, and this doesn’t explain the warming of the outer planets observed by scientists.

        “Barring a major oil deposit showing up that dwarfs Saudi Arabia and Iraq our oil supplies will be exhausted in 30-40 years.”

        The oil is out there, but we’ve regulated ourselves from extracting it. And don’t forget about Russia’s supplies.

      • 0 avatar
        psarhjinian

        *Hotly* debated, and this doesn’t explain the warming of the outer planets observed by scientists.

        It isn’t actually hotly debated by actual scientists, and the outer planets (and sunspots, etc, etc) warming was debunked.

        Interesting point, apparently confusion over the consensus or the perception thereof, is only among conservatives, and generally only a point made by Fox.

        What conservatives assume is that there’s confusion and debate in the scientific community. There isn’t, really, but there’s a lot of money to be made convincing people that the issue isn’t settled.

        People who push Creationism, or Vaccines-cause-Autism, use the same strategy: teach the controversy, don’t actually debate the facts.

      • 0 avatar
        Xeranar

        “Because it’s cheap and effective. I suspect you use it, too.”

        It doesn’t mean we should use it as it is a pollutant to our environment. Mercury is incredibly cheap but we stopped using it in paint. It’s about safety and protecting our environment. My requirement to use it doesn’t make me a hypocrite, it makes me pragmatic at worst, but honestly I use it because I am required since I don’t have the money or engineering skill to build myself an electric vehicle that could pass DOT inspection.

        “*Hotly* debated, and this doesn’t explain the warming of the outer planets observed by scientists.”

        Now I completely understand you’re a political creature as am I but science has come down 90-10 in favor of man-made cause. The remaining 10% are scientists funded by those who ideologically and economically oppose the idea. It’s much like arguing cigarettes cause cancer. There are still people arguing against it but they’re on the losing side of reality. If you want to find peer-reviewed non-oil paid-for science you’ll find it’s consistent.

        Also, warming of outer planets is your argument? Seriously? They go through cycles and we aren’t even 100% what they’re made of let alone their similarity to earth’s atmosphere. Cosmic radiation is a funny thing.

        “The oil is out there, but we’ve regulated ourselves from extracting it. And don’t forget about Russia’s supplies.”

        Yes, the classic debate argument of “it’s unknown!” No we haven’t regulated ourselves from extracted, ANWAR has very little oil compared to other reserves and destroying wildlife isn’t worth those few billion barrels. Russia’s supplies aren’t nearly as vast as you think and they’re probably more aimed at supplying Europe than they are selling it to the US.

        The reality is you’re in the wrong and while I can’t MAKE you understand that, I can hope you get with the program. Wanting electric vehicles and needing them are two different things but technology marches on and oil will dry up.

      • 0 avatar
        Frownsworth

        Absolutely. The point here is that a lot of us prefer the ability to “make” something we need (energy) instead of extracting it from unknown quantities of reservoirs. If we can capture the sun’s energy efficiently, or make other alternatives similar in spirit, we can sustain our own lives without having to resort to satchels of bit of this or that. We also can immediately observe the consequences of our actions of energy usage, good or bad and make corrections immediately instead of leaving uncertainties for the next generations (is there enough left for them, are we causing devastating damage to the planet one way or another). Its the better attitude to approach our needs and problems.

    • 0 avatar
      Frownsworth

      Regardless whether or not oil can be extracted indefinitely, do we really want to extract oil from the oil sands, and the arctic region ? Is it really worth degrading our environment this much to sustain the way we live and expect growth after growth ?

      Even if we buy the argument of uncertainty that nearly all the organic materials in the upper crust can be made into oil by the earth then extracted at our will, surely at some point of time, the number of people (and cars) we can put on this planet will exceed our living comforts as it is (ask Beijing).

      To top it off, while organic compounds occur else where in space, our organic compound known as oil is most likely from fossil sources. Science is about the most probable explanations, not the most remote. Just ask any petroleum geologist about paleontology and its use in finding petroleum.

