The Truth About Cars » Project Better Place The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Tue, 29 Jul 2014 21:42:50 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Project Better Place In The Battle For The Post-Oil Auto, Big Investors Are Shooting The Moon Mon, 14 Nov 2011 23:15:07 +0000

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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Global EV Demand Stuck At 2%-4%. Unless… Wed, 05 Oct 2011 19:58:55 +0000 Of all the persistent questions faced by the auto industry in these tumultuous times, perhaps the most pressing is: how many consumers would actually consider buying an electric car? There’s no single answer to this question, but we do have one new perspective on it today, courtesy of a study by Deloitte [PDF] which analyzed potential EV demand around the world through some 13,000 survey respondents. The major takeaway?

The reality is that when consumers actual expectations for range, charge time, and purchase price (in every country around the world included in this study) are compared to the actual market offerings available today, no more than 2 to 4 percent of the population in any country would have their expectations met today based on a data analysis of all 13,000 individual responses to the survey.

That assessment is well in line with other studies we’ve seen, most of which estimate global EV demand at somewhere between one and five percent of the market. But because potential EV demand has a lot of moving parts, from government regulations to the state of EV technology, there’s more to the study than that conclusion alone…

One of the most unexpected lessons from the Deloitte study: you can’t rely on self-identified “early adopters” to drive the market by acting differently than “typical” consumers.

Regardless of whether they thought of themselves as potential first movers, might be willing to consider an electric vehicle, or even those that are not likely to consider an electric vehicle, their expectations for range, charge time and purchase price are extremely similar – and consistently and significantly different from what automobile manufacturers can offer today

Though the appeal of the EV’s environmental benefits vary globally, that appeal never outweighs three factors: range, price and charge time. In the conclusion, the study authors note that their work

suggests that while common consumer expectations have helped the automotive industry globalize, it also means that when it comes to alternative power train technology such as EVs, the globalized consumer will be less willing to deviate from their wellestablished expectations. What’s more, with the rapid development of new markets for automobiles in Asia and the rest of the developing world, millions of new consumers are entering the market with the same set of well-established expectations. This helps explain why the survey found that consumer expectations regarding electric vehicles were so out of line with what can be offered by manufacturers today.

The counterpoint to this argument was laid out by Shai Agassi of Project Better Place, in a recent speech given at the APEC 2011 conference, in which he argued that this influx of new drivers would place enough strain on global oil production that it makes an EV boom not only necessary but inevitable. But then, the Deloitte study doesn’t look into the kinds of services offered by Better Place, which include both battery-swapping (thus eliminating “range anxiety,” as well as an cost benefit that stems from its “end-to-end” business model, which decouples battery costs from the upfront expense of an EV. The Deloitte study implicitly leaves room for Agassi’s alternate scenario when it notes

The current collection of hybrids is better equipped to meld consumer expectations with environmental consciousness and government calls for cleaner forms of personal transportation. While manufactured costs of these dual powertrain hybrids will continue to be a significant challenge, it is expected hybrids will be much more readily adopted by consumers than pure EVs. Ultimately which technology enjoys the most success will depend on ever changing consumer expectations and preferences coupled with effective government policies… Government policy is more so than any other aspect that will likely determine the adoption rate of EVs over the next decade and beyond.

But there’s even more evidence that a Better Place-style infrastructure solution is what the EV market needs, as the study notes

It is clear from the survey that consumers’ expectations for EVs are much higher than anything manufacturers can deliver today. But consumers are also notorious for being fickle and changing their mind; and doing so fairly quickly. Electric utility infrastructure can play a significant role in electric vehicle adoption. Plentiful electric power generated through stable, dependable, clean and cost-efficient sources (and delivered over smart grids with acceptable economics for consumers), coupled with easily accessible and economical charge stations can make consumer concerns about range and charge time dramatically less – even if EV technology does not demonstrate any significant improvements over the next decade. Higher oil prices (anywhere from a 40 to 70 percent increase) would also likely lessen the concerns consumers have today about electric vehicle range, charge time, and price.

This is Agassi’s scenario: higher oil prices coupled with a smart infrastructure supported by government policies. After all, it seems unlikely that the “wait for a technological fix” scenario will deliver the desired improvements in range, cost, and charge time, as the Deloitte study notes that expecting huge declines in battery prices (which affect all of these factors) is not realistic.

But to break out of their small test markets in Israel and Denmark, Better Place needs partners to emerge from the global automakers (currently only Renault is partnered with BP). And, argues Deloitte, the automakers hold the keys to the EV’s success.

Though the tipping points may vary slightly from country to country, the study found that across the globe consumers will be less likely to consider purchasing an electric vehicle as the fuel efficiency of ICEs improves. As a result automotive manufacturers will need to carefully plan their investments to maximize sales of fuel efficient technologies consumers are willing to purchase.

Another way of putting this: with plenty of efficiency improvements to be found in the Internal Combustion Engine, automakers will continue to emphasize those technologies, in effect relegating the EV to the niche role that this study sees for it. An “end-to-end” EV servicing/infrastructure firm like Better Place might be able to significantly broaden the global appeal of EVs, but why take on a partner when you can keep trickling out ICE technology that keeps EVs from being a necessity? Agassi acknowledges this challenge by arguing that he’s asking automakers to take a gamble not unlike that made by Jeff Bezos and with its Kindle e-reader. Amazon had to kill off its traditional book selling business in order to take its book (and content more generally) business to a new level. And, as this study shows, the car business has plenty of incentive to not take that leap… yet. And until automakers actually try to make EVs capable of overcoming the range, cost and charge-time concerns that consumers globally share, we can expect assessments of global EV demand to continue to be as pessimistic as this one.



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The Case For Better Place: Shai Agassi Addresses The APEC Transport/Energy Ministerial Conference Tue, 13 Sep 2011 22:13:01 +0000

TTAC’s Twitter followers already know that I’m at the 2011 APEC Transport/Energy Ministerial Meeting in San Francisco, rubbing elbows with key decision-makers from the world of energy and transportation across the Asia-Pacific region. Earlier today I had the opportunity to sit down with Better Place CEO Shai Agassi, the intense, formidable CEO of Project Better Place. I’ll be writing about that conversation shortly, but many of the major points are covered in the speech Agassi gave shortly afterwards to assembled ministers, media and businesspeople. The speech boils down Better Place’s hugely ambitious plan to tackle one of the most complex challenges the world faces: transportation’s dependence on oil. If you’re looking for an Al Gore-style “green” speech, keep looking. Agassi tackles the problem from an economic and technological approach, and he makes a case that is well worth about 17 minutes of your time.

