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Old 03-04-2011, 10:01 AM   #1
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Default Better Place gets slammed in new report

FORTUNE -- Remember Shai Agassi? He's the high-profile founder of Better Place who is trying to market a breakthrough technology for recharging electric vehicles.

Agassi has been energetically lining up venture capital investors and estimates he's raised $700 million so far. He's also signed up big name partners like General Electric (GE, Fortune 500) and France's Renault and struck deals with the governments of Israel, Denmark, and Australia to launch his venture. He's gotten ranked as one of Foreign Policy's 100 most influential global thinkers, as well as a guest spot on the Charlie Rose show.

At the center of Agassi's business is a plan to build battery-swapping stations where drivers can bring their electric vehicles when they need to recharge. Instead of plugging in, they would merely swap their depleted batteries for fully-charged ones.

It is a hugely ambitious plan, requiring investments not only in the charging stations but also in an inventory of batteries. Integral to the plan is a fleet of cars that have been specially engineered for swapping.
Daring in concept, the question about Agassi and Better Place has always been "do the numbers work"? A new study by the British consultancy Trend Tracker, first reported by the Detroit News, says they don't add up.

First off, Trend Tracker, which specializes in auto research, expects very slow adoption of electric vehicles. "Battery-only vehicles are too expensive and provide an unacceptably short range ... The economics of battery car use, with their limited life and high cost, will only appeal to rich, early adopters."

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The report goes on to argue that Better Place's scheme requires an uneconomically high inventory of batteries. Since one battery has to be recharged overnight while another is in use, it reduces the battery utilization rate to 50%. As more EV brands come on the market with different battery configurations, even more inventory will be required.
To be sure, Better Place's automated swapping equipment is currently designed for a single vehicle, the Renault Fluence, but Agassi says different configurations won't be a problem, because Better Place will own the batteries. He adds that his controlled quick charge system means only 12-15 batteries need to be held as replacements at any time.

Trend Tracker wonders whether three minutes per vehicle would be enough time to swap batteries, as Agassi claims. Better Place has tested its swap technology with four taxis in Tokyo and says it can exchange one pack for another in 59 seconds, though the entire process takes three minutes. Agassi plans a more extensive test in San Francisco with 60 taxis a year from now.

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The cost of the Better Place equipment creates another hurdle to profitability, according to the report's authors. They estimate that equipment required for each battery swap station is likely to cost around $1 million. Add to that the expense of roadside real estate for the stations, and it "may raise initial investment requirements to a level that affordable battery rentals may not be capable of recovering."

Then there's the additional risk of accelerated obsolescence in a fast-moving industry. "Such an elaborate system for servicing an immature technology is at particular risk of premature obsolescence," it said.
So don't look for a big payoff anytime soon, according to the report. "The risk for Better Place's investors remains apparently high; not only does it depend, to date, on just two allied manufacturers providing sufficient numbers of EVs compatible with its battery swap technology to support the requisite demand, but in many jurisdictions, the monopoly supply of such EV 'refueling' facilities may be rejected for legal reasons. The notion that battery exchange could actually supply enough customers profitably is questionable."

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In fact, the initial momentum behind Better Place seems to be slowing. By now, according to press reports, Agassi expected to have five or ten more countries signed up, but only one, Australia, has joined him in the last three years. A pilot project is just getting under way in Hawaii. And Renault remains the only major automaker that has plans for a battery-swappable car. Nissan is merely a battery supplier. Agassi says he is working with China's Chery to develop a switchable prototype and is in discussions with others.

If Better Place fails to live up to the ambition of its promoters, some people are going to be embarrassed. In April 2008, Deutsche Bank analysts concluded that the company's approach could be a "paradigm shift" that causes "massive disruption" to the auto industry, and which has "the potential to eliminate the gasoline engine altogether."

Not in our lifetime, according to Trend Tracker. It figures that EVs are likely to remain very much more expensive and far less useful than their present-day conventional counterparts in the medium term.

