Right Time for Better Place?

by Richard T. Stuebi

Although the benefits of electric vehicles (EVs) have long been intuitively understood, EV market adoption has been limited by various issues associated with batteries.  Batteries cost too much and are too heavy/bulky, the operating range an EV is too short, and there’s no convenient way to recharge batteries with the speed and ubiquity of filling up a gas tank.

Well, there’s a lot of money being invested in many companies to address the first set of issues concerning battery cost and performance.  However, there hasn’t generally been a lot of attention paid to the question of how excellent/cheap batteries will get recharged – even though the lack of a solution on this issue would completely nullify the value of any progress on battery technologies for EVs.

Enter a company called Better Place.

Having secured $350 million of new investment in early 2010, led by HSBC (London: HSBA), Palo Alto-based Better Place is developing proprietary technology and installing infrastructure to streamline the process by which electric vehicle (EV) owners recharge batteries.

I recently had the opportunity to visit the research and testing facility for Better Place, which is located just north of Tel Aviv in Israel.  At this facility, Better Place allows visitors to test-drive a near-production prototype EV made by Renault (Euronext:  RNO), with whom Better Place is working closely.  It’s a fun exercise to gun an air conditioned mid-size five-passenger sedan up to 60 mph in a few seconds with no transmission shifts and virtually no sound, although Better Place has virtually nothing to do with the EV or the battery within it.

More interestingly, the facility lets future would-be EV drivers interface with how the battery pack would be recharged – if the vision of Better Place gets adopted.

Better Place envisions that EV drivers would buy a monthly subscription to Better Place recharging services.  At parking spaces hosted by Better Place, there is a post about one meter in height, in which is embedded a retractable cord to plug into the EV for battery recharging while the car is parked.  The retractable cord is unlocked by an electronic key card that the Better Place subscriber waves in front of the charging post.  (I wish I had asked what happens if a non-subscriber occupies a Better Place parking spot, or if a user forgets to disconnect their EV from the charging cord before driving away.)

This is all well and good for commuters or around-towners that have ample parked-car time for a recharge, but Better Place also has a solution to the EV challenge of quick recharging for long-distance trips.  Better Place has developed a service station design involving robotic arms in underground bays to reach under a parked EV, extract the depleted battery, and replace it with a fully-charged battery – all within a couple minutes. Thus, an EV-driver can be back on the road as quickly as refilling a gas tank, without even having to get out of the car.

Additionally, Better Place is developing software to facilitate vehicle-to-grid (V2G) utilization, wherein the customer would enable the EV’s batteries to sell power back to the grid during high-value peak periods.  Each customer would set his/her own parameters as to when Better Place would allow the grid to tap the EVs batteries for resale to the grid:  some customers would be willing to save (or even make) a few dollars by letting the grid utilize the EV for power supply pretty much anytime, whereas other customers wouldn’t want to risk depleting the EV batteries (and hence EV range) for any price.

The Better Place business model has many interesting and compelling aspects to it – recurring revenues, different price points and subscription packages – but it has one very scary element:  there is no avoiding its capital intensity.

In essence, Better Place strives to become an unregulated utility, with massive infrastructure deployment in its parking recharge posts and service stations.  Better Place needs to gain sufficient critical mass of customers in relatively dense geographic areas in order for the infrastructure investments to pay off.  Over time, Better Place can stitch together multiple clusters into pan-reginoal and eventually national ubiquity.

Although smart money is making a big bet on Better Place, only time will tell.  Be on the lookout for a Better Place regional pilot taxi program in the San Francisco Bay Area in early 2011.