If you’re not familiar with Better Place, you can read some of TTAC’s coverage of the battery-swapping, network-managing, mileage-leasing project at our Project Better Place tag here (much of it on-the-ground reporting from Tal Bronfer, who has been following its rollout in the Israeli market). A comparison of battery swap to other EV business models can be found here, and a study of EV grid management issues can be found here.

]]> 3 Battery Swap,EV,Green,Industry,Project Better Place TTAC's Twitter followers already know that I'm at the 2011 APEC Transport/Energy Ministerial Meeting in San Francisco, rubbing elbows with key decision-makers from the world of energy and transportation across the Asia-Pacific region. TTAC's Twitter followers already know that I'm at the 2011 APEC Transport/Energy Ministerial Meeting in San Francisco, rubbing elbows with key decision-makers from the world of energy and transportation across the Asia-Pacific region. Earlier today I had the opportunity to sit down with Better Place CEO Shai Agassi, the intense, formidable CEO of Project Better Place. I'll be writing about that conversation shortly, but many of the major points are covered in the speech Agassi gave shortly afterwards to assembled ministers, media and businesspeople. The speech boils down Better Place's hugely ambitious plan to tackle one of the most complex challenges the world faces: transportation's dependence on oil. If you're looking for an Al Gore-style "green" speech, keep looking. Agassi tackles the problem from an economic and technological approach, and he makes a case that is well worth about 17 minutes of your time. If you're not familiar with Better Place, you can read some of TTAC's coverage of the battery-swapping, network-managing, mileage-leasing project at our Project Better Place tag here (much of it on-the-ground reporting from Tal Bronfer, who has been following its rollout in the Israeli market). A comparison of battery swap to other EV business models can be found here, and a study of EV grid management issues can be found here. The Truth About Cars no 17:37
Better Place Announces Business Plan, Signs Israeli Lease Deal Sat, 13 Aug 2011 17:09:33 +0000

One of the biggest clouds hovering over Better Place’s venture in Israel – and globally – is what stands behind the well-prepared presentations and thoroughly thought out, customer-oriented marketing. What makes the seemingly adventurous venture appealing to the business hounds investing their best capital in it? Such questions from journalists are usually answered with a neat smile, a corporate joke and a dry statement.

While Better Place still isn’t revealing its global business plan, it finally sheds some light on the numbers behind its Israeli venture, as part of a worldwide roadshow in preparation for the company’s upcoming $300 million capital raising.

While I’m not going to bore you with all the figures and upward-pointing graphs, Better Place’s presentation does contain some interesting figures. For example – for the first time ever – the company reveals the cost of its swappable battery pack: 9,900 euros – which are about $14,000 – and a declared range of 290,000 kilometers, which translates to a little over 180,000 miles before the battery is sent to a world full of good.

According to the company, the total cost of implementing its solution in Israel – including the construction of battery swap stations, charge spots and service centers – is 240 million euros. To return the investment, Better Place will need to sign up 30,000 4-year contracts – making a profit of 8,600 euros per customer travelling 25,000 annual kilometers, or about 15,000 miles. We’ve already pointed out in previous reviews of Better Place’s Israeli venture that this mileage is significantly higher than the Israeli average – which stands at about 10,000 annual miles – which further reinforces the notion that Better Place targets its services towards company car fleets that tend to travel a lot more.

Unsurprisingly, this renders Shai Agassi’s past claims about the tremendous future popularity of the electric car quite obsolete. Last January, in an interview to Associated Press, Agassi claimed that by 2016, “plus or minus a year”, more electric cars would be sold than their gasoline counterparts. The current projections published by the company are much more sober, starting with an optimistic 0.1% share of total car sales this year (about a 1,000 cars), 0.2% in 2012 and then a gradual, one-percent-a-year rise – from 1% in 2013, to 4% in 2016 and 8% in 2019, which is quite a distance from Agassi’s ludicrous statement.

But as I’ve concluded in the review of Better Place’s pricing scheme, even to reach these relatively modest numbers, Better Place “needs to provide peace of mind to its customers by introducing some sort of a buyback program and by leasing the car through third-party vendors like the vast majority of its competition. Until then, the electric car for everybody will remain just what it is now – a vision.”

And apparently, Better Place has decided to take my advice and do just that, by signing a contract for the sale of 500 Renault Fluence Z.Es to the Israeli leasing company Albar (also the local operator of the Thrifty franchise). The timing is hardly incidental, as Better Place is keen to prove its viability to its investors and fulfill its own goal of putting electric cars on the road by the end of the year. While 500 cars are barely a dot in Albar’s account books – being one of the largest companies of its kind in Israel – for Better Place, which has had some unsuccessful negotiations with leasing companies in the past, this serves as an important milestone in the pothole-filled road of making their solution a reality.

This is how the deal is going to work: Albar will lease the cars to various companies – likely to the tens of companies that have previously signed a memorandum of understanding with Better Place – while Better Place will offer its charging, battery replacement and customer service package separately. It’s likely that as with most leasing contracts in Israel, Albar will cater for the cars’ maintenance while the lessees themselves will pay for the gas electricity package, in exchange for the employees waiving a handful of benefits.

The catch here is twofold: one, Better Place is likely to offer heavily discounted pricing for massive orders – both for the car itself and for the service package. And two – perhaps even more importantly – it will buy the cars back from Albar when the contract is over, thus removing any worries about the car’s future second hand value. While the cost of the lease itself is still not clear, it will almost definitely be equal to the leasing price of a standard Renault Fluence – about $680/month, depending on the size of the order.

So why doesn’t Better Place just pass these discounts on to the private customer? Because it knows it doesn’t stand a chance. To make any impact in the fleet market, Better Place needs to match the significant discounts that are a regularity in the business, and it won’t be able to do so without setting a high initial price for the car and service. Without tending to fleet sales, Better Place will never be able to reach the sales figures it now speaks of – not only because fleet purchases make up most of the car sales in Israel, but also because the vast majority of Better Place’s potential customer base – those that drive higher-than-average annual mileages – belong to these fleets.

At the end of the day, neither of these two announcements is breaking news, but rather an attempt by the company to stick a peg firmly in the uneven ground that is the Israeli auto market, by putting cars on the road and backing their Israeli venture with figures and not just blank statements filled with adjectives. We’ll have to wait and see if these promises are hopeless optimism or a carefully crafted business plan.

