"Most people give us two more years to prove this vision is a reality," Shai Agassi quipped Monday evening about his company, Better Place.
The founder and chief executive of the electric-car battery-swapping company offered a moment of levity as he accepted a visionary award from the Commonwealth Club in San Francisco. But behind most jokes is a grain of truth.
If Better Place sees any humor in this statement, it is not letting on. The company, which Agassi founded in 2007, is peddling the most radical idea in electric vehicles. It hopes to lower the price of electric cars by selling them separately from their batteries and turning battery charging into a service. No one knows whether it will work. Israel will find out in 79 days when the first trial goes live.
Agassi says his goal is to launch the service at a price equivalent of $2-to-$2.50-a-gallon gasoline. This includes amortizing the cost of the battery. He anticipates the price will be especially appealing in Europe and Israel, where gas is often $7 a gallon. The hope is to reach a $1-a-gallon equivalent in the next decade.
He also expects battery swapping to appeal to mainstream consumers. The company expects the Renault's Fluence ZE, the battery-swappable car Better Place has ordered 100,000 units of, will sell at a price similar to the electric Nissan Leaf (the Leaf will start at $25,280 after government incentives). Renault is set to unveil its pricing in September when Better Place discloses the pricing of its Israeli service plans.
Here are several other observations from a Tuesday interview with Agassi:
Agassi says the electric-car market will take off when cars sell for $3,000 to $5,000 less than gasoline cars. This can include government incentives, such as the 5,000-euro subsidy that is in place in France.
What if a $5,000 Chinese-made electric car sold in the United States? "All hell will break loose," he said. Better Place struck a deal in April to collaborate on electric vehicles with Chinese auto maker Chery. Agassi says he anticipates Chery will sell a battery-swappable vehicle in the Better Place markets of Israel and Denmark, but not for several years.
In Israel, Better Place is presently building battery swapping stations and preparing for a 50-car trial to start before the end of the year. Employees will operate the cars. The country will have five swapping stations by then and eventually 70 stations, spaced 25 miles apart, to provide adequate service across the country.
The investment in Israel: $70 million for infrastructure and $150 million total when adding in costs for sales staff, office space, etc. Agassi rationalizes the cost as equivalent to what Israeli drivers spend in one week on gasoline.
In Israel, Better Place says it is seeing interest in its service from 700 to 800 drivers a month. That many people are signing up at the Better Place visitor's center saying their next auto will be electric.
In Japan, Better Place says its trial with four Tokyo taxis has lasted for 75 days so far. Each vehicle has logged more than 10,000 miles, a healthy amount for an electric car. Battery swaps take an average of 59.1 seconds. The company calls the trial a success and has earned its first revenues, though it did not release figures.
In Denmark, Better Place's second target market, trials will start at the end of 2011. Some charge spots are available to electric car drivers already. The electricity for the market will come from 600 windmills.
Australia is still on track for a trial at the end of 2011, followed by Hawaii and California in 2012.