    • 0 avatar
      zerofoo

      Abiotic oil theory has not produced one significant find. If the earth was truly producing oil abiogenicly, all major oil companies would be suing those theories in oil exploration activities.

      The truth is, oil companies don’t use abiogenic oil theory to explore for new oil reserves simply because the theory is wrong.

      The stuff you put in your car was formed by heat and pressure acting on organic matter over millions of years. The geologists figure out where the most likely place is for that organic matter – and guess what – correlates to that organic matter theory? Oil.

    • 0 avatar
      zerofoo

      Abiotic oil theory has not produced one significant find. If the earth was truly producing oil abiogenicly, all major oil companies would be using those theories in oil exploration activities.

      The truth is, oil companies don’t use abiogenic oil theory to explore for new oil reserves simply because the theory is wrong.

      The stuff you put in your car was formed by heat and pressure acting on organic matter over millions of years. The geologists figure out where the most likely place is for that organic matter – and guess what correlates to that organic matter theory? Oil.

  • avatar
    pleiter

    “After all, one of Better Place’s key advantages is that you don’t buy an EV battery, but just the car.”

    In the limit, how much ‘car’ is needed for a pure EV with a provided battery ?
    It might be I only need a go-cart.
    Or a used Tata Nano without the engine and a generic DC motor installed, that I can build myself.
    Hence, the threat to the ‘as-is’ auto industry.

  • avatar
    bucksnort

    Maybe I am just getting old but this is at least the third, maybe the fourth time I have lived through peak oil.

    It is going to get expensive but it will be around for a long time.

    I think the doom and gloomers have a need to be such. They have to have a cause, an urgency…something to take to the barricades…no wait, that is the occupy types.

  • avatar
    mad_science

    The bigness or audacity of an idea isn’t what makes it important, it’s the implementation. Their scale-up plan starting with dense, highly motivated countries makes sense. Australia will be an interesting dress rehersal for the denser areas of the US.

    It’s still not obvious what BP’s actual _product_ is. Are they going to operate a series of battery swap stations? Sell/lease vehicles? License an interface standard?

    They may be shooting themselves in the foot if their businesss plan is as all-encompassing as it sounds (namely the 1st 2 items before). By offering a complete alternative to the current OEMs, they’re instantly up against some very entrenched competition.

    IMO, the wiser option would be to define and license the standard behind a fast-swap EV infrastructure. This gets them out of the car business and lets the OEMs focus on vehicle design with batteries interfaces that meet a spec.

    • 0 avatar

      Australia is a country almost as big in land area as the lower 48, with the population of New York state.

    • 0 avatar
      maybloom

      It’s still not obvious what BP’s actual _product_ is. Are they going to operate a series of battery swap stations? Sell/lease vehicles? License an interface standard?

      My understanding is they are not going to own or lease the cars. They are however going to own the batteries, provide the electricity and provide you with a connection point in your home as well as build and operate the swap stations. The will also manage the charging and recharging of cars on their network. They look at the battery as a consumable (ala petrol) that can upgraded and improved as technology improves. For this you will pay a fixed amount per month. The amount you pay will be determined by the the miles/kilometres plan you buy into.
      There is already a defined standard for plugs/interfaces and BP are conforming to that standard which will enable non BP/other electric vehicles to plug into their network.

  • avatar
    John Horner

    Wow, talk about drinking the Kool-Aid. Better Place doesn’t need to simply sit around and wait for the price of oil to go up. Better Place is assuming that swappable battery packs are “the answer” and that the rest of the industry will either play ball with Better Place or go away.

    Those are two massive assumptions, and are bigger than the simple assumption that the long term price of oil is going up.

    Be careful of reasoning by analogy.

    Also, be careful of falling under the spell of a silver tongued CEO.