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Better Place Prices “Range Anxiety”-Free EVs In Israel. But What About Resale Anxiety? Mon, 23 May 2011 14:52:15 +0000

In the last time we heard from Better Place – a little less than two months ago – we’ve witnessed the unfolding of the company’s first functional battery swap station. And yet we were left with one big question mark hovering over the entire project: the price for the end customer.

This question is particularly crucial for the Israeli market, where the vast majority of people owns a car and uses it for their daily commutes and where gas prices are amongst the highest in the world – about $8.3 per gallon. And while the company has already unveiled its prices for the Danish market, it hasn’t revealed the price of the car and monthly subscription for the Israeli market – until now.

As expected, Better Place is pricing their only automotive offering as of now – the Renault Fluence Z.E. – quite similarly to the similar, gasoline-powered competition: $35,326 at current conversion rates [full English pricing release in .doc format here]. The basic trim level features a satnav (as part of Better Place’s on-board software), dual-zone climate control, auto headlights and wipers and cruise control – add an extra $2,000 in case you want goodies like leather seats and alloy wheels.

Yes, I can hear the muffled gasps coming from our readers across the Atlantic. Why so expensive? Due to the complex Israeli car taxation system, which brings taxation on some cars to over 70% of their value – car prices in Israel are exceptionally high. Electric cars, however, get a (temporary) reduction and are only taxed 10% of their value, which, according to Better Place, made it possible for the company to price the Fluence Z.E. similarly to other competitors in the segment.

The most crucial part of Better Place’s price scheme is, therefore, the monthly subscription rate. As in Denmark, Better Place has chosen to offer several plans based on annual mileage. The basic plan, offering 12,400 annual miles, will set you back about $310 per month. Other plans offer 14,300 miles for $370, 16,100 miles for $420 and 18,600 miles for a monthly payment of $460. The company will also offer a prepaid plan – including the car itself and 15,500 annual miles for 3 full years – for about $45,300.

Better Place commits to maintaining the same subscription prices for a period of 4 years and assures us that the all plans are without obligation (except for the prepaid plan), so you can cancel at any time (but be left with the car itself literally being idle in your garage). The price also includes one Better Place charging spot that can only be installed in a parking spot legally belonging to the owner.

As the average mileage for a privately-owned Israeli vehicle is about 11,300 miles annually, the most relevant plan for the individual customer would be the most basic 14,200 mile plan. Let’s break it down and compare it to the monthly spending in the local gas station each month as would be with a gasoline-powered competitor – for example, the long-running Israeli bestseller – the 1.6 liter Mazda3.

Assuming a realistic combined fuel consumption of about 29 mpg for a Mazda3 which travels 14,200 annual miles, the payment for Israeli gasoline will set you back about $330 each month, while the comparable Better Place plan is only $20 less. With competing hybrid and diesel-powered vehicles – even the Renault Fluence diesel itself – Better Place is even put in a considerable disadvantage.

Now, of course, Better Place’s PR hasn’t arrived unprepared for this battle. They point out that the insurance for the Fluence Z.E. is cheaper by about $350 per year compared to that very same Mazda, and that the less-complex electric motor will reduce maintenance costs by an estimated $215 per year. The handy comparison tables Better Place have prepped on their launch-market websites (Israel and Denmark) point to savings of about a $1,000 annually. They’d also be right to point out that the Fluence Z.E also comes more equipped in base trim than its direct competitors.

While the greater mileage plans offer better value on the cent-per-mile front, the difference is not substantial and they are not applicable to the majority of customers in a country in which the two farthest points are a full 300 miles apart. And let’s face it – when choosing between similar vehicles in the same segment, the average Joe – or in this case, the average David – usually does the rough gasoline-price-per-mile calculation we did here and doesn’t necessarily weigh in long term and less recurring factors such as insurance and maintenance costs. And then he learns that in order for Better Place to install a charging spot for his future car, he has to have a registered parking spot in his name (and in Israel – and especially in larger cities in which the majority of Better Place’s potential customer base lives – it’s not a trivial requirement).

But by far the biggest turnoff for the average consumer is Better Place’s refusal to introduce any sort of a buyback scheme – which means that in four years’ time – when the warranty and contract expire – the car could be worth nearly nothing. Better Place claim that by then EVs will become regularity on Israeli roads – and as a result, their value as used vehicles will be similar to competing, conventional cars – but what if they don’t?

There are two unanswered questions that can potentially make Better Place’s Israeli venture work despite all these drawbacks. The first is future gasoline prices. We all know that they’re headed up – but we don’t know exactly how tall the climb is going to be. A natural disaster or political instability in one of the chief oil producing nations can bring gasoline prices up to an extent that the difference between gasoline and Better Place’s EV will convince customers into biting the bullet of uncertainty and choosing the Fluence Z.E. over its conventional competitors.

The second question – left unanswered by Better Place – is lease pricing. To understand why, you need to know how Israel’s car market works.

More than 60% of all new cars delivered in Israel each year are leased – and most of these are company cars for which the employees pay by a monthly reduction in their salary and by waiving several social benefits. These cars are usually leased not from the dealers themselves but by car rental companies such as Avis or Hertz, and in most cases come with a complete maintenance package and are returned to the leasing company within 3 years in exchange for a new car (or a termination of the contract). The employing company usually pays for the fuel, and in most cases the allowed mileage is greater than the Israeli average or – in some case – even close to unlimited.

In this scenario, the customer may not even care whether the car is powered by fossil fuels, electricity or by the power of love – and the uncertainty is covered by the knowledge that within 3 or 4 years, the car will be someone else’s problem. In order to convince leasing companies into purchasing large quantities of their cars, Better Place is likely to heavily discount the Fluence Z.E. for those companies, while keeping the official sticker price intact to attempt to preserve the car’s value when the cars go on sale once the lease ends. And Better Place wouldn’t be the first to do this. In fact, Hyundai has used this technique to get to the top of the charts. But despite signing memorandums of understanding with Better Place, no Israeli leasing company has announced intentions of offering the Renault Fluence Z.E. to customers as of yet.

At the end of the day, Better Place’s unveiling of its pricing scheme still hasn’t answered the bold question mark hovering over the project’s viability, but rather brought about several new question marks into the game. In the current state of affairs and for most Israelis, the company’s electric car – be it a noble concept as it may – is still not a real alternative to the traditional automobile. The price difference is not enough to lure a wide customer base into electrifying their main method of transportation. And that’s without even taking into account the issue of range anxiety and the fact that while in construction, only a handful of battery swap stations exist as of now.

