Shai Agassi: electric entrepreneur

4 November 2007

Shai AgassiShai Agassi has big plans for his electric car startup, Project Better Place. Not for him the bottom-up, Tesla Motors route – building a fleet one battery car at a time. The ex-SAP executive wants his new firm to be “the Google of batteries”, as he puts it. Just as Google has become virtually synonymous with the web by serving as the default gateway to the network, so Agassi wants to be at the centre of a future, battery-electric transport infrastructure.

Agassi has dissected that imagined infrastructure and studied the gaps that need to be filled. Where some – like Tesla's founders – have tackled the lack of convincing electric cars, Agassi has alighted on a different void: the absence of a recharging network, the paucity of places to top up a Tesla. Comparing the problem to creating a mobile phone network, Agassi says, “You don't start by building the handsets and then hope someone will build the network.” It's a mistake, he argues, to build the cars first without thinking about the network - like providing a handset with no network to make the calls.

With missionary zeal he argues that all of the necessary technologies are already proven. “You don't have to wait for the magical 400-mile battery,” he says. What you need instead is a 100-mile battery, perfectly possible as Tesla has shown, combined with somewhere to plug it in if you need to drive further. Better Place, it seems, will aim to provide lots of somewheres to plug in – in homes, streets and car-parks around the world.

In the past this blog has seen fur fly between people who think it's feasible to drive a pure electric car for hundreds of miles on a 10-minute charge, and those who think that's a bit, well, over optimistic. We’re in the latter camp, as is Agassi. Rapid recharging is unwise for practical reasons but it's also muddle-headed: it tries to shoehorn the electric car into the same box in which combustion-engine vehicles fit. It's like a 19th Century pundit insisting that horseless carriages will only catch on if they can refuel themselves when parked on the grass.

Given current limitations, not just in battery chemistry but in the power generation and distribution grid, it's a lot more sensible to capitalise on the fact that most cars spend more than half their lives standing still. This is the time to send electrons into their innards – preferably whenever and wherever they're parked. Or at least wherever they're left parked overnight, when electricity is cheap.

But not everyone wants to cool their heels for hours while their battery sips current. So, if a 10-minute recharge is science fiction, why not swap a depleted set of cells for one that was charged earlier? Better Place plans to build “switch stations” to allow owners to rapidly and safely swap batteries as easily as they currently fill up the tank with unleaded, allowing the completion of long-distance journeys.

Agassi is evidently very serious in all this. He has secured $200 million in funding to establish a network of charging points and switch stations. While $200m sounds like a lot it won't be nearly enough. The investors chuckle as they describe the huge sum as seed capital. The plan will also call for electric cars to be built with Agassi's switch stations in mind. He's already talking to unnamed manufacturers, hinting at big-name makers rather than small fry like Tesla, Reva or Th!nk. And the cars will not be “souped up golf carts”, he says, but “full blown” cars of all shapes and designs. “We believe that many manufacturers will offer them,” he adds.

Some obvious problems with the plan have been elegantly side-stepped. What if I arrive at a switch station and want to swap my five-year-old, last-legs battery pack and drive off with a new one? Not a problem, because Agassi calls the battery pack “part of the energy infrastructure”. The cells are not sold with the cars, but continue to belong to Better Place. Scrap packs are not the end user's problem.

Agassi says he has run the numbers and that an electric car bought and charged in his way will be cheaper than a petrol equivalent. He is even planning to borrow a bit of business model from the mobile phone companies, where initial hardware purchase is subsidised for customers who commit to a long-term subscription.

Of course the phone companies recoup their hardware losses through call charges, so presumably Better Place will need to levy a surcharge on the pure cost of the electricity during every recharge. No doubt the surcharge will need to apply even when the recharging is done at home, a step which may meet some resistance from customers who don't quite get the business model.

Surprisingly, Agassi also talks of “flattening demand” for electricity, by centrally controlling the load imposed by tens of thousands of recharging automobiles. He also alludes to the switch stations and car batteries being used as a distributed storage system to help the utility companies meet peaks in demand. This will be another surprising thing to explain to consumers – that their car might be feeding power back into the grid in the afternoon, when one might reasonably assume that it is trickle charging.

Better Place may sound far-off, but apparently the company will begin large-scale testing next year. For its first foray into selling the idea, Agassi says he is looking for sweet spots where there is the right taxation policy, the right electrical infrastructure, and a growing green sensibility. London surely has to be near the top of his list.

Agassi tries to play down the scale of the challenge that lies ahead, saying it's “not a science project, it's really an integration project”. He means, of course, that all the technological pieces are available and proven. The business model, however, is another kettle of kippers. It may not be a science project, but it is a case of driving in the dark. We hope Agassi succeeds in turning on the lights.

3 comments:

Anonymous said...

Agassi's scheme is stupid on so
many levels that one wonders how this fellow
1) ever made a lot of money and 2) ever was able to convince others of his scheme, which is basically a con. His aalaogy to cell phones
is so dumb that it's quite hilarious, unintentionally, we may assume.

Mark said...

Anonymous is so stupid one wonders how he only misspelled 3 words in his post.

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