  • avatar
    ixim

    Toyota’s merely trying to prepare for expensive energy. I’d like to keep my current option of a personal motor vehicle, and they’d like to continue to sell it. “Peak oil” may, once, or twice, again prove a mirage, but expensive gas is happening before our eyes.

  • avatar
    Amendment X

    Anyone who has owned a laptop or a cell phone with half a brain should be terrified at the thought of long-term ownership costs associated with an electric car.

    What this strategy fails to address is that, should oil consumption rise while supply falls, the price of EVERYTHING, including the production cost for batteries, will rise. Not to mention that the percentage of oil that goes into gas tanks is a small sliver of total consumption.

    There still isn’t a simple answer to peak oil.

    • 0 avatar
      Luke42

      I used to say the same thing, before putting 135k miles and 7 years on a Prius battery…

      Yes, NiMH (the Prius battery) is a different technology than lithium ion (which is being used in the Volt and the EVs), but the folks with lithium ion batteries in their cars are getting the advertised performance so far.

      The truth is that there is reason for people such as yourself to be conservative when it comes to adopting new technologies. Those who aren’t willing to pay the early-adopter premium (financial and hassle) shouldn’t be buying EVs at the moment.

      But, it’s not like the people designing automotive batteries didn’t think that they’d need to last decades and hundreds of thousands of miles. It’s still early in the deployment of automotive-scale lithium ion batteries, but there’s every indication that those batteries performing as advertised as well as any other 1st generation product.

      As for me, I’ll be buying an EV as soon as I can afford one. That may be a while, though, because I’m a public employee (at a university), and our salaries don’t keep up with inflation — even without the Republican war on us. Oh, well, at least I have a job with medical insurance, I guess — but daycare costs as much as my mortgage, so buying any kind of new car is off the table for the foreseeable future. At least I can drool about plugin-hybrid daddymobiles on this site, that I might-maybe be able to afford one day…

  • avatar
    don1967

    peak oil is here: the graph above is not from some fly-by-night EV firm, but Toyota, an auto industry giant.

    Let’s just agree that the graph is from an auto industry giant with a huge investment in the Peak Oil cult – er, theory.

    I’m not knowledgeable enough to dispute the science for or against, but I do know the scent of human folly when I smell it. And this tired old story reeks of a thousand false – or at least grossly premature – prophecies before it.

    • 0 avatar
      Luke42

      As someone who’s been sort-of following the peak oil debate since 2005, it smells like a large business-institution finally paying attention. And just in time, for them.

      GM certainly wasn’t so attentive when the SUV/Truck businesses (the only worthwhile vehicles that they bothered to make) was kicked out from under them by an oil price spike. They seem to be doing better these days, and Ford’s strategy of bringing their European small-car lineup here seems to be a winner.

      (The fact that car owners from all over the world now swap notes on their vehicles and their home markets may have had something to do with Ford’s new strategy, too. You can’t claim a 2nd-rate Focus is a 1st-rate Focus anymore, when the owners of the two vehicles are swapping notes. So, they started selling the 1st-rate Focus here in the USA, and it really does look like Ford was holding out on us.)

  • avatar
    geo

    There is enough oil here in Alberta to supply the USA for many, many years to come. The problem is, America has allowed misinformed idealogues, alarmists, and celebrities hijack the political process. You just cancelled a major oil pipeline because Elaine from Seinfeld thinks that “greedy people” will be getting rich from it, and because it will endanger “millions of lives”. As usual, decisions by bumper-sticker mantra.

    Your brilliant president said that he wanted “shovel-ready” jobs, and less dependence on Middle Eastern oil. Then he punted the Keystone approval, which would have supplied both.

    • 0 avatar
      psarhjinian

      There is enough oil here in Alberta to supply the USA for many, many years to come.

      Putting aside that this isn’t true (the tar sands production is well below that of the US’s usage)…

      It’s also some of the most energy-intensive and environmentally-damaging oil there is, which is why people were protesting it if, you know, you actually listen to what’s being said rather than just thinking you know what they’re saying.

