Every great company in the history of the [silicone] valley started in a technology down cycle. — Shai Agassi
Stories about electric cars usually don’t get me very excited. They may not generate any emissions on the road, but their batteries must recharged from a national electric grid, which in America is 50% dependent on coal and 20% dependent on natural gas. Essentially, electric cars always looked like a game of fossil fuel whack-a-mole – trading the limitations and pollution of oil for the limitations and pollution of coal and natural gas. You could argue that we could power the grid with renewables, but the grid is a 7/24 dance of precisely matching up demand with supply and it can only tolerate a limited amount of intermittent power like wind and PV before the music stops. Add to that the limited range of electric cars and the whole concept falls apart when you consider that potential buyers must be confined to a tight radius around the umbilical cord of their home’s electric meter.
All of that is about to change as our model of personal transportation built around cheap oil and the internal combustion engine goes the way of the buggy whip. Imagine a future work day that looks like this:
- You enter your garage and pull out your electronic key. The logo on the key is blinking blue, indicating your car is fully charged.
- You unplug your car from the wall, open the garage door, and head for work. Your electric system software analyzes the first few minutes of driving and determines your likely destination based on past history: “Work?” it asks to confirm. You answer the question in the affirmative and the system determines how much energy is needed for the day.
- During your commute, the GPS enabled system finds and displays three open parking spaces near your office that are equipped with charging pods linked with your electric car’s subscription plan.
- You pull into one of spaces and an automatic arm extends to plug into the car. The charging pod then communicates with the control center, and based on the your driving history, picks the lowest rate time slot to recharge your vehicle.
- Before your recharge is complete an unexpected cross town meeting comes up. You climb into your car and enter the new destination, and the system software notifies you that there is insufficient charge to make the trip, return to the office, and commute back to your home. To extend your range you order a battery swap.
- The system software finds the most convenient battery-exchange location and books a bay. The old battery gets lowered onto a hydraulic plate, and the car moves forward on a car-wash-style track. In no more time than it takes to fill up your old tank with gasoline, a fully charged battery pack is in place, and you are on your way with another 100 miles of driving range.
If all this sounds like an episode from the Jetsons, think again. Within 15 years, automobile transportation in Israel and Denmark will be carbon neutral, with electric cars powered by wind and solar energy, and the rest of the world may not be that far behind. This all starts with a business model for the automobile that takes its cues from the mobile phone.
The idea, according to Shai Agassi, the software entrepreneur responsible for this new vision, is to sell electric car transportation on the model of the cellphone. Purchasers get subsidized hardware — the car — and pay a monthly fee for expected mileage, like minutes on a cellphone plan, eliminating concerns about the fluctuating price of gasoline.
As with cellphones the car will become secondary in importance to the network, “You’ll be able to get a nice, high-end car at a price roughly half that of the gasoline model today,”
Agassi’s vision is well on its way to reality. His company, Project Better Place, has already attracted $200-million in venture capital, a commitment from Renault-Nissan to develop and build the software enabled electric cars, and commitments from Israel and Denmark to be the “beta sites” to prove the concept. If any of this required some new technical breakthrough, I would find it all interesting in a wait-and-see kind of way. However, what makes this real is that it all rests on a proven foundation of off-the-shelf technology. The breakthrough lies in the vision – in the paradigm shifting business model. The initial selling is done, what comes next is flushing out the partnerships, building he supplier base, creating the system software, and engineering the infrastructure.
The collection of park and charge spots across a country or city, together with software that controls the timing for charging the cars, creates a smart grid—synchronized and extending the country’s existing electric grid, matching excess electricity on the grid with the need to charge batteries flattening the demand curve in the process. When we put together the charge points, the batteries, exchange stations, and the software that controls timing and routing we get a new class of infrastructure—the Electric Recharge Grid (ERG). A new category of companies will emerge in the next few years which will install, operate and service customers across this grid—called Electric Recharge Grid Operators (ERGOs).—Project Better Place white paper distributed at EVS-23
The ifs and the maybes are past tense. Renault-Nissan has promised to have the cars ready by 2011 and prototype testing has already begun in Israel. These cars will not be glorified golf carts, but snappy full size sedans and small SUV’s.
The consumer’s contract for the EV must be the same – or better – than the consumer’s current contract for gas-powered cars. We need to change the way consumers buy an EV so that it fits the current social contract we have with our cars, providing a normal car ownership experience even if the car has an electric drive train. – Shai Agassi
Israel and Denmark provide ideal consumer markets to test the business model. Each country enjoys low average miles driven per day that fall within the proposed battery pack range and a high likelihood that the electricity used for transportation will be renewable. Denmark already generates enough excess wind power to supply all of it’s personal transportation needs and Israel has an obvious strategic need to be independent of Middle East oil.
With any infrastructure project of this magnitude, there will be unforeseen problems. However, none are likely to be more than temporary engineering challenges. The end result will be a new electric personal transportation paradigm that is equal to or better than the freedom and convenience provided by the internal combustion engine. It is a business model that has the potential to greatly mitigate the impact of peak oil, positively impact climate change, and by providing a large storage sink in the form of batteries enable much greater use of solar and wind power on utility grids.
It also extends the age of the automobile, along with the legacy of traffic jambs, suburban sprawl, and mind numbing commutes. Better Place estimates the the cost to develop the necessary infrastructure in the U.S. is about $500 per car or about a year’s worth of oil imports. Over $400 of that number is for investments in renewable energy to avoid the shell game of trading oil off against coal and natural gas, so the actual cost for the charging and battery swap infrastructure is only about $85 per car. Since the U.S. electrical grid suffers from 30 years of under-investment and is a balkanized maze of 500 owners, the implementation of the Better Place model will mimic the cellphone industry and role out by metro region based on local politics and beliefs that favor an early adopter mindset. It’s no surprise that the California cities of San Francisco, Oakland, and San Jose will combine to be the first U.S. adopters of the model.
A Utopian Future?
Once you have a system of electric cars – a system that knows where every car is and where they are going – it is not much of leap to imagine the end of traffic jams or even the end of actually having to operate the vehicle. Phase II?