To pessimistic ears ‘Project Better Place’ sounds like the title of a Sci-Fi movie or ecological high-school campaign. But that easily remembered catch-all name sums up the basic philosophy of the Palo Alto software entrepreneur Shai Agassi. A man on a mission to advance the cause and viability of the electric car, to be hopefully achieved through the ‘prove-out’ of his Californian sourced “L-ion” (lithium-ion) batteries
The news of his ambition, strengthened by a Renault-Nissan/PBP alliance, has spread like wildfire through the general and industry press since the Israeli government announced its intentions to aid the eco-venture to the tune of an initial $200m, so as to create an electric re-charge infrastructure (through either on-street posts or re-charge stations - probably linked to conventional fuel stations) and create an economic environment of consumer goodwill.
Obviously an ‘at cost’ business model, which would charge buyers the very expensive full value of L-ion technology would dramatically fail. To overcome this hurdle Agassi has adopted the ‘cell-phone’ business model which charges the consumer a monthly amount based on usage (mileage), similar to the call minutes philosophy of network providers. Thus the technology is effectively subsidized and made available at a fraction of production cost and a variable based usage revenue absorbs the initial high fixed technology cost.
The key is a business focus on infrastructure & usage rather than product; a version of the much lauded ‘service-value’ pricing model that has gained cross-industry interest, as opposed to a ‘product-value’ pricing model. The foundations of the business ideology is reaching an expanded, continuous, downstream revenue stream.
Of course, given Israel’s governmental encouragement (taxation incentives as directed subsidies) the business model can’t be yet said to be wholly viable, the Public-Private-Partnership approach key to its creation and development as opposed to the stand or fall of free-market economics So judging the immediate viability of the business in what are unaligned consumer and cost conditions isn’t the point. The point is to nurture a new automotive chapter that could, in time, have large-scale global ramifications for big, 'self-contained' conurbations and close satellite townships.
Everyone recognises that the very point of the commercial exercise is to act as a pilot programme to study, amend and create the (socio-technological) basis for ultimately a financially viable, indeed revenue maximising, business case. One that allows for a copy+ regime of spin-off ventures around the world.
Of course the political dimension for Israel is not lost on anyone. The energy security agenda of western governments is a high priority, as is reliance on what have been near record real oil prices. Israel’s obvious broader geo-politics reside with what is a domestically highly-networked set of close cities along the coastline (Hefa, Netanya, Tel-Aviv, Ashqelon) and an inland sizeable Jerusalem together spanning much of the 7 million population. Given that the round trip between Tel-Aviv & Jerusalem is only 75 miles, the (stated) 125 mile battery range should prove itself.
PBP’s major investor is Idan Ofer (of Israel Corp fame) who’s put-up $100m to obviously explore new energy related opportunities beyond his oil shipping & refining core interests. Also, ex-World Bank President James D Wolfesohn has taken a minority stake.
As an alternative energy automotive test bed, many parties will be interested in watching the roll-out, whether they be:
1. VMs (obviously R-N, but including China’s Chery)
2. Metro-Access Charge Cities (eg London, New York, Paris, Singapore, (LA)
3. Oil / New Energy Companies (eg BP ‘Beyond Petrolium)
For VM’s the issue of technology viability, longevity and cost is key to assessing the broader uptake. For Metro-Access Charge Cities it will be the real-world travel patterns & infrastructure costs. And for Oil/New Energy Cos it will be the efficiency of what is conventionally called the ‘well to wheel’ cost chain; now possibly titled ‘plant to propshaft’. [Today the vast majority of drill-worthy oil reserves are held by non US national oil companies, so they must seek additional non-oil-derived energy businesses].
And one should not forget that this ‘future vehicle’ exercise centred on electricity is set against a broad western energy policy (from the US to UK to France and Australia) that favours the development of new ‘clean generation’ nuclear power plants that will provide a sizeable portion of each country’s energy needs for the next 30 years & beyond; the stations themselves born from state energy security directives.
Much will of course depend on vehicle uptake and credibility – these reliant upon the Israeli government, Renault-Nissan and PBP’s successfully managing the 3 way balancing act of: economic rationale, consumer desirability and core-tech reliability.
Whilst the auto-industry has witnessed, and sometimes craeted, many off the wall, fly-by-night innovations, this deeply considered test-bed venture could very well set the basic tenants for an additional possibility for inter-urban vehicle usage in the 21st century.
Edwardian auto-engineers often believed Electric Cars superior to their petrol counter-parts, but the external factors such petrol’s availability & convenience won the day. Over one hundred years on they may look-down from above and eventually see their long wished for credible infrastructure put into place.
So the final word goes to Agassi himself (expecting to make 100,000 units): “the Israelis can control the externalities and give it a chance to flourish or fail”. All will most definitely watch intently.