What Shai Agassi did next

Are we heading for a better place?!

So just what did 'Shai Agassi do next'? The Silicon Valley-based tech-expert / entrepreneur certainly seems to have been busy. Holidays in the Galapagos islands have fronted his blog for the last few months, but in the few moment's he's apparently had spare, he's raised $200M of funding for a new venture called 'Project Better Place'.

In more than just the headline grabbing financial figure, Better Place is big news, as it has the potential to turn the auto-industry upside down. Although this might at first appear to be overstating things - because Agassi doesn't seem to have a desire to build or sell cars per se - Better Place is nonetheless a bold move - with Agassi appearing to be the biggest name yet to bet that the automotive future is electrically powered. The smartest part of what he's trying to do is in undoubtedly recognising that battery range and recharge times are two of the greatest hurdles to the widespread adoption of such vehicles (EVs), so as an answer he's proposing to build a network of recharging points, and stations where electric vehicle batteries can be exchanged for freshly charged ones - in about the same time that it takes to fill a regular car up with fuel.

So why might this turn the auto industry upside down? The key idea seems to be that Better Place will own the battery, and sell you the value of the 'fuel' (electricity) in a similar manner to cellular phone contract plans. In short, they use selling you fuel to subsidise the actual cost of the vehicle. Sign up to a four year contract and the actual cost of the car is 'subsidised'; sign up for six, and the car gets thrown in for free. Although this idea has been mooted before, up until now, no one has actually set out concrete plans to do it.

Will Chevy's 2010 Volt 'plug-in' to Agassi's proposed system?

Of course, the plan is fraught with pitfalls. Springing to mind immediately is the question of whether it is possible to standardise batteries / charging ports and systems - and if so, this would seem to suggest the need for the vehicle and battery manufacturers to agree on a common system, which although obviously desirable, doesn't seem very likely anytime soon.

Perhaps a bigger, and more interesting question is whether doing things this way round can work. In the auto and auto-related industries, this type of approach has never been tried before. Ford and Chrysler mainly saw to it that the gasoline-powered car became the standard in the early part of the last century - but they built such cars before a plentiful network of fuel stations had been established. Thus 'petrol-stations', and much other auto-related infrastructure sprung up because of the popularity of the gasoline-powered automobile - when there were already hundreds of thousands on the road.

It was an idea reiterated just last week by Honda, who are proposing to sell the world's first hydrogen car. Talking about how they were not unduly worried about the lack of a hydrogen fuel network, Honda chief Takeo Fukui suggested:

“When the car was invented, countries weren’t full of petrol stations...When the demand is there it [the hydrogen economy] will happen.”

Honda's FCX hydrogen refuelling station in California

Although it is arguable that electricity is much more easily 'tansported' and 'stored' than hydrogen, it should be noted that, just like hydrogen cars, there are only a handful of plug-in electric vehicles on the market at the present time. So will there be a market for Agassi's product? That's a question we'll only be able to answer for sure in the next five, ten, fifteen years. But electric cars are coming. Toyota and GM's next generation hybrids will 'plug in', Renault, Nissan, Mitsubishi and Subaru have all said they'll build and sell a pure electric car within the next three years. Tesla's roadster is due on the roads any minute now. Perhaps more important than all this though is a sense that times are changing. There's a distinct possibility that in this case we should ignore the precedent of automotive history. Only time will tell whether Shai Agassi is right, but his venture means that things could be about to get very, very interesting.

There's much more to say - and being - said on this, so watch this space. But for now much of it has been summed up in a great article on Wired magazine's Autopia blog - read more here.

The picture below link to a Better Place youtube video, which illustrates how the system might work.

Related articles:
What Shai Agassi could do next
Time to get moving

Posted by Joseph Simpson on 1st November 2007

Images - Sunrise: Michael Dawes on Flickr via Creative commons license. Honda station: Honda. Chevy Volt: GM

Comments

[Ben Bakhshi]

Great commentary as usual. As I remember you were one of the first, if not, then the first to do so in English, to break the news that Shai was starting this project. As Ofer said, this venture should create the largest blue ocean opportunity in the history of capitalism, read: create more jobs than any single venture ever in history.

Giddy up!
Ben

[ArthurGlen]

There are innumberable reasons why you would never build an EV the way that Agassi wants to, but even if such easily removable battery packs didexist, the scheme hwerre makes no econnomic sense to the driver. Adding all this overhead (charging stations, battery pack inventory, leasing costs) simply makes the batteries MORE expensive, not less. And the isea of having to stop every 200 miles or so on a trip for a battery pack replacement is absurd.
Worst of all, with the advent of plug-ins with 40, 50 and 60 miles of electric driving range and unlimited occasional ethanol range, there isn't even a need for this clumsy, monopolistic
battery service at all. Batteries are simply too expensive for all-electric cars - Agassi is simply trying to con the driving public into thinking that they aren't.
Dollars and cents proves he's a liar. And what happens to his scheme if fast charging batteries
come along? And, worst of all, there is no reason to want to drive an all-electric if plug-ins exist - they solve virtually all the problems that all-electrics would with respect to oil avoidance and emission reductions.

[study the data]

Before you start smearing other's ideas it is usually suggested you study something about the data.

The cost of a connection to the grid is required regardless of whether you need a plug-in hybrid or a full EV. Otherwise all your plug-ins become heavy cars with little engines than almost can.

The cost of an exchange station for batteries, when divided across many cars is so small, that the average cost for the grid is low.

As to the consumer - I still can't recall any plug-in vendor that is willing to give away a free plug-in hybrid for 6 years worth of your current gasoline price...

[Mark Charmer]

Thanks for fighting your corner, Shai. Do keep in touch. Cheers, Mark