If Electric Car Scheme Works, Auto/Gas Industry Could Overturn Like an SUV on a Sharp Turn

November 01, 2007

If we build it, they will come.

That's part of the thinking behind a new plan to completely change the kind of cars people buy and how they buy them. If it works, it could upset the auto market and reduce our dependence on oil.

Right now, you buy gasoline-powered vehicles for tens of thousands of dollars and pay fluctuating prices for fuel. But Shai Agassi, former SAP executive, wants to offer you a fixed rate service plan that would include a free (or subsidized) electric car and all the battery charging (or batteries) your heart desires. If the concept is difficult to grasp, just think about how your mobile phone service works. You buy a contract and with it, you get minutes, service, maintenance, and in many cases a free, or subsidized, phone.

"Wouldn't it be nice if you could take an entire country off oil in a way that is consumer-driven and not mandated by government?" Agassi posed when I talked with him by phone about his idea.

He said the seed of the notion sprouted in 2005, when at a World Economic Forum Young Global Leaders meeting, he was asked how he was going to make the world a better place by 2020. He started thinking about how he could leverage his skills to address the problem of climate change. He started doing research and eventually quit SAP to devote his time to developing a business plan. By May of this year, he had one and founded Palo Alto,CA-based Project Better Place.This week, the company announced that they had received $200 million in first-round venture funding to help make it happen.

Here's what they propose: A nationwide infrastructure that consists of electric cars, locations where cars can be charged, stations where batteries can be quickly exchanged, and software that helps coordinate all of that and also keeps track of how much electricity is coming off the power grid and how much is getting fed back into it. There's a video on MSNBC that gives an explanation.

Agassi hopes that the new infrastructure, called the Electric Recharge Grid, will ignite demand for--and therefore innovation in--clean energy, such as solar and wind power and in the development of electrically powered cars.

But the plan does not require such innovations to begin, said Agassi. At first, cars can get their electricity from the current power grid, which is generating excess energy all of the time as a buffer against brown outs. When that electricity isn't used, it's wasted. Now it could be used to power electric cars. (For more information about electric cars, see FAQs at Plug in America.)

So how would this plan make Earth a better place? "If we can take all of the car emissions of the road--2.8 billion pounds of CO2--that is a better world," said Agassi.

Comments

[Driving Schools Finder]

I doubt that the electric car industry will come of age so soon. It will still take time for people to jump from gas to electricity anytime.

[Joel T. Maki]

With all the news on biofuels and alternative fuels these days, I wonder why no one has heard of this little company able to to make overt 5 gallons of biodiesel from a bushel of soybeans? www.sstp.us

If you follow the link to another company usse.us on that site, hit the research link. Apparently these guys are real according to Cornell University and Acorn University letters of support.

Apparently they are about to open a new pilot plant in BayTown Texas offering cellulosic biodiesel and biogasoline.
The company offers the fuels as a substitute - no blending or mixes.

If this is true then it is years ahead in advancement.

Fossil fuels substitution? Big oil will never stand for that. These guys will get bought out and never seen again.

Can you find out more?

[alexch77]

scheme car tesla www.hohlov.nnov.ru

[Chris Davis]

There's also startup money chasing the improbably expensive 200 mph all-electric Tesla (http://www.teslamotors.com/). And Hyatt putting Tesla recharging stations at some of their hotels (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/08/30/BUKERRNPR.DTL).

Who knows which of all this transportation R&D will take hold. It is just reassuring to watch the identification of the problem, and the search for solutions.

[LarryO]

I'm amazed how quickly some people trash the idea of even a 40-mile-per-charge electric car -- regardless of the recharge methods. Many households have one car that does the distance driving and another used for local stuff. Even a short-range electric would work for the second car. There is certainly plenty of demand for such vehicles -- if only they would make them available to us (which they refuse -- see "Who Killed The Electric Car"). After all, most hybrid buyers are aware that they do not save much money in the long run because of the higher price tag (as has been reported by Consumer Reports). These same car buyers would jump at the chance to buy an all-electric car or at least a plug in hybrid. It's a no brainer. Anyone that says otherwise is doing some interesting mental contortions.

[Patty]

I have to agree with Mysterymeat's assessment of the posts so far. Alhough I truly appreciate Kent's reference to "Three Stooges-inspired business plan," as I read the article, I was waiting for the punch line. The auto and oil industries have way too much power to ever allow the complete elimination of gas powered vehicles without a fight. Better to get the backing of someone in the automotive industry before you tackle the big boys.

[Mysterymeat]

Howdy. Enjoyed Tracy's piece on Shai Agassi's interesting and provocative plan. Then in comments Kent B comes out swinging so hard it seems there's more than science and straight-forward business going on with him. Battery Expert is more my style. Any advance, from small improvements in efficiency, reliability or cost in subcomponents, to "out of the box" style revisions to current business models or infrastructure systems, will keep the ball moving in the right direction. That direction being one that, in time, gets us as far away from the current sorry situation we're in with the large US car co's largely fiddling while Rome burns. Small start-up innovators like Agassi (though $200M is a whopper of a first round !!!), and more progressive big co's like Toyota and Honda, with some patience, hard work and imagination, are going to help us get out of these gas guzzlers in the next half a dozen years or so. You can be sure Mr. Agassi's investors did their homework before placing such a huge bet on the man and his plan. I for one plan to keep my eyes open for what happens next with him. Cheers.

[Battery Expert]

The interesting thing is that people become so zero-sum in the name of their cause. You can be a plug-in hybrid fan but that is not the only solution. If you get a plug in infrastrucutre it can also serve the hybrids that will need charging...and if you think about it, with a bit of context that is not just US based (read: Europe) you would use electricity at 10 cents than gasoline at $8 a gallon.

Also, did you hear about that free plug-in hybrid vehicle? what you're still holding your breath waiting for GM to produce it?

[kent beuchert]

This is a really dumb plan that attempts to solve a problem that, with the imminent arrival of plug-ins from GM
and BYD and Fisker, among others, is attempting to solve two
problems that actually don't exist - the lack of adequate driving range (which Agassi's scheme of swapping is totally
inadequate anyway) and the excessive cost of batteries - which Agassi's scheme actually increases. Nor does the scheme spread out the cost of batteries thru leasing any more than already would be via the 5 or 6 year auto loan
that includes them. I'm amazed at how simpleminded this whole scheme realy is. Everyone (I thought) knew that practically nothing of consequence is gained by going the all-electric route when 40, 50 and even 60 mile range plug-ins are available, which they soon will be. And should batteries become fast rechargers (as some already are) Agassi's rather implausible swapping scheme falls in taters as a horribly expensive kind of nightmare Three Stooges-inspired business plan. Plug-ins will destroy the gasoline industry without any help from poorly thought out ideas like this. I'm astounded that investors with $200 million can be so gullible. One thing's for certain - they don't know the first thing about electric car technology, especially batteries.