It estimates EV production would need to increase by an average of two million units per year over 23 years to effectively electrify the global car market by 2050. Even if cumulative EV sales reached 30 million units by 2050, 99% of the world's car park would still be dependent on fossil fuels.
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Old 03-04-2011, 10:02 AM   #2
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Better Place Denmark Plan Gives Glimpse of Battery Exchange Cos

Providing the best look yet at what a plug-in vehicle battery exchange programs might cost if introduced in the U.S., industry trailblazer Better Place said that its program in Denmark will provide drivers of properly equipped electric cars unlimited access to home and public charging and freshly charged battery packs whenever needed for the equivalent of 399 euros ($551) a month.

Better Place's battery exchange station and a specially equipped "battery-swap" taxi in in Tokyo.

Coupled with partner Renault's announced pricing of its Fluence Z.E. swappable battery sedan at 27,496 euros ($37,962) before any incentives - a price that doesn't include the battery pack - the program could save Danish EV drivers from 10 percent to 20 percent a year on total vehicle and fuel costs versus similarly sized and equipped gasoline cars, said Better Place spokeswoman Julie Mullins. The cost of electricity is included in the monthly fee, she said.

Gasoline in Denmark now sells for almost $8 a gallon and because of the country's tax policies mid-size cars such as the Toyota Avensis that would compete with the Fluence can easily cost from 40,000 to 48,000 euros ($55,225 - $66,660).

Removing the expensive lithium-ion battery pack from the selling price of the car and bundling it into a monthly "fuel" lease has enabled Renault and Better Place to set a competitive price for their combined products, Mullins said.
Most of the savings Better Place claims for the Fluence-charging services package would come from the lower vehicle purchase costs.
Our computations, based on $8 a gallon gas, a 41 mpg rating for the 1.8-liter gasoline Avensis and 20,000 kilometers (12,400 miles) of annual driving, show annual fuel costs for the Toyota would be around $2,400 versus a $4,200 annual cost for a 20,000 kilometer Better Place annual access package and the 114-mile range of the Fluence Z.E.

An apples-to-apples comparison is difficult, however, because the higher monthly cost for the Better Place package includes the battery pack, which is a key part of the Fluence's powertrain - the car won't work without it.

Better Place, which is partnering with Renault on nationwide EV programs in both Denmark and Israel, will offer several lower-cost "mobility services" packages that include charging and battery swapping for Danish drivers who don't want the unlimited monthly access.
Those packages would be based on annual mileage - drivers would purchase packages providing service for ranges of travel from 10,000-30,000 kilometers per year (6,200-18,600 miles) at monthly costs equivalent to $277 to $462. Extra charges would apply if drivers exceeded the mileage in their services agreement.

A Renault Fluence Z.E. battery-electric sedan.

Each package would include a home charger - at a one-time charge of 1,341 euros ($1,854) - plus access via a radio frequency identity card to Better Place public chargers and battery swap stations and in-car informatics that would track mileage and help plan trips around available charging and battery swap points.

California-based Better Place has not announced plans for a U.S. program, but its Danish program serves as a template for the company's pricing plans for most markets.

In Israel, where it has also teamed with Renault, the program won't be quite the same because Renault doesn't have an Israeli dealership network, so Better Place will be importing and selling the Fluence Z.E. electric cars bundles with its own battery charging and exchange services.

Pricing there isn't slated to be announced until later this summer, Mullins said.

Bot the Danish and Israeli retail program are scheduled to begin late this year.
Better Place late last year announced plans to install a pair of battery swap stations on the heavily traveled San Francisco-San Jose corridor in Northern California in a test program that would serve a local taxi fleet's electric cabs. The company has a single exchange station working with three battery-electric cabs in a Tokyo test and is working in Australia and several other countries to develop pilot programs.

One drawback to its battery exchange plan is that it requires automakers - a notoriously independent bunch - to agree on common standards for pug-in vehicle battery packs that can be installed and removed from beneath a vehicle.

So far, Renault is the only company building cars with battery packs that work with Better Place's automated exchange stations, although several other automakers, including Tesla Motors, have said they'll design future cars to use swappable batteries.

(Note: Denmark's official currency is the Danish Krone, valued at today's exchange rate at 7.45 krone per euro or 5.39 krone per U.S. dollar.)
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