If Better Place wants to appeal to that wide customer base – and not be a niche choice aimed at the environmentally-conscious and early adaptors – it needs to make its product more attractive and less risky. Rising fuel prices may make the Fluence Z.E. more financially attractive from month to month, but the company also needs to provide peace of mind to its customers by introducing some sort of a buyback program and by leasing the car through third-party vendors like the vast majority of its competition. Until then, the electric car for everybody will remain just what it is now – a vision.

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Inside Israel’s First Battery Swap Station Tue, 29 Mar 2011 18:13:16 +0000 When Better Place launched their Visitor Center in Tel Aviv, the attending journalists’ fingers couldn’t keep up with all the numbers and the promises flogged by the company chiefs: tens of battery switch stations to be built, hundreds of charging stations to be deployed and a thousand cars to be sold to Israeli customers each month.

Just over a year has passed since these statements made air, and in typical Israeli fashion – most of the goals were not met. Despite promising to begin delivery of cars in the beginning of 2011, Better Place has not sold a single car over the four months that passed since New Year’s Eve. And the number of battery switch stations built in Israel was – you guessed it – exactly zero. Until now.

I couldn’t blame the residents of Kiryat Ekron – a small town located about 20 minutes south of Tel Aviv – for mistaking Better Place’s latest effort for an automatic car wash. Examined up close, Better Place’s first commercial car battery switch station still looks like a carwash for the yuppie: it’s a white, square structure with an appropriately modern rounded-rectangle tunnel attached to it, standing in the backyard of a gas station.

But before we talk about switching batteries, let’s talk about cars. Namely, let’s talk about the Renault Fluence Z.E, which Better Place sets to be its most important car in Israel. So far, Better Place has only demonstrated their solution to the public using a fleet of converted Renault Lagunas – one of which I briefly drove last year. The launch of the first Israeli battery switch station was the first opportunity for me to meet the nearly-finalized prototype of Better Place’s flagship in person.

Unsurprisingly, it’s based off the Renault Fluence – which in its turn is a bigger, four-door version of the Megané, targeted mainly at developing markets outside of Europe. While the Fluence is formally a compact car – despite being quite large for its segment – its electrified sibling errs ever further towards midsize in the automotive wardrobe, having been extended by a few inches in order to accommodate the battery somewhere underneath the rear seats. Interior dimensions seem to have remained the same, while trunk space was slightly compromised in the conversion process.

While Better Place didn’t let us drive the cars ourselves, performance figures seem to be adequate – just over 10 seconds from 0 to 60 mph and an electrically (no pun intended) governed top speed of about 90 mph – all that from an engine putting out about 90 horsepower and 167 ft-lb of torque. Interestingly, according to Better Place officials, the entire battery pack weighs just under 660 pounds, while Renault itself gives a more optimistic 550 pound weight figure.

The battery switch process itself is thoroughly unexciting, which must mean great praise for Better Place’s work in developing the concept. The driver only needs to flash his Better Place RFID card at the machine, drive into the rather narrow tunnel and find something to occupy himself with during the upcoming 3 minutes. The car slides into position, slightly lifted – then an underground robot grabs the battery, disappears – and returns with a fresh one. All of this is invisible to the technologically impaired driver, while the geekier amongst us can watch the entire process streamed live on a TV planted outside.

Better Place says that the stations are designed to be modular and compatible with several different vehicles and that 15 batteries are stocked in every station at all times. Even though that doesn’t sound like a lot, Better Place claims that the calculations they’ve made found this to be the optimal number. 8 more switch stations are in construction, and the company set 40 stations throughout the country as its initial goal, despite initially promising 70 stations by the end of 2010. According to company officials, they found that 40 stations provide a complete coverage of Israel, and that more stations may be installed in the future according to answer demand in key locations.

Shai Agassi, the company’s charismatic CEO and founder, was as optimistic and ambitious as usual. “You’re seeing the second Apple”, he announced in the press conference that followed the switch demo. This time, however, Agassi and his team were significantly less keen on throwing promises around – only committing to starting distribution to customers on Q4/2011.

Despite already announcing its pricing schemes in Denmark in the beginning of this month, Better Place refuses to reveal Israeli prices at this time. An internal Better Place memo which leaked to the Israeli press, however, sets the price of the Renault Fluence Z.E at 123,000 NIS, or about $34,500. That may sound like a lot of money for a compact car, but consider that in heavily taxed Israel, the bestselling car – the Mazda3 – is only some $800 cheaper, while lacking much of the equipment that the tax-reduced Fluence Z.E is expected to carry standard.

As fleet sales account for more than 60% of the new car market in Israel, Better Place is aiming to sign contracts with the country’s most prominent rental and lease companies in which it guarantees buyback of its vehicles after three years in service in exchange for a commitment by the companies to price the Fluence Z.E closely to internal combustion competitors.

If the Danish pricing schemes are of any indication, Better Place is expected to offer several different plans for various mileages. In Denmark, the most expensive plan – allowing for unlimited mileage –costs the user about 400 euros (or about $550) per month, while the most basic – allowing for up to 12,000 miles per year – costs from 200 ($280) to 250 ($350) euros. Considering Israel’s slightly higher gasoline prices, the appropriate plans in the Holy Land will likely cost more compared to Denmark.

And if those prices sound a bit high to you, it’s probably because they are. A very rough calculation puts one month of Denmark-priced gasoline for an average compact car travelling 12,000 annual miles very close to the price Better Place offers for that mileage, and perhaps even slightly higher. It seems that Better Place’s main lure would be the ‘unlimited’ packages. On its end, Better Place doesn’t try to refute this claim, only going as far as promising running costs “comparable or lower” to those of equivalent gasoline vehicles.

One of the most interesting points brought up in the press conference was the compatibility of Better Place’s charging points with third party cars. The company was keen to emphasize that the charging points, of which a 1,000 have already been installed in public and private parking garages, are designed according to a “standard”, which will allow non-Better Place cars to be charged using their current infrastructure. Agassi went as far as claiming that the company doesn’t view fixed-battery EVs as competition since they only target drivers travelling short distances. Agassi was also reluctant to answer journalists’ questions regarding specific models, but said that the company is in “negotiation” with several local dealers regarding possible cooperation.

As I was standing next to one of the Fluence Z.Es parked by the curb, a curious passerby interrupted my photoshoot. “Nice looking car,” he said. “What’s the engine’s displacement?” “It’s electric,” I dutifully replied. “Oh, cool”, he noted as he continued to circle the car. “So how big is the engine?”

