My second post in a row that’s based on an article from the Economist!
I strongly recommend this story on Electric Cars from the Sep 3 2009 Print Edition of the Economist.
About midway through the article, mention is made of “Better Place”, a company founded by Shai Agassi, and one he spoke about at a talk in the Stanford Technology Ventures series. In that talk, he shares stories about his work in software, his leaving SAP when the top job seemed to be ready to be handed to him, and his plans for a bold new venture – something that would help save the planet.
Here’s an exerpt from the Economist article:
Besides providing drivers with secure refuelling, the Better Place approach has a second advantage. Separating ownership of the battery from ownership of the car changes the economics of electric vehicles. If you rent the battery rather than buying it, that becomes a running cost (like petrol) and the sticker price of the car drops accordingly. This might not matter to a sophisticated economist, who would amortise the battery cost over the life of the vehicle. Many people, though, are swayed by the number they write on the cheque that they give to the dealer.
Better Place, indeed, plans to go further. It will charge for its services (battery and electricity) by the kilometre travelled. The cost per kilometre will be lower than for petrol vehicles, and if you sign up for enough kilometres a month, it will throw in the car for nothing.
This is a fascinating idea. Mobile phones, Smart Phones and to a lesser extent, Netbooks, are being given out by telcos and broadband ISPs with 2 or 3 year service contracts. People aren’t buying the gadgets – they’re buying the ability to communicate with voice and data, and the gadgets are merely the vehicle for that voice and data traffic.
In Better Place’s model, people are buying transportation, not cars or batteries. They pay for the distance travelled, with perhaps different rates for rush hour and off-peak periods, and the car is provided as a mere device with which to consume those kilometers.
It’s interesting to think of Nokia/Toyota, VoodooEnvy/SLK, Desktop-PC/Truck and basic mobile phone/scooter pairings.
And a key requirement for this to become real is improved battery technology, and likely to be based on Li-ion in the near term.
While you’re hunting through iTunes for the Shai Agassi podcast on the Stanford Technology Ventures section (it’s worth the search), look out as well for 2 past programs by the BBC’s Peter Day for Global Business. In one, he visits the factory and interviews the boss of BYD, a chinese company that is planning to make waves in the new world of electric cars (For a hint at BYD’s chances, you may like to know that Warren Buffet has an interest in the company). In another, more recent podcast, he presents a story about massive lithium deposits in Bolivia, and discusses how these may find their way to feed a battery industry hungry for this amazing metal.
It will mean huge mindset changes for the Auto industry and for it’s consumers. Nevertheless, I shall not stop lusting for the dream Aston Martin that shall one day be mine, in the hopefully not too distant future. (It will be fully electric, and have amazing acceleration!)