      The tar sands only became viable recently because the costs to extract it made sense when oil got really expensive. Oh, and because we (as in Canadians, or at least our governments) sees fit to socialize the profits of the oil sands industry by providing all sorts of tax incentives, R&D grants and, importantly, a blind eye to the colossal waste of water, energy and environmental spoilage.

      I can’t really blame Albertans for being totally okay with this: it’s made them filthy rich in a very short period of time.

      • 0 avatar
        geo

        “Putting aside that this isn’t true (the tar sands production is well below that of the US’s usage)…”

        Imagine my surprise when I just learned that the oilsands don’t currently produce enough oil to completely feed the USA. In other words, I said oil, not the current production levels (which are expected to triple).

        I agree the water reservoir was a valid concern, and I don’t know why it wasn’t dealt with during the three-year review. But without this issue, there will be another manufacured threat, such as the “settled science” of global warming. Anyhow, why don’t you educate yourself on how much water is actually used, etc, instead of glomming onto the myths.

        Here, I’ll help you:
        http://www.gwest.net/documents/N.MurrayEdwardsCanadianNaturalResourcesLtd.pdf

  • avatar
    bucksnort

    Too bad we don’t have an electric grid to support the potential enormous demand for electricity to charge the cars in 6-8 hours so they can go 80 miles. In some cities, the grid is so fragile, we cannot even it up the grid up right now.

    • 0 avatar
      bryanska

      Again, we are not talking about distributed charging in 6-8 hours at someone’s house. The topic in question doesn’t specify how batteries would be charged, so your concern is more applicable to distributed rather than central charging.

  • avatar
    jco

    you know, I love everything about the internal combustion engine. i love running an F20C to 9000rpm, listening to a Mustang V8 pop and crackle, and burning through a couple hundred dollars’ worth of fuel in a LeMons weekend crashing into horribly crappy cars. i would LOVE for Peak Oil to be a ‘myth’, so that I could still do these things 30 years from now. but i also pay attention to the world around me. growth and consumption worldwide continue to waver as we teeter on the edge of falling back into recession. yet Brent crude is back up $115ish/bbl.

    the post WWII-era of growth/consumption based on cheap oil is gone forever. the problem is, in that time period we’ve effectively tripled the amount of people on the planet. with a steadily declining overall availability of resources. and now more people needing to use them. and this isn’t just transport. food production is also oil-intensive. farm machinery, fertilizers, production transport.

    if you accept that oil is a finite resource, then at some point we will reach the end of it’s supply. Peak Oil is NOT the end of oil. it is arguably only the halfway point to the end. but that downslope means the cheapest, easiest to find oil is gone. replacing it requires better drilling tech, new exploration and discovery, often leading to more expensive and complicated methods of recovery and production. deepwater offshore, horizontal drilling, fracking.

    you may have lived through more than ‘peak oil’. that isn’t proof that it won’t happen. it just meant that at the time, we had reached the peak of what we can recover with the resources and tech available. the developments have just pushed the curve out further. and that may continue to happen in the short term.

    right now, the thing is the shale plays, like the Bakken in North Dakota. extracting the oil from the rocks is both incredibly inefficient and the production curves are also alarmingly short. this also means the oil from these wells is expensive. they would not be producing this oil if both the market price wasn’t high enough to support it and the easier to recover stuff wasn’t already gone. after all, the companies involved in the production of oil are in it for a profit. it is cheaper to stick a well in the ground and just suck it out than to break rock with water and chemicals and then process the slurry into oil. given the choice, and knowing what the price for the end product will be (publicly traded commodity prices), you’re gonna go with the cheaper option to maxmize your profit. so the existence of the massive push towards shale plays should be an obvious indicator of where things are now. but again, shale will push the curve out further, but it won’t change the shape to a straight upward line.