“Our target is for people to say it’s a car”, said Agassi in his opening statement. Did they succeed in that? The answer is a resounding yes. Better Place and Renault have managed to create a car that looks, feels and refuels like your average Camry, and for that they deserve credit. Unfortunately, that’s not the toughest challenge the company has to face. The jury is still out on the viability of Better Place’s model in real life, and in an industry as conservative, the company isn’t going to have an easy time proving the skeptics wrong.

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Review: Project Better Place Renault Laguna EV Mule Fri, 19 Feb 2010 17:02:17 +0000

Charging stations are okay, really. Battery swapping stations are even better, and I honestly have nothing against Lithium-ion batteries. But we love cars, not infrastructure, and that’s what has been missing from our Better Place coverage: real car related stuff. So here I am, in the front seat of Better Place’s actual electric car. Of course, when I say actual, what I mean is that this is actually a Renault Laguna, a rather bland French midsize car, and one car Renault doesn’t intend to electrify in its joint venture with Better Place. So what’s its business being green in the car park with stickers all around it reading ‘EV’ and flowers emitting from its exhaust?

The Electric Laguna (which sounds like a fun holiday experience) is a part of Better Place’s new visitor center just outside Tel Aviv, Israel. It’s one of a small fleet of demonstration cars visitors would be able to thrash – err, test drive – around a dedicated test track, which is a polite way of describing two turns, one straight and a roundabout.

This Laguna actually has a pretty interesting biography. It started off as a bog-standard diesel in Renault’s factory in Sandouville, France. In an ironic twist, it arrived into Motown, where its powertrain was converted to electricity by FEV, before proceeding to Germany to embark on a costly journey to obtain European specification.

From the outside, save for a handful of giveaway stickers, it looks normal. The cabin is also nothing exceptional; the stock Laguna’s excellent seats and driving position are still here, and there’s ample room for four adults, but not five. It’s European midsize, remember? That means it’s significantly smaller than your intentionally-accelerating Camry, and pretty close in dimensions to the real deal – the Fluence Z.E, itself an enlarged C-segment Megane. But the real deal is still a while away from serial production.

The Electric Laguna then, is remarkably unremarkable. And that’s a good thing, considering that the average EV asks you for compromises when it comes to interior space. Even the smartcard key, push-button ignition and electronic parking brake are standard Renault issue. The future, serial-production Fluence Z.E will have Better Place’s own AutOS operating system, which will provide the driver with a plethora of useful (as well as useless) information.

The only hint at what’s under the bonnet comes from the gearlever, or, more precisely, the lack thereof. Instead of the usual stick, there are four familiar buttons: P, R, N and D. Another giveaway: the tachometer is replaced with a power consumption scale, measured in KW/h , accompanied by Better Place’s ‘switch’ emblem.

If you’ve ever driven a Prius, the startup sequence of the Laguna EV probably won’t rock your world. You press the Start button, wait for the OK and push the ‘D’ button, which illuminates in blue. A few clicks sound from the back of the car and you’re ready to roll. To get started, you need to brush the pedal – there’s no creep – and once you’re there, Better Place’s mule accelerates linearly and swiftly up to an electronically limited speed (got that?) of 84 MPH, but it probably won’t set your tires alight or win any drag races.

It was a sunny day, and three sweaty journalists probably didn’t contribute much in the way of ambience. So we politely asked the Better Place employee riding shotgun to turn on the air conditioning, to which he agreed – rather reluctantly. Lo and behold, a breeze of cool air exited the air vents – probably reducing range by several tens of percents. Definitely a welcome addition to the electric car.

There were only two serious bumps on the Better Place track, but they were enough to ascertain that the Laguna EV isn’t the most comfortable car around. Physics are to blame: with such a big lump of air conditioned metal to carry around, there’s a big lump of battery too, 550 pounds of it, all stored in the trunk, which the tight-lipped Better Place rep refused to open. If we had gone past him, we’d probably discover that it was packed full, though the Fluence Z.E will compensate for this with a slightly bigger trunk.

From the outside, the Laguna looks balanced, so it’s obvious that someone has been tinkering with the suspension. Unfortunately, it still needs work, because it’s simply uncomfortable. Bumps trigger an erratic, bouncy response – not the cosseting type of bouncing, either. The same is true for handling – it simply feels heavy on the turns, doesn’t inspire much confidence and the rear weight bias shows, no matter how much uncommunicative the steering is. Definitely not a Tesla Roadster.

Like many hybrids and EVs, this Renault has a regenerative braking system, which recovers ‘lost’ energy from braking (read: bad) into electricity, which is then returned to the battery (read: good). In the Laguna, this system is less fierce than systems on other EVs – it simulates in-gear braking, but it doesn’t actually brake the car for you when you lift off the throttle. The typical driver will still use the left pedal, which uses a conventional disk brake setup, thus significantly dropping the car’s range.

So, what do we have here? An electrically-powered, zero tailpipe emission sedan that accelerates well enough, carries four adults comfortably and doesn’t neglect amenities like air conditioning. It demonstrates what an EV can do – and I emphasize could, because the Laguna EV has about 170 horsepower, compared to the Fluence Z.E’s projected 95 – but saying that is only telling half the story, understandable ride and handling imperfections aside.

We already know that the Laguna’s seats are excellent and that EVs are possible. What would be the car’s real-life range? How would it function in daily traffic? How much would it cost? How much would the batteries last? For these questions to be answered, we need to wait for the real-deal Fluence Z.E.

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Project Better Place Birthwatch: Visiting Hours Tue, 09 Feb 2010 15:14:42 +0000

Optimism and food were the two abundant commodities at Better Place’s press conference yesterday morning, announcing the company’s first Visitor Center, established – how ironically – inside what used to be an oil tank in Pi Glilot, a former gas depot. It seems that the entire event and the resounding optimism around it were eclipsed by HSBC’s recent $350 million investment in the company.

Better Place’s new visitor center is the company’s first ever direct appeal to customers in marketing the car. Rather than educate visitors about the company, the center seems focuses on educating the public on the idea of electric cars themselves. Movies, interactive displays and galleries are all included – but so is a ‘live’ demonstration: genuine electric cars powered by Better Place’s solution that users can test drive themselves on a short course.

Perhaps one of the boldest messages the company tried to convey during the press conference was branding. The thousands of logos spread across the visitor center betray CEO Shai Agassi’s goal of making Better Place’s ‘switch’ symbol as recognizable as Apple’s logo within “three to four years.” Agassi said that Renault’s investment in a ‘ground breaking’ project such as Better Place is reminiscent of the step that Apple has taken with the iPod and iPhone.

