Charging Toward an Electric-car Future

The venture-backed firm Better Place has a vision of how the electric-car business — that most historically stalled of industries — will finally reshape the automobile landscape in the next decade.

Two years after the company was born under the guidance of former SAP executive Shai Agassi, Better Place's CEO, it sees the future of transportation as all-electric, rather than hybrid. Further, it expects that so many more drivers will buy these vehicles, powered by rechargeable and removable batteries, that the electric car will turn today's carbon-emitting gas-guzzler into the dinosaur that we've long suspected it is. 

The role of Better Place in this new industry will be what CFO Charles Stonehill calls "the seller of electric miles," vaguely similar to the way wireless communication companies provide minutes to cell-phone users. Auto-powering lithium batteries, like the ones that will be provided inside new cars, could be recharged or easily switched out — flashlight-style — for fully charged units that could be purchased from Better Place, as part of an "electric mileage plan." Under that scenario, drivers of electric cars would prepay for a number of electric miles per month or year, along with battery switchout or recharging support, and service at "charge stations" that Better Place would build and operate in cities around the world.

Palo Alto, Calif.-based Better Place is currently developing the technology for building its envisioned electric-recharge grid in partnering cities and countries. The plan calls for charge points to eventually be installed in locations, including parking lots and public parking spaces, where drivers could charge their electric battery for trips less than 100 miles, the current maximum distance battery technology allows electric cars to travel.

For longer trips, drivers generally would use the battery switching stations that would be built along highways and roads. There, a swap would be made for their original battery , thus avoiding the long recharging process that electric batteries otherwise need. Better Place also envisions providing software that would serve as an "operating system," notifying drivers how much electricity remains, and where the closest recharging or battery-switching station is located. 

This year, 100,000 charging spots will be built in Better Place's first test-market country, Israel, where the company already is paired with Renault-Nissan for electric vehicles that are compatible with Better Place's technology in the next few years.

The company's credo is that the support of governments — from national to municipal — is vital to creating the infrastructure needed to support electric vehicles. Leaders in Denmark, Japan, Australia, and Ontario, along with the San Francisco Bay Area and Hawaii, also have committed to supporting public and private investment in building Better Place grids. Last November in California, for example, the mayors of San Francisco, San Jose, and Oakland announced the goal of turning the Bay Area into the nation's electric car capital. Lending support to the overall effort, President Obama has made green initiatives and energy efficiency goals of his administration.

Managing the finance operations for Better Place, and managing its vision, is former investment banker Stonehill, an Oxford University graduate who formerly was nonexecutive chairman of Panmure Gordon & Co. PLC in London, and before that global head of capital markets for Lazard Freres, head of investment banking for Credit Suisse First Boston, and head of European equities and equity capital markets for Morgan Stanley.

Stonehill now has the task of overseeing Better Place's capital-raising operations in this extraordinarily tough market for securing financing. Despite the challenges, he believes there are bright spots -- starting with the demand the company expects for all-electric autos. According to a worldwide survey from Continental Automotive, 45.8 percent of motorists are at least interested in buying an electric car.

Here is an edited version of our interview with Stonehill.

What is the business model that Better Place envisions to serve electric-car drivers?
Most importantly, we need to build the infrastructure that will allow people to regularly charge up their cars with more electric miles. They'll do that at charge points at their homes, offices, and other public places where they park their cars, such as garages and parking spaces on the streets. For a journey longer than the range of the electric miles in their car, they will have to do exactly what they do [today] when they go to a garage and fill up with more gas.

They'll have to effectively get more miles by exchanging their depleted battery for a charged battery at one of our switch stations. So they will drive into a switch station, remove the battery from the car, put in a fully charged battery, and go off again in what we believe will be less time they would normally spend filling up their car at a gas station.

Car makers will obviously need to build cars with removable batteries. We will build the stations and other charge points, and provide technology that we will install in cars to alert people where they need to go to charge their car or exchange their battery. There will be a significant amount of software in the car that will help them have a complete driving experience.

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