    toyota is smart to go this way. they’re covering all the bases. you can still buy a Tundra that burns (refined) oil. they will also sell you a Prius that uses both gas and can now plug into a wall to recharge. that electricity can come from coal, cng, wind, solar, nuclear, geothermal..

    ideally.. i would love for SOMEONE, whether it’s toyota, Better Place, Chevy (Volt), to finally find the right way to keep personal transport as a viable option in the 21st century. i would LOVE if most people saw burning oil as both expensive an uneccesary to their lifestyle. and the only cars still burning (refined oil) were the 1967 Chevelles kept in garages and tinkered on endlessly when their owner parks their EV ‘commuter car’ outside when they got home. right now we’re a long way from that, but it is both possible and necessary. technology won’t ultimately overcome Peak Oil, but hopefully it will just move us away from oil.

  • avatar
    SilverHawk

    In 1980, the Institute for Strategic Studies identified the lack of an energy policy as the Achilles Heel of US power & influence in the world. This report was not telling us to stop using oil, or any other energy source for that matter. It was just saying that we had no plan to manage the energy, of all types, that was available to us. 30 years latter, we are in that same position, simply because we chose to do nothing. If we want the freedom to continue enjoying the vehicles of our choice well into the future, there will have to be energy management of some kind. As enthusiasts, we should be helping to lead this discussion.

  • avatar
    ciddyguy

    I think perhaps both sides have a point. We buy cars and add gas to it when it runs low. The idea of swapping batteries that you don’t own, but swap out and pay for their use sounds plausible.

    But, and there is a but to all this (or several in this case), having a one size fits all solution (Better Place)approach is not a wise solution as not everyone benefits from having a pure EV vehicle.

    What Toyota is proposing, while still advocating for gasoline use is utilizing other fuels sources such as CNG, Hydrogen and other forms of fuel outside of gas, it then gives the potential purchaser of cars choices as to what to go with,including hybrids as it’s been made clear, time and time a gain one solution does not fit all needs but a variety of solutions will.

    I do think gas will go up and probably sooner rather than later but in the end, no matter the fuel/energy source, all cars have got to be smaller and lighter than they are now and be much more fuel efficient than they currently are.

    Right now with the current state of battery technology, the range is still fairly short and that means more frequent stops to swap out batteries, unlike many cars today where 350-400 miles cruising range being the average, that makes driving long distances through remote areas of this country much more doable as a result.

    I DO like the concept of swappable batteries however.

  • avatar
    Vracknal

    Personally, I’d like to know why we abandoned CR5 reactor technology, that showed some promise at least of producing hydrocarbons without needing to drill oil reserves. I know it had problems with production capacity per day, but at least it was an alternative.

  • avatar
    ihatetrees

    A fuel saving technology that’s completely off the radar screen is the ‘networked’ and driver-less car. Given tech and behavioral trends, I’d wager that cars’ drivers will obsolete in 25 years. Such cars may have significant efficiency gains in picking the most cost effective route and style of driving.

    I know I’m pooping in the aisle of the Driver Enthusiast Church. But let’s face it – the vast majority of people doing do NOT want to drive. They’d rather work, text, or eat tacos.

  • avatar
    ixim

    Many local gas stations have long lines at popular times – holidays, weekends, rush hour, etc. Just how many fully charged swap-packs will the average station keep on hand for those times? OOops! I know. Those people better have fossil-fueled cars or they’ll be SOL.

    • 0 avatar
      chuckrs

      How about for the foreseeable future, we accept that true EVs are short commute vehicles? It will be enough of a challenge to produce cost competitive EVs that have enough range for a real world 30-50 mile round trip commute in Minnesota in the winter or the Southwest in the summer. We need the lessons learned from a number of years of that real world experience in dense urban environments or with users like me, an old guy who can occasionally go weeks without traveling outside a twenty mile radius.

      • 0 avatar
        maybloom

        we accept that true EVs are short commute vehicles?

