Batteries included

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Courtesy of European Energy Review (EER)

Leading entrepreneur Shai Agassi’s company Better Place has teamed up with Renault Nissan to develop a unique business model for rolling out the electric car. Under their pioneering scheme the car’s battery remains the property of the provider. Israel has been targeted as the launch market, with Denmark to follow.

Electric motoring will only take off if drivers can feel confident that they won’t be left stranded with an empty battery. And if the cost per kilometre is no higher – and preferably lower – than it is now. That just about sums up the philosophy behind US company Better Place, which has committed itself to conquering the world with the electric car: it needs to be practical and affordable.

The company has plumped for Israel as the first target market in which to realise its ambitions. A central principle of its business model is the battery exchange station. The company likes to compare the roll-out of electric cars to the introduction of mobile telephony: demand only picks up once cover extends across an entire country. In much the same way, drivers will only opt for electric motoring once there are enough battery swap stations to guarantee full mobility. In Israel there are plans for 150 stations where motorists can swap their empty battery for a fully charged one. The infrastructure must be in place some six months before the largescale roll-out of the electric models. The cars’ batteries are deemed to be part of this infrastructure and remain the property of Better Place. Customers pay a monthly fee to cover overheads, and for the distances travelled. Thanks to economies of scale and Israeli tax breaks, the costs per kilometre of running an electric car are no higher than those for diesel or petroldriven vehicles. Israel levies a purchase tax of 95 percent on cars with a combustion engine. For electric cars, the tax will be just 10 percent.

Seated in Better Place’s recently opened, hypermodern Tel Aviv offices, research and development director Dr. Barak Hershkovitz expounds on the company’s plans. A staff of 75 is already working full-time on preparations for the launch. Hershkovitz, who graduated as an opthamologist but has spent his entire working life in the IT industry, says he decided immediately he wanted in on the project when he saw the vision document on Better Place drafted by Shai Agassi, the famous entrepreneur. ‘It was not just a new job,’ Hershkovitz says simply. ‘I became part of a mission.’

A couple of years ago Better Place still ranked as a ‘project’, but these days it’s a business that has already managed to attract some $200 million in investment in Israel for the product launch alone. The projected return on investment (ROI) based on the fees to be paid by clients was sufficiently compelling to persuade major players such as Israel Corp. and Vantage Point Venture Partner to become investors. ‘It’s a large sum of money, but it only buys three months of fuel for Israel’s current fleet of cars,’ Hershkovitz explains.

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