Two years ago, the Israeli-led firm “Better Place” (weird name, we know) was founded to produce technology that reduces dependence on fossil fuels. One of their first major projects has been solving one of the main barriers to getting electric cars into mainstream use: The fact that, while the technology to manufacture non-gas-powered cars exists, no car maker is going to mass-produce them because the necessary infrastructure to support them doesn’t exist (think corner gas stations with the ability to quickly re-charge electric batteries).
The firm plans to market electric cars similar to the way that cellphones are marketed: The consumer signs a service contract that provides him with subsidized hardware (a cellphone or, in this case, an electric car) and then pays a monthly fee (airtime for a phone, mileage for a car). Better Place partnered with Renault and Nissan to produce the cars, and they’re producing the batteries.
Besides the obvious environmental and political benefits (um, does anyone really want to be sending money to Saudi Arabia or Iran?), the plans would negate consumers’ worries over fluctuating gas prices.
Unstable (and generally sky-rocketing) oil prices have wreaked havoc over the last few years: American consumers went nuts when average gas prices topped $4/gallon in 2008 — though Americans pay far less than in many other parts of the world. At the end of 2009, Israelis paid the equivalent of around $6.20/gallon, while Americans were paying only around $2.65.
Better Place posits that running their cars will be significantly cheaper:
“With $100 a barrel oil, we’ve crossed a historic threshold where electricity and batteries provide a cheaper alternative for consumers,” Founder Shai Agassi told the New York Times. “You buy a car to go an infinite distance, and we need to create the same feeling for an electric car — that you can fill it up when you stop or sleep and go an infinite distance.”
Better Place lithium-ion batteries are expected to run 124 miles per charge, but the even more important vision is creating and building the infrastructure necessary to keep the cars going — whether parking meter-like plugs on city streets or service stations along highways, where, in a structure like a car wash, exhausted batteries will be removed and fresh ones inserted.
The firm got a huge vote of confidence–along with fresh resources–with a $350 million venture funding investment to build networks of charging stations:
The Series B funding round, which includes a $125 million investment from HSBC Group and values the Palo Alto, Calif.-based company at $1.25 billion, will allow Better Place to expand into Asia and Europe where countries are laying down incentives for electric-car development. Chief Executive Shai Agassi tells VentureWire Better Place has signed up 50 corporate customers in Israel, and expects to have about 90,000 drivers paying for its battery power by the end of 2010 in both Israel and Denmark. That would mean at least $27 million in monthly revenue coming online by the end of the year, given his estimates. This is only the start – Better Place, which has so far raised $700 million in capital, will likely need billions of dollars to saturate the market.
Looks like they’re off to a good–green–start!