        No, that is not the BP model. They are going for the family, 2 car garage urban commuter market. Initially with a 4 door sedan with a swappable battery that will allow you on one charge to go 90 miles/150km. The swap stations are there to overcome your “range anxiety” and through building a network of them will give you the confidence to use your car as freely as you do now. The average time for each swap will be around 3/4 minutes.

    • 0 avatar
      bryanska

      This will be fixed the same way that Cub makes sure there are enough turkeys for Thanksgiving. Demand prediction. And in the rare times there is a “run”, then networking will let us know where the nearest battery is.

  • avatar
    HiFlite999

    The general theme of the luddites in here convinces me that the next “Henry Ford” will be foreign-born and foreign-based. The majority of Americans these days look to some hallowed past legendary greatness and ignore what it took to get there. They sit, rocking on the porch and whining about change, while much of the rest of the world is out there doing it. May you live long enough to see your children suffer (if they aren’t already).

    • 0 avatar
      chuckrs

      What an uncharitable malediction. I’ve been working on thermal and mechanical issues in advanced batteries for several years. There are an army of people working on these issues, and others, like the chemistry and packaging. The race is on worldwide, but there are US players as well as RoW. You just can’t will a technology into existence. In the 1990′s California’s CARB stamped its tiny feet and declared that there shall be electric cars. How many of those are running around now? This is an exciting time, like the first third of the last century (a period that brought electric lighting, electric starters, automatic transmissions to cars).

      • 0 avatar
        bryanska

        Chuckrs, you are one of the silent majority working toward the future. Our culture indoctrinates our young, and right now they’re busy deifying athletes and reality stars.

        Every time an American girl stands in line to catch a Twilight premiere, a Chinese girl graduates college.

        All knowledge is virtually free and available these days; it’s just a question of putting it to use. Wouldn’t you love a fresh pack of American graduates every year, clamoring for free internships? Or maybe I’m just not hearing about them.

      • 0 avatar
        Luke42

        @bryanska: “All knowledge is virtually free and available these days; it’s just a question of putting it to use. Wouldn’t you love a fresh pack of American graduates every year, clamoring for free internships? Or maybe I’m just not hearing about them.”

        You’re just not hearing about them. I work for a university with a strong engineering program.

        There are some things that we really need to fix about the way we do science and engineering in this country, but the enthusiasm of young engineers isn’t one of them.

        Also, Chinese girls line up to see Twilight, too. Even the ones who come here for a graduate-level education.

        One of the first things that I would fix about engineering in this country is that ANYONE who earns a diploma in the US should be OFFERED a green card. Not all of them will take it, but forcing us to send the world’s best and brightest home after they’ve just spent several years in the US become better, brighter, and conversant in our culture is completely idiotic.

        Next we need to implement the Google 20% Rule in most engineering organizations to allow smart/innovative people to experiment and build skills in an above-board. It’ll also make it easier for engineers to stay employed in the field if they get to do some innovative self-guided experimentation (the kind of play that made most of us decide to become engineers in the first place) and talk to their employer and co-workers about it as they’re doing it.

  • avatar
    redav

    A couple problems:
    - He wants to kill the oil industry? Where does he think the fuel for the electricity for his cars comes from? He’s added some additional suppliers (e.g., nuclear, wind, hydro-electric, solar), but NIMBYism and cost limit the growth of many of those players. The result is that more natural gas & coal will be burned for electricity. Oil companies have no complaints about that.
    - This isn’t really a whole new, revolutionary paradigm. Rather, it’s a new method that can be deployed today. A really outside-the-box solution would take more than simple battery stations and a sales model.

    I’m thinking a true paradigm shift would be along the lines of distributed power production–each home/building able to generate its own power/fuel for commuting through solar, waste, or chemical process, removing the need to build additional infrastructure (power plants, electric lines, refineries, etc) and fewer instances of power disruptions, which would save govt significant money that could be then used to fund a perpetual low-cost loan program for people to purchase this equipment. Given the price trends for batteries, PV cels, et al are downward, those loans could have fairly low interest rates.

