Shai Agassi: We have crossed a historic threshold where electricity and batteries provide a cheaper alternative for consumers. (Photo: New York Times)With 700 million cars driving on the world’s roads, releasing an estimated 2.8 billion tons of CO2 pollution annually, …
Israeli entrepreneur Shai Agassi is that man. The 39-year-old former SAP executive has come up with an ambitious plan to shake up the auto industry by encouraging consumers worldwide to give up their heavily polluting fossil fuel cars and purchase electric cars instead.
Agassi’s new company, Project Better Place, was launched on Monday in New York. The company, which raised $200 million – making it one of the largest initial fundings for a start-up in history – plans to establish a widespread grid of electric charging spots at current parking locations, as well as battery exchange stations to provide consumers with the energy to keep their electric cars charged and on the roads without the need to wait for electricity at any point.
This is crucial. One of the drawbacks of electric cars today is that they can only drive 100 miles on a single electrical charge. Better Place aims to create a new regional and global infrastructure to support electric vehicles on a country-by-country basis, in effect jump-starting mass adoption of electric cars.
“Our global economy urgently needs an environmentally clean and sustainable approach to energy and transportation. We need to rethink how to bring together consumers, existing technology, and the entire car eco-system to establish the next generation infrastructure that provides energy for commuters and is not dependent on liquid fuels,” Agassi said in a statement. “We have crossed a historic threshold where electricity and batteries provide a cheaper alternative for consumers. Existing technology, coupled with the right business model and a scaleable infrastructure can provide an immediate solution and significantly decrease carbon emissions.”
Investors in the company include Israel Corp., a leading Israeli industrial holding company, which invested $100 million in the fledgling company; global financial services firm Morgan Stanley; Silicon Valley venture capital firm VantagePoint Venture Partners; and a group of individual angel investors managed by Michael Granoff, which includes James Wolfensohn, Edgar Bronfman, Sr. and Musea Ventures.
Agassi, who founded TopTier Software in Israel in 1992 and later sold it to SAP in 2001, will serve as CEO of the new entity, while Idan Ofer, chairman of Israel Corp., will serve as chairman of the board.
“Project Better Place offers a compelling business and environmental case for how to address global energy and transportation challenges,” said Ofer, whose company traditionally invests in oil refineries, ocean tankers and chemicals.
In its first phase, Better Place, will focus on establishing a repeatable framework, implementing electric recharge grids through local operating companies in multiple countries. In addition, the company hopes to partner with carmakers, technology providers, and global and local financing institutions so that consumers who subscribe to the network can get subsidized vehicles that are cheaper to buy and operate than today’s fuel-based cars.
Think of it like a mobile-phone provider today. Agassi’s company hopes to sell or lease electric cars to consumers in packages that include monthly service fees. The whole system, called a smart grid, will be coordinated by networking software developed by programmers from Better Place.
The company is currently in discussions with various governments to establish pilot sites in a few countries next year, and will deploy and test this framework over the next 24 months in a variety of launch markets. In 2010, it plans to deploy hundreds of thousands of vehicles annually, across multiple markets. Agassi believes than tipping-point saturation in early markets will happen within 10 years of rollout.
Agassi’s project has been greeted by the auto and energy industry with both excitement and skepticism, and Agassi admits that he anticipates much criticism from carmakers. Interest in alternative-energy vehicles is growing, however, as oil prices climb above $90 a barrel, and companies like Toyota Motor and General Motors introduce hybrid gasoline-electric cars, and Renault and Nissan Motor plan all-electric cars.
Unlike traditional schemes, Better Place separates the battery from the vehicle and uses lithium-ion phosphate batteries that can be lifted out of a vehicle at service stations and replaced, in the same amount of time it would normally take to fill a tank of petrol. This enables drivers to go for longer distances in a single journey. The company plans to develop a wireless network to tell drivers where they can get their batteries replaced on the road.
“The tailpipe problem has always been the most challenging wedge of the climate change problem that humanity has to solve,” said Ofer. “Under Shai’s leadership, this project has the promise to stimulate the largest blue ocean economic opportunity in the history of capitalism, with our children as its greatest beneficiary.”