Better Place CEO: Biggest obstacle to electric cars is auto industry 'scepticism'
Published: 10 December 2010 | Updated: 13 December 2010
It's a bold call, maybe even outlandish – the end of new gasoline cars by 2020. But if you listen to Shai Agassi, founder and chief executive of Better Place, you might want to believe it.
Shai Agassi is founder and chief executive of Better Place, a global provider of electric vehicle infrastructure, networks and services.
He was speaking to EurActiv's Noelle Knox.
How soon before your network is fully operational?
The next year we will basically start demonstrating. We've had three years of development and this is year of testing, so over the next 12 months we'll test and demonstrate more and more of the claims we made originally.
The first claim was that you could get an electric car and it will have the range. The second claim was that people would like it and we proved that step by step. And the last claim was the controversial part, that the overall cost of the entire infrastructure would be less than one week of gasoline use in that country.
Israel uses $25 million a day of gasoline. Our entire network cost is $150 million – six days [worth of gasoline]. Holland uses about €60 million a day in gasoline. Our cost for the Dutch network is €60 million – one day.
Is your network large enough in size and scope?
Yes, to cover the geographical range of driving in that country. Our network is a combination of two elements, public charge spots and battery switch stations on the freeways. If you cover the geography to enable any car to drive from anywhere to anywhere with comfort convenience and affordability, you've got full coverage for the country.
And the network is large enough to support every car? Do you have the capacity?
In Israel, we have 56 stations across the country. That covers every geographical road you can take. The size of the network is derived by the landscape. And that allows 150,000 cars.
How many cars are in the country?
Two million. Now why am I saying that's enough? Because at 30,000 cars we've paid for all that infrastructure. So the money for the rest of the network comes from the (profit) margin of that network itself.
With an investment of six days of gasoline we get a self-expanding network that requires no more capital injection. From that point, when we get to car 60,000 we can double the size of the network, at which point we have enough for 150,000 cars. After car 150,000, we can cover 50% of the cars in the country.
It's a network that's big enough for one million cars. Effectively at that point it creates a flywheel [expanding] effect that just gets you going until the end.
What's the demand for the cars?
In Israel we opened a visitor center in Tel Aviv a year ago. In February of this year, in the span of almost 10 months now, we had 40,000 visitors who came in, saw the [marketing] movie, drove the car, looked at the switch, and 20% of them signed up for the car.
In the large [commercial vehicle] fleets for the country we signed up another 60,000. So we're a year away from the public launch of the network, but we've already sold almost 70,000 cars, which is about 1/3 of one year's worth of (new car) sales in Israel.
So Israel will be the first?
Israel is first, Denmark is second, same time, and Australia is six months after, second half of 2012.
What have been the biggest challenges?
Scepticism. We're fighting a lot of pre-conceived notions. The biggest one of them is that change doesn't happen. In the automotive industry we haven't seen any significant change in about 100 years. The Ford Model T was the only massive transformation of how we make cars, how we sell cars, how we service cars.
And suddenly somebody comes up and says we can make a huge change in the way we build the car, the way we operate the car and the way we price the car. And the industry says change is not going to happen.
Is your plan based on a universal design for an electric car?
We believe there will be a lot of different models, a lot of different ideas. We believe this idea we're putting in front actually comes up and says it's going to be truly market-driven, it's going after people who drive a lot. It's not a car that you have to give up on comfort or give up on performance or give up on range. It's a car just like any other car. And it will succeed because it's cheaper.
Will your network handle every automaker's electric car?
Renault is our car partner. So Renault has built a car called the Fluence ZE, and it's a large sedan with a battery that comes in and out.
So, you're effectively linking your fortunes to Renault's, in the end?
We're not exclusive with Renault. But the reality is we put a massive amount of investment into building, designing and implementing this infrastructure. And Renault has put a massive amount of investment into building the car, building the factory and making the car.
For the first few years, both of us will rely on one another, but if it works it will work with any car from any automaker that will make a car to fit the model.
So automakers must build a car that links to your network in order to get in the game?
Any type of car could get it. We license that to the carmakers for free so they can build a car like that. There's no blockage for anybody to get in. The issue is one of scepticism. There's scepticism in the market. We bought 100,000 cars from Renault...most carmakers are saying 'you're not going to find 100,000 people to take those cars'.
But you could say their scepticism is based on their experience trying to get into the alternative car market.
Most have not gone into the electric car market. The position we're coming from is the opposite of where they came from. We came in from a position that said, if you really want to make something happen in the car industry, make the car cheaper and more convenient and charge the same as gasoline to drive a kilometre.
Most of the people in the industry said, if you want to have an alternative car, it doesn't matter what it is, it's more expensive, it's low volume or less convenient. You give up on something. But you save on the kilometre, it's less than gasoline. What consumers are basically saying is 'I don't know how to calculate that stuff, so I'll buy the cheapest car'. Somebody else should do the 'good thing' (for the environment).
The (Toyota hybrid) Prius was about €3,000 more expensive than the Corolla. That €3,000 meant that even though it was extremely successful perception-wise, it was less than 2% of the cars sold for the 13 years it was on the market. Only €3,000 more expensive. Why wouldn't it sell more, given that we all want to save the planet?
Make an electric car €3,000 cheaper than a gasoline car, you'll see the exact opposite effect.
How are you going to define success?
We believe we'll tip the market in Israel and Denmark by 2015. So if we're launching late 2011, early 2012, we've basically said '12, '13, '14 are proof years and by 2015 we should already sell more than 50% of the new cars in the market.
You said something controversial recently about the end of gasoline cars.
If we tip those markets, by 2020 you won't see a single gasoline car sold in the market, other than rare exceptions.
In terms of expanding into other countries, what kind of interest are you seeing?
This is going to happen because the minute you can prove you can put in an infrastructure for the cost of one week's worth of gasoline…if I can put the country off of oil, the political pressure put on leaders to do it is beyond anything you can imagine.
What's your biggest risk?
Execution. Digging holes in the ground, getting robots in there, getting all the pieces to work in harmony. Now it's execution. There's not an element that hasn't worked. We've had taxis in Tokyo go 180 days now, non-stop, day in day out. Taxi can drive for half a year there's not a car with worse driving patterns than taxis. If a taxi can work, anything can work.
Who are your competitors?
Oil.
Besides oil?
Nobody has tried anything even remotely close to the entire system as we're doing it. You've got people who are building an electric car, or battery or charging system. Nobody's done a system.
So that's your competitive edge?
Transportation doesn't change until you give me a complete system.
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