    • 0 avatar
      maybloom

      He wants to kill the oil industry? Where does he think the fuel for the electricity for his cars comes from? He’s added some additional suppliers (e.g., nuclear, wind, hydro-electric, solar), but NIMBYism and cost limit the growth of many of those players. The result is that more natural gas & coal will be burned for electricity.

      So far not the case. In Israel, Denmark and Austalia he has signed off on purchasing electricty from wind, wave and solar power only. Do some research.

  • avatar
    VanillaDude

    If alternative fuels and alternative means of transportation were logical, efficient, and effective, America has a long history of being one of the first adapters of new technologies and will adopt these alternatives too.

    There is no need to insult traditionalists. Folks will turn from today’s vehicles when they see a better alternative.

    I’m tiring of pessimists throwing insults at people, claiming the end of the world, claiming that their neighbors are retards, and cursing at everyone who points out a differing opinion from theirs.

    We have a long history of adopting what works – not just in the US, but across the globe. Humans are not as stupid as self-annointed geniuses claim. We would not be where we are today if we were not all capable of change. It happens everyday.

    So, your favorite take on the future isn’t accepted by all – big deal – grow up. If I am not mistaken, there is plenty of room for Amish as well as Trekkies and everyone in between. This is America. We let folks choose because they have liberty and freedom. Don’t ruin that, OK?

    The world isn’t coming to an end. Stop arguing as though your take on an oil-less future requires everyone to drop what they are doing quite well at doing, and follow your ass off a cliff.

    Importantly, governments have reach a point where they are becoming increasingly irrelevent in their current forms. This means we don’t have to fight to grab the Ship of State in order to avoid disaster, or reach Nirvana. A huge mistake over the past generation is a belief that government is a solution here. It isn’t. It barely functions. So to all the environmentalists insulting everyone around them in order to appear extra-special and gain political control – go ahead. When you do succeed, you will be finding a bankrupted, empty shell unsustainable in every way.

    By treating others respectfully you will do a whole lot more to win their support than if you use fear, insults and politics to force them into doing something they feel is not in their best interests. Try it sometimes.

  • avatar
    fred schumacher

    In The Collapse of Complex Societies, a case study of three civilizations (Imperial Rome, Lowland Maya, and Gran Chaco), Joseph Tainter emphasizes that when complex societies can no longer marshall sufficient sources to drive them, they begin to collapse. They literally run out of energy.

    Hoe societies run on human power. Plow societies ran on animal, wind, and water power, until the 19th century, when coal power was truly harnessed. The 20th century belonged to oil. The 21st century needs another paradigm shift in power, one that relies on sustainability.

    Globalization will not go away. It began with the development of sailing ships that could go upwind. The freak effects of WW II, which destroyed nearly all of the developed world except for isolated America, created an unsustainable situation for the U.S., but it brought most of its population up into the middle class.

    It would seem obvious that our present trajectory is unsustainable. Without energy, our lifestyle is unsustainable. Energy efficiency and development of sustainable energy and transportation should be the prime task of the 21st century, but we have a deep inability to think and act systematically. We need systems change, but we peck around the edges in an ineffective fashion. In this country, we are stuck with dysfunctional politics and the best political system that the 18th century could provide.

  • avatar
    davidrose

    “Operating a battery recharge station would require a lot of space for the batteries, plus a labor pool trained to deal with the batteries. That cost structure pretty much torpedoes this before they’ve even started”.

    Actually you do not need a lot of space for the batteries, the completed stations in Israel all have a relative small underground storage area, where depleted batteries undergo cooling and recharging, and filled batteries await the cars for switching. The labor pool for the stations is pretty much non-existent as everything is done roboticly. Any technical service/repair will not be provided by station service personnel (one person per station), cluster manager and regional managers – all customer service oriented), but rather by existing Renault service personnel who are undergoing training, therefore avoiding the need to inflate costs, the labor force is already in place.


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