Symbolically, the establishment of the visitor center also brings the company to committing to a schedule. The initial real-world Israeli pilot rollout of the Renault Fluence Z.E sedan, featuring a few hundred cars given out mainly to leasing customers, will take place around September this year, says Agassi. Series production of the Fluence in Renault’s Turkish factory will begin halfway through 2011, with the first ‘regular’ cars destined to arrive on Israeli roads in the end of 2011.

Critically, Agassi refused to reveal the electric Fluence’s local pricing, but previous reports and speculations place the showroom price at around 85,000 NIS, about $23,000 and more than $9,000 cheaper than Israel’s bestselling car, the Mazda3. Being a showroom price tag, it doesn’t include the battery, which will be subsidized by Better Place and paid for on a monthly basis with payments depending on range travelled.

The press conference also gave interesting insight into Better Place’s intentions regarding the battery switching stations and the related infrastructure, something that company officials weren’t too keen to discuss previously. The battery switching stations will theoretically provide Better Place’s vehicles unlimited range, with a freshly charged battery replacing an incoming car’s used battery, but it’s not clear if Better Place will modify the Fluence Z.E sedan – which has batteries mounted in the trunk – to suit its battery swapping model.

Kaplinsky revealed that the company has signed a surprising agreement with Israeli gas station operator Dor Alon to deploy battery switching spots in its stations, while hinting at similar agreements to be signed with additional partners in the near future. 5 to 10 battery replacement stations are scheduled to be installed in Israel for 2010, and until the end of 2011 the company guarantees 100 battery swap spots – most of which will be installed in partnering gas stations.

Kaplinsky spoke of the 92 ‘Better Place Vision Partners’, including newly-joined Motorola, Computer Associates, Strauss and Israeli ISP Netvision. In total, these companies account for a fleet spanning 45,000 vehicles – more than a third of Israeli car sales in 2009. Numbers weren’t provided, but Better Place Israel’s CEO said that a ‘portion’ of the fleet will be dedicated to electric vehicles utilizing the company’s solution. He also presented a list of 17 municipalities cooperating with Better Place – likely in setting up charging stations – amongst of which are Jerusalem and Haifa.

The company introduced a new pilot in Tokyo, where 4 Better Place taxis (likely converted Nissan Rogues) will operate over the course of the next year, each travelling a distance of about 18,500 miles. Agassi says the pilot will help prove the long-term viability of Better Place’s batteries and swap stations.

Better Place’s execs also spoke of the company’s plans for the future. Idan Ofer, Chairman of the Board, mentioned that the company is in contact with Chinese automaker Chery to produce battery-replaceable EVs. During the Q&A session, Agassi stated that the company is in talks with ‘many different automakers’ regarding the utilization of its solution in more vehicles, and explained that the recent financial crisis slowed down the negotiations. He also said that Renault is developing nine different electric vehicles for different segments and tastes, and while refusing to elaborate, hinted at an upcoming sports car: ‘not all of those cars will force you to be green’, he stated.

Discussing the battery range issue, Agassi spoke of a total range of 620,000 miles before a battery is required to be replaced, and of three ‘range cycles’ that would decrease travel range per charge during use. To us, that sounds like sugar coating a battery’s natural tendency to decrease its capacity over time, as well as a rather optimistic battery life span.

The issue of standardization also appeared during the session, with Agassi declaring that Better Place will cooperate with competing companies providing similar service. He even went as far as claiming that such companies are beneficial for the project.

The ambitious center and newly-found willingness to share numbers may bring Better Place one iota closer to their dream of a network of electric vehicles, but the fundamental questions around the viability of the project are still afloat.

One shadowed area is how much range is affected by one’s driving habits and requirements; another is the issue of battery fatigue – which wasn’t fully addressed during the event. We will be exploring these issues during the Better Place Birthwatch series, but meanwhile, we’ll close with an interesting fact: while the fleet of electric Renaults caught sun outside, Mr. Ofer, who is renowned for owning a Tesla Roadster, parked his other car, an Audi RS6, at the curb. Sheer hypocrisy or subtle taste in cynical jokes? You decide.

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Better Place Birthwatch: New $350m Investment Brings Deeper Pockets, But Not Broader Appeal Tue, 26 Jan 2010 17:40:57 +0000

It goes without saying that it’s always good news for a business to be able to raise hundreds of millions of dollars on the financial markets. Just as important as the financial boost, such capital-raising also raises the profile of the company, presenting it as a viable investment and implicitly endorsing its underlying business plan. In the case of Project Better Place’s recent $350m funding boost however, the benefits might be largely limited to the firm’s balance book. Heavy participation by HSBC, Lazard and Morgan Stanley do help raise Better Place’s profile, but HSBC and Lazard are the only new investors in this most recent round of financing: Morgan Stanley, IsraelCorp, VantagePoint and other previous investors make up the rest of the round. This speaks to a fundamental challenge underlining Project Better Place: broadening, rather than deepening its appeal and support.

Investment in EV firms has been largely either government-led or buttressed by co-investment by battery suppliers. Or, as in the case of A123 Systems and Fisker, both. Better Place has yet to improve much on that model, as IsraelCo’s investment underlines BP’s dependence on government support, particularly in its test-markets of Israel and Denmark. Indeed, Israel’s wholehearted embrace of Better Place should probably be interpreted as an investment in national security as much as a bet on Better Place’s long-term success. As such, a re-up in funding from this partner with very limited aims (getting Israel to energy independence as quickly as possible) is no guarantee of the long-term success of the Better Place project.

After all, building EV charging infrastructures in Israel and Denmark isn’t even half the battle for Better Place. These markets are largely  insignificant to the global auto game in terms of volume and tastes, and since both nations are committed to skewing their markets to no end in order to help BP succeed locally, the local implementation of BP’s infrastructure is unlikely to be directly transferable to other global markets. That’s in addition to the soci0-geographical limitations (Israel and Denmark are compact, urbanized, developed countries) to translating local success to global results.

And make no mistake: Better Place needs global results to succeed. Due to the high costs of infrastructure construction, battery leasing schemes, and general implementation of its system, Project Better place isn’t going to take over the world by simply building a charging infrastructure. The infrastructure is a means to an end, namely the holy grail for all EV-related firms: establishing a battery and charging standard that the global industry can embrace (and pay royalties for). Better Place is likely more than willing to continue taking a loss on its Israeli and Danish projects, as long as it becomes the first major player to establish the all-important standard for EV infrastructure solutions, which would force EV entrants to their markets to adopt their battery specs (or perhaps contract to Better Place for batteries and recharging/switching).

