The Times They Are a-Changin’

Call it range anxiety – call it what you want. Electric car drivers worry time and again that they won’t have enough juice to make those long trips. And so, as is too often the case, the question of pragmatism becomes a hurdle for greensters and those on the fence.

As they continue to push to sell more battery-powered cars, it’s a fear that automakers must overcome.

Due out late this year, Nissan’s all-electric Leaf can travel just 100 miles on a single charge. That’s perfect for a commuter but not the Jack Kerouac cross-country sojourner type.

One guy who once owned an electric car, Mr. Bob Shafron said:

“I think the Leaf is a beautifully designed vehicle, but 50 miles in one direction is just not enough…I think they are going to run into problems in markets like L.A., where things are spread out.”

The Monrovia-based maker of unmanned surveillance planes and quick-charge systems for electric vehicles and wind turbines, AeroVironment, secured a contract to install and provide home-charging systems for Nissan’s Leaf:

“When a customer goes to Nissan they will be able to schedule a home assessment with a licensed electrical contractor that will be part of our nationwide network”

said Steven Gitlin, AV’s vice president of marketing strategy.

Car Charging Group, Inc an owner and provider of electric vehicle charging stations with a mission to build a nationwide infrastructure, compliments California regulators who voted to make it easier for electric car charging companies to resell power in California at the California Public Utilities Commission Meeting held recently:

“For years, California has set the standard in green technology. It is great to see the state pave the way for electric vehicle charging companies and allow them to sell power in the state,” Car Charging Group CEO Michael D. Farkas said, “This opens up the gateway to bring revenue from EV charging stations and helps our company fulfill its mission. Furthermore, if other states follow in California’s footsteps, the national initiative would allow our company to price the cost of our services competitively benefiting property owners and consumers.”

Slightly more expensive and also hitting show room floors soon is GM’s $41,000 Volt. President Barack Obama was recently photographed driving in one.

Meanwhile, another fine example has been set by the Israeli company, Shai Agassi’s Better Place is opening a visitor center in a Tel Aviv suburb, situated in a renovated oil tank at the Pi Glilot fuel depot.
The center invites the public to hear about the Better Place vision (electric cars and charging stations, already setup in Jerusalem and parts of Europe), learn how the system will work, and test drive the cars.

Agassi had this to say:

“With the Better Place project, for the first time, we in Israel are providing a solution for one of the biggest global problems…By a happy coincidence, the Israeli government announced today that it was calling for a national plan to reduce Israel’s dependence on fossil fuels. I promise you that we had nothing to do with it, but we are happy about it because it shows where we’re going.”

Better Place Israel CEO Moshe Kaplinsky, a former deputy chief of the IDF General Staff, said that the company has signed agreements with 92 different Israeli companies who have agreed to convert a portion of their fleets to electric vehicles.

Motorola, Strauss and Netvision are among these companies.

The Times They Are a-Changin’

Rockin’ Down to Electric Avenue, Part II

Shai Agassi closed a deal, financing his company Better Place, two days before the World Economic Forum‘s annual meeting in Davos, Switzerland. They closed at $350 million, pricing the firm at $1.25 billion.

Agassi became inspired to enter the electric car market at the World Economic Forum meeting three years ago, when he left software giant SAP.

Their biggest investor was HSBC, which took 10% of the company for a $125 million. Other investors included Morgan Stanley, as well as investors from the first round of financing, led by the Israel Corporation, which now has 30% of the company.

When asked how a company which has no revenues, hasn’t begun operating and has no proven business model, can round up that much worth from investors, Agassi said:

“The round indeed reflects a valuation of $1.25 billion, which is three to four times more than the valuation during our last round two years ago. … In terms of the speed with which the value was created – there haven’t been any companies like this. This is the largest investment since the crash in 2008 and the largest investment ever in clean-tech.”

Ok, but THAT kind of valuation?

“That’s a very interesting question. Look … we’re selling kilometers. The people selling kilometers until now were the oil companies.”

What’s selling kilometers? What does that mean?

“When you go to a gas station nowadays, you buy kilometers. It looks like a model whereby someone fills up the tank and pays, but ultimately, it’s a purchase of kilometers, 500 to 600 kilometers. It’s the same business, an energy distribution network, which is currently called oil companies or gas companies. The global kilometer market is currently worth $3 trillion a year, and [gas stations are] living on profit margins of 1% to 2%… Now, we’re buying the raw goods at a price that’s constantly decreasing … and we’re starting at very high profit margins, much more than 1%.”

