Stars align for maker of electric car infrastructure

By Bill Vlasic
Published: February 9, 2009

DETROIT: When Shai Agassi set out in 2007 to develop an infrastructure to service electric cars, circumstances were hardly in his favor.
Gasoline was cheap, and big pickups and SUVs still ruled the road in the United States. While auto companies were working on alternative-fuel vehicles, they seemed destined for a tiny niche market of green-minded consumers.
But now Agassi and his start-up company, Better Place, are riding the tailwinds of an industry that is suddenly obsessed with going electric.
Nearly every major auto company in the world is committed to building electric cars, and President Obama has made reducing oil consumption a centerpiece of his energy policy.
It's a fortuitous turn of events for Agassi, a former software executive who is bringing his Silicon Valley business acumen to devising a system to increase the driving range of electric cars.

The 40-year-old, Israeli-born entrepreneur is selling the sizzle of a new idea at the same time he is putting it into practice.
The key to consumer acceptance of electric cars, he said, is installing a network of stations that can replace drained batteries with fresh ones - just like filling a vehicle with a new tank of gas.
By building its first battery-changing stations in test markets like Israel, Denmark and Japan, Better Place is positioning itself to be a critical link in the evolution of the electric-car market.
"The battery is a consumable part of the car, just like gasoline," Agassi said during a recent interview. "Cars in the 1950s only went about 100 miles on a tank of gas, and that problem was solved by installing an infrastructure of gas stations."
Agassi acknowledges that there is much work to do to perfect the mechanics of switching a vehicle battery in a few minutes during a roadside stop.
But his concept has already won powerful converts in government and industry, including Shimon Peres, a former Israeli prime minister, and Carlos Ghosn, the chief executive of the Renault-Nissan auto alliance.
Agassi has also tapped into a spirit of change and an anything-is-possible mentality fostered by the hopeful, new Obama administration.
"I start with the question, how do you run a country without oil?" Agassi said. "To get there, you need the number of electric cars coming into the market to exceed the number of gasoline vehicles."
Up until recently, such a goal would have seemed a fantasy. But auto companies are now putting vast resources into electric-car projects, with several of them vowing to have a model on the market by 2011.
Advances in lithium-ion battery technology have increased the range and reliability of prototype electric models. Agassi is betting that batteries will become commodity products that can be leased and then replaced on demand in the ordinary course of driving.
Better Place has joined forces with governments in several countries to test its switching stations, and has also signed agreements in Hawaii and with a nine-city alliance of communities in the San Francisco Bay area.
The mayor of San Francisco, Gavin Newsom, envisions his city as an incubator for electric vehicles.
Part of the challenge is to convert existing sources of electricity - like municipal light poles - into charging stations for consumers.
"But what Shai is doing with these switching stations is taking the worry out of charging your car," said Newsom. "It relegates the concern about running out of electricity to the back of one's mind."
Agassi has no previous experience in the auto industry, but has been a devotee of electric cars for some time. He owns one of the 1,500 battery-powered RAV4 sport utility vehicles that Toyota built for testing purposes in the late 1990s.
He was a computer programmer who started a series of software companies with his father, the last of which they sold to the software giant SAP in 2001. He rose to become SAP's chief technology officer, and appeared on track to one day become chief executive.
In 2005, Agassi joined a business forum called Young Global Leaders, and attended the Davos economic conference. In one of the discussion sessions, attendees were asked to consider ways to "make the world a better place" - a concept that stuck with Agassi.
He left SAP two years ago and founded Better Place in Palo Alto, California, with $200 million in backing from venture capitalists in Israel and the United States. In a few months, he was meeting with Peres and Ghosn - again in Davos - to finalize an agreement to build switching stations in Israel for electric cars produced by Renault.
He has since signed similar deals in Denmark, Japan, Australia, and, most recently, Canada.
The Better Place system includes software that analyzes a vehicle's battery consumption, and can direct drivers either to small-scale charging spots or full-size switching stations.
Agassi estimates that a single battery-switching station will cost about $500,000 to build. A vehicle will park on a conveyor similar to the track in a car wash, and within minutes its depleted battery will be removed and replaced with a fully-charged one.
The batteries themselves might possibly be owned by Better Place, with consumers simply purchasing electric charges as they would cellphone minutes.
Renault and Nissan have already agreed to make electric cars that use stations built and owned by Better Place in test markets, and Agassi has pitched his plans to several other auto companies.
One auto industry analyst said the business model should be particularly appealing to automakers.
"Frankly, we are not aware of any reason why they would not sign up for this, as the automakers do not need to commit capital for infrastructure or for batteries," Rod Lache, a Deutsche Bank analyst, wrote in a research report on electric vehicles.
Better Place will open its first battery-switching stations by 2010, in Israel. Agassi expects that tax credits for electric cars will be widespread in several countries by then. Demand for the vehicles, he said, will grow in proportion to the ease of charging batteries or exchanging them.