But in order for this strategy to be effective, Better Place needs to broaden its support in addition to getting established investors to double down on the scheme. Even if the Better Place infrastructure revolutionizes the Israeli and Danish markets, consumers will be forced to choose from the vehicles Renault happens to offer, as the French automaker is the only OEM to sign on to Better Place’s standard to date. Even Renault’s sister company Nissan declined to equip its Leaf EV with BP-compatible, switchable batteries, pointing out the real challenges Better Place faces in broadening the appeal of its battery standards.

This problem is emblematic of the larger challenges of the EV market: firms like Tesla have proven that it’s possible to pull huge amounts of money for its zero-emissions products from committed EV fans with means. The ramp-up from boutique early-adopter playthings to truly mass-market transportation appliances is the fundamental challenge for EV firms going forward, especially with GM and Ford diving headlong into the EV game with plenty of US government backing. Though these first generations of electric vehicles will imperfect and challenging for their makers, they’ll be crucial in establishing dominance in the market, and therefore creating future infrastructure standards. Wider appeal is far more important in this struggle than a few backers with deep pockets.

Better Place’s CEO Shai Agassi understands the challenge, telling VentureWire “we’re in discussions with a number of [original equipment manufacturers] to bring the same technology to other car makers… this round provides great validation for [those] other OEMs.” But with Better Place stuck rolling out its infrastructure in the tiny markets of Israel and Denmark, those OEMs still have more incentive to beat Agassi at his own game than join him, and surrender the war over EV standards without a fight. Once Better Place proves it can broaden its appeal, it might well become a household name. Until then, it needs the support of a broader base of stakeholders as much as it needs new capital.

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Renault Threatens Denmark With Project Better Place Pullout Fri, 22 Jan 2010 22:31:52 +0000

Denmark is keen to show the world, especially after the Copenhagen Conference, that they mean “green.” Denmark is setting up an infrastructure to support electric car recharging, however the other side to this grand scheme are throwing their toys out of the electric car. The Copenhagen Post reports that Renault are threatening to withdraw the electric cars which they were supposed to supply to “Better Place”, the company monitoring the installation of the electric car infrastructure. The reason behind this shocking behaviour (see what I did there?) is that Renault believe that the Danish government are not giving enough favourable car tax breaks to electric cars. The government’s policy is to give electric cars exemption from normal vehicle registration tax of 180%* until 2012.

But previous Climate and Energy minister, Connie Hedegaard hinted that an exemption or a tax reduction would be extended until 2015, but no clarification has been given. ‘If we don’t get a clarification, then we at Renault want to focus on other countries for the first electric cars,’ Henrik Bang CEO of Renault Denmark said. Mr Bang also added that Renault wanted the issue resolved within six months. Jørgen Hostmann, an expert in electric car technology at the Technical University of Denmark, is telling the government to take Renault’s threat extremely seriously. “If Denmark wants to be a testing ground for electric cars, it will have to create a base for new companies and open up greater opportunities for existing companies. Without clarification on the tax issue, there is doubt,” Hostmann said. The current Climate and Energy minister, Lykke Friis, said that the issue was “complicated” and that the government was working with the stakeholders in the project to resolve the issue.

It’s looking like the French government might be starting to enjoy mixing politics with their car industry a bit too much. Maybe the Danish government should speak to BMW… the Bavarians have some experience snatching contracts away from Renault.

* = That’s right, you didn’t misread. 180%. In researching this article, I went to to compare prices. A base model Toyota Prius costs 385,041 Danish Krone. Which works out to be, roughly, £45,000. Or roughly $73,000. Never mind burning rubber (not that you could in a Prius), what about the hole burnt in your pocket? [Editor's note: a recent discussion of European car price comparisons can be found here]

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Ask The Best And Brightest: Questions For Project Better Place? Mon, 21 Dec 2009 20:54:26 +0000 Ask and ye shall receive... (courtesy:Life)

While we at TTAC continue to cover the serious, the silly and the sublime from the world of cars in this holiday season, there’s a lot going on behind the scenes. We have a grip of new blog and editorial series in development right now, the first of which we’re debuting today: The Project Better Place Birthwatch. This series will be a collaboration between a new contributor here, Tal Bronfer, who will be monitoring and reporting on Better Place’s Israeli rollout, and Martin Schwoerer who will be covering Denmark’s collaboration with the EV dream company. True to TTAC’s mission, we’ve asked Messrs Bronfer and Schwoerer to dig deep into Better Place’s heady swirl of public funding, private companies, and new technology to critically explore the reality of Better Place’s reimagination of the automotive relationship. Because coverage of all things EV tends to be enthusiast- or hobbyist-oriented (read: strictly for the fanboys), the idea for this series is to look beyond Better Place’s green-tinted pitch and learn more about the true viability, costs, benefits and complications of the nascent EV infrastructure business. To ensure that we don’t miss any of the important questions, please take a moment to read Tal’s introduction to the fundamentals of Project Better Place, and let us know what questions you would like answered and what elements you would like to see explored as we take on this sprawling story.

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Project Better Place Birthwatch: An Introduction To Project Better Place Mon, 21 Dec 2009 20:22:03 +0000

How do you make the world a Better Place? If you ask Shai Agassi, president and founder of the eponymous American-Israeli Company, the answer lies in the development of an infrastructure that makes charging an electric car as simple as pulling over in a gas station. This deceptively simple idea has spawned an international project, which brings together automakers, governments, activists and scientists in a hugely ambitious attempt at creating the first localized electric vehicle charging infrastructures. With brand new technology, millions of tax dollars and the fate of at least one global automaker hanging in the balance, the evolution of Better Place is a crucial story in the rise of electric vehicles. But before we begin chronicling the build-up to this ambitious plan, we have to get back to the basics of EVs and their fundamental shortcomings.

There’s nothing fundamentally new about the electrification of the automobile. From GM’s early-nineties EV1 that everyone loves to hate, to ambitious declarations such as the Nissan Leaf, electric cars have proven capable of generating an impulse of media attention before falling away into the backstage of automotive history. And not much else.

But why? On the face of it, EVs are a ubiquitous all-in-one solution to the environmental-equivalent of the flu: the internal combustion engine. As much as there is to love about internal combustion, there’s no doubt that it’s bad for the environment and it’s literally everywhere.

Electric motors are highly efficient due to the small number of moving parts causing friction and added complexity. More importantly, they don’t waste energy on unneeded heat. Add emission-free, flower-spitting tailpipes and the possibility of charging the batteries using alternate green power sources, such as hydro-electric power, and you get an environmentalist’s wet dream.