Explain again about that valuation, what with no revenues and all?

“The total value of the Israeli kilometer market is about $10 billion. It’s being sold in servings of NIS 6.5 per liter – for us, the market share is 500,000 cars that get a lot of mileage – half of the distance traveled in Israel. These are leased cars, and the cars of people who drive 30,000 to 40,000 kilometers a year. That’s worth $5 billion …. We can get to that market share with profit margins of 40% to 50%.”

How do you get to profit margins of 40% to 50%? What about returning the investment, what about operations?

“I buy a battery and electricity, and I sell kilometers. On the way I’ve laid a lot of infrastructure in order to translate one into the other …. And my profit margins are constantly improving and eventually become very large because batteries keep getting cheaper and electricity keeps getting cheaper, while the price of a kilometer increases since there isn’t much cheap fuel left in the world.”

With Agassi’s plan, drivers will need to recharge every 150 kilometers – they’ll come to a recharging station, where a robot will remove the empty battery and insert a full one. The entire process takes two minutes, and most drivers won’t need to recharge more than once every two weeks.

When the project launches, hopefully in the second half of 2011, Israel will have 70 recharging stations. The infrastructure, that is the recharging stations, plus setting up chargers at customers’ homes, will cost the company $150 million. That being said, the company hopes to return the investment within 18 months.

It shouldn’t take more than 15 minutes to set up a charger at a customer’s house. Customers will not pay for electricity usage. They’ll pay a flat cost.

The charging stations will recognize cars based on a SIM-card-like device.

“The program that manages electricity consumption is amazing, because this is essentially the first time that cars will have a computer running Windows 7 inside them and a constant cellular Internet connection…This changes the complete driving experience. You can do things like navigation with other cars.”

Will the drivers like it? Will the masses get used to it?

“These changes happen in all fields. The large [car manufacturing] companies are looking at the changes and not moving. They’re like deer caught in the headlights. Look at the newspapers versus Google, look at pharma versus biotech, at the music industry.”

While the driver may lose due to the inconvenience of having to charge every 150 kilometers Plus, the up side is that electric cars will be less expensive: around NIS 100,000, he cites as an example, or NIS 20,000 to NIS 30,000 less than current car prices in Israel.

What is the word from Amdocs, Nice or Comverse?

“They see a decrease in costs, they see a fixed price for car maintenance. Remember that a year and a half ago, the price of gas suddenly jumped. And they also see a marketing opportunity for their company – an opportunity to be innovative leaders.”

And how will they sell it?

“First of all, the worker will benefit from the lower valuation of the car for income tax purposes.”

Agassi also said that Gas stations have no reason to fear the new business model – at this point, most of their revenues come from

“selling sandwiches and ice cream.”

If they become recharging stations, they shall maintain the traffic that powers their stores.

What about oil refineries? The company’s main investors are Sammy, Idan and Eyal Ofer. They also control the oil refinery in Haifa.

“Idan told me during our first meeting: ‘You told me that the days of the refineries are numbered, so why should I let someone else kill them? I want to be the person who kills them, because if this works, electric cars will be more profitable for me than refining oil.'”

“We Gonna Rock Down To Electric Avenue”

shai aggasiA U.S. firm, California-based, Better Place, is building electric car chargers, in Jerusalem of all places and has installed a network in Tel Aviv.

By 2011, roughly 100 charging stations will be found on the streets of Jerusalem. In the same year Israel plans to have electric cars available for mass consumption. Twenty of the stations are already in place.
Better Place, CEO, Shai Agassi calls Israel, “a leader in the road to sustainable mobility.”

In a recent statement, a Better Place spokesperson said that:

Electric car batteries used in Israel will have a range of 160-200 km (100-125 miles), sufficient to cover the distances among most of the small country’s main urban centers. They would take 3-4 hours to charge.

flash charge spotsBetter Place, is a brand new $200-million venture-backed company. They plan to add electric car charging stations in Denmark after the project in Israel; and is working with Renault and Nissan, to develop electric car infrastructure.

According to Reuters:

The firm has also announced partnerships with Australia, California and Hawaii, worth about $2 billion in total, to expand its network in the coming years as markets search for alternatives to cut carbon emissions and pricey fuel imports.