One reason of the public’s avoidance of EVs – and possibly the most significant of all – is their limited range, and attendant “range anxiety.” True, Toyota has addressed this problem with the Prius and GM wants to reinvent it still with the Volt. But the truth is that these cars will ultimately burn gas to get you to your favorite shopping outlet, whether you like it or not.

Of course, this is not the only reason. Electric cars also haven’t been able to answer the needs of consumers whose morning commute involves more than hopping to the other side of the street. Many of them aren’t available to the public and worse still – they aren’t typically normal cars. The G-WIZ by REVA was (is) an automotive joke, albeit a very green one. Most electric cars can’t carry four adults in comfort and achieve viable cruising speeds – in short: they don’t answer the needs of a middle-aged, middle-sized, middle-income’d Bob from the ‘burbs.

This is where Better Place steps in. Basing itself on the cellphone provider model, Better Place wants to sell you energy, in the same way AT&T sells you airtime. And as with the cellphone provider model, it will subsidize the cost of the operating device – batteries – and provide you with several methods of obtaining the product – that is, energy.

Fine, you say, but where’s the car? They won’t make one. Better Place stresses that they provide you with a service, not a car. That’s why back in early 2008, the company signed a memorandum of understanding with Renault-Nissan which will provide the platform for Better Place’s solution. Have no fear: since this is TTAC, we will be focusing on the cars themselves as this series goes on.

Two pilots are being carried out: one in Israel, the other in Denmark. The reason for choosing these very different countries isn’t surprising: itcomes down to taxation.

Israeli taxation dictates a standard 85% tax on all vehicles, with a refund given based on ‘green credentials’. However, a new reform has been recently introduced – and without boring you with the very boring details – for the next couple of years, EV buyers will only pay 10% tax.

It’s a similar story with Denmark, albeit worse: the Scandinavian country has no less than 200% tax on a new vehicle. Denmark also recently altered this policy to exclude electric vehicles, which will be eligible for a minimum of $40,000 in tax break, as well as free parking in Downtown Copenhagen which is apparently a rare commodity.

Better Place also signed a contract with Danish Energy Company DONG, which will allow energy collected from wind turbines to be stored for overnight charging, when consumer demand is fairly low.

Better Place claims that their current batteries are capable of piloting an average compact sedan for anywhere between 100-120 miles. But as Top Gear has proven with the Tesla Roadster, there is much optimism involved in the calculation of these figures – realistic use with air conditioning, freeway speeds and a heavy right foot would probably take a large slice off this promised range.

Beyond that, Better Place’s solution includes two different methods of replenishing energy: via charging stations and through battery-changing stations.

The heart of the charging process is the charging pole, slightly reminiscent of the traditional parking meter. All you do is pop out your Better Place customer card, plug your car in and charging begins.

Better Place wants to put these poles everywhere. That is, in malls, parking lots and offices – beyond the necessary plug-in at home. The company intends to spread about 500,000 charging poles throughout Israel, and has already installed several hundreds of them.

But what if you need to go on a longer journey? What about range anxiety? Better Place wants to challenge this problem with a gas-station like facility that would automatically replace your empty battery pack with a newly charged one. In a demonstration held in Yokohoma, Japan back in May, a Better-Place’d Nissan Rogue had its batteries replaced in under 2 minutes, which the company says is less than the average refueling time.

Finally, the company’s solution is backed by a smart kit of software, which will manage energy distribution. It will, for example, make use of lower electricity tariffs at night and charge batteries at that time.

So, is everything rosy and green? Will polar bears send letters of gratitude to Better Place’s offices? Most importantly – will Better Place’s solution make EVs a viable alternative-fuel option for the masses? We will be trying to answer these questions during this series. We’ll see what challenges the company faces (and how – or how not – it’s planning on solving them) and monitor how the pilots work out. Surprises can be expected.

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Denmark EV Incentive: $40k and a Parking Spot Wed, 02 Dec 2009 17:04:55 +0000

Along with Israel, Denmark is one of the first countries to sign on to Project Better Place’s attempt to establish a viable electric car infrastructure. And as with all early adopters, Denmark is paying a pretty price for the experiment. The country is spending $100m on infrastructure, including charging points and battery-swap stations. Moreover, Better Place’s partner, public utility Dong Energy, is trying to run the new EV infrastructure entirely on wind power, which is already the source of 20 percent of Denmark’s energy. “We’re the perfect match for a windmill-based utility,” Better Place founder and CEO Shai Agassi tells the NY Times. “If you have a bunch of batteries waiting to be charged, it’s like having a lot of buckets waiting for rain.” Despite the close government involvement in the project, Danes are still wary of making a wholesale switch to EVs, prompting the government to offer $40,000 in consumer incentives for electric vehicles, as well as free parking in downtown Copenhagen. Though there’s plenty of skepticism in Denmark about the plan, that incentive is expected to make a huge difference.

After all, buying a car in Denmark isn’t the same as buying a car in the US. The NYT explains:

The country imposes a punitive tax of about 200 percent on new cars, so a vehicle that would cost $20,000 in the United States costs $60,000 here. For a quarter-century, electric cars have been exempt from that tax. But the models on the market were so limited in their capabilities that only 497 of them are registered in the entire country.

And though the incentive combined with Better Place’s Renault/Nissan EVs might make a difference, Danes are still worried about betting the farm on a single vehicle supplier. With millions set to be spent on Better Place’s battery swap stations (under BP’s scheme, you buy a car but lease a battery, a system based on the cell phone contract model), many worry that the stations won’t be able to supply batteries to competitor EVs. “I’m skeptical about the infrastructure,” says Klaus Bondam, Copenhagen’s mayor for technical and environmental administration. “It won’t work unless it’s standard on every electric vehicle produced.”

The questions point to an underlying problem with Better Place’s strategy. Though battery leasing and swap stations theoretically eliminate range anxiety (since batteries could be swapped in less time than it takes to fill a tank with gas), the BP-specific infrastructure forces competitors wanting access to the Israeli and Danish EV markets to standardize to BP’s specifications. Though standardization of a plug-in infrastructure is clearly a major goal for all EV supporters, the terms of that standardization should not be set by a for-profit, public-private enterprise. The Society for Automotive Engineers or some other cross-industry organization should take the lead in establishing international EV standards, and should do so in such a way that doesn’t favor any one manufacturer. Otherwise, Better Place’s attempt to leap ahead in establishing its own infrastructure will end up dictating the terms of engagement for everyone else. Especially when it has such generous governmental support.

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