Inside The Better Place Electric Car Revolution [Exclusive]

Walking into Better Place’s visitor center in Pli Glilot, an industrial center about fifteen minutes outside of Tel Aviv, it is hard to believe that anyone would call this electric car company a “startup.” This is not a company being run out of a loft apartment by a couple of college grads with money from deep-pocketed relatives willing to invest in some idea for “the next big thing.”

The Better Place showroom is modern, sleek, and spacious and housed in a former oil reserve’s water tank. It is equipped with model cars, chargers, a miniature, moving representation of its battery switching stations, a screening room furnished with seats from old gas guzzlers, and a handful of “switchers,” aka the sales people that switch customers from conventional vehicles to electric ones. This is an international company founded by business veterans with wide experience and achievements, who wear blazers and go to meetings with Congressmen and Fortune 500 executives; sometimes accompanied by the President of Israel, Shimon Peres. To date the company has raised more than $750 million, with individual and corporate investors putting hundreds of millions of dollars on the line. So yes, Better Place is a “startup” in that it is a company that started up from a good idea, but to write it off as just another young business with a bold but untested idea would be a big mistake.

Focused on the simple idea of making the world a “better place” by breaking its oil dependence, founder Shai Agassi sought a way to make the electric car a logical choice for an ordinary member of the driving public. Mike Granoff, who holds the unique job title of Better Place’s Head of Oil Independence, described the company’s goal. “What we’re really trying to do is create a system that makes electric cars affordable to the mainstream consumer and makes them convenient, but also gives comfort to consumers that all of the uncertainties that go with a transition of this nature, particularly around something as fundamental as getting around, are going to be addressed and taken care of for them.” Or as the Better Place slogan phrases it, “We don’t make electric cars. We make them make sense.”

In order to do this, Better Place needed to address the biggest drawbacks of the electric vehicle: price and range. “The most fundamental insight that Agassi had was that our battery shouldn’t be viewed as an expensive component of the vehicle but instead should be viewed as part of the infrastructure – it should be viewed as a mini-oil well,” Granoff told me. “And in order to set the battery both to reduce the price of the car and to make them exchangeable for infinite range, there would need to build a mechanism to quickly replace the spent batteries with the fully charged ones. It started with that vision.”

By partnering with Nissan-Renault to build the cars and retaining ownership of the battery, Better Place has been able to offer a car with a price comparable to other new, mid-range, gas powered cars. (For example, in Israel, a Better Place car costs about the same as a Ford Focus.) Owning the batteries not only makes the vehicle less expensive, it also allows the company to update them as the technology advances. With the Israeli government taxing the purchase of zero emissions vehicles at 8%, as opposed to up to 83% for some conventional cars, and Better Place footing the bill for the electricity used for charging, the purchase becomes even more affordable.

To deal with the range issue, possibly the most vexing challenge faced by all electric vehicle manufacturers, Better Place not only provides charge spots for the owners’ homes and offices, but has also introduced the potentially game changing battery switch stations. Using an automated, robotic operation, drivers can pull into a station and have their empty batteries switched for fully charged ones in less time than it takes to fill a tank of gas. They don’t even have to get out of the car. Even though in a typical day most drivers will travel far less than the 100 miles covered by a fully charged battery, these stations give drivers an unlimited range. Israel currently has 20 switching stations and has plans for 18 more by the end of the year. Better Place hopes these stations will eventually serve other manufacturers’ electric cars as well. “Our promise is any automaker that makes a car that switches its battery from underneath and creates that car in mass production, our switch stations will be compatible,” Granoff said.

Slowly but surely, Better Place’s networks are popping up around the world.  There are currently 500 Better Place cars driving in Israel and Denmark – two countries whose small size makes them particularly well suited for this kind of network. But the company is emphasizing its scalability: Australia is the next country in line to get the Better Place treatment. The company will make its mainland U.S. debut in California sometime in the next year or so with a network of taxicabs running between San Francisco and San Jose. (Better Place is already operating 150 charge points in Hawaii, but has no switch stations.) And on September 3 it announced the launch of another taxi network based around the Amsterdam Airport Schiphol.

Granoff combines his investment background with his experience as a founding member of the Board of Directors of Securing America’s Future Energy, a nonpartisan organization advocating for comprehensive energy reform. After coming to the realization that “electrification is really the only meaningful way to displace oil in the long term,” he connected with Agassi. Granoff now spends his time mostly in Washington, meeting with Congressmen and investors. While he has done well on the fundraising front – bringing in the aforementioned $750 million – his success with politicians is harder to measure. He seems to have collected plenty of moral support, but direct political action is proving trickier to shore up. Noting that, “there are many on both sides who get it,” Granoff also realizes that when it comes to the most potent tool at the government’s disposal, a carbon tax akin to the one in Israel (where gas costs about $9 per gallon), “the political reality is that’s not going to happen in the near term.”

This, of course, ties back to why the Better Place founders knew that the car had to make economic sense to consumers. The company is looking to go beyond the market of environmentally conscious consumers, even if breaking a dependency on fossil fuels is part of the mission. “I don’t think it makes practical sense for people that aren’t environmentally conscious to support projects that aren’t sustainable. And I think that the only way we get to sustainability on a planetary level is to have sustainability in a business model that underlies it,” Granoff said. “We’ve demonstrated a way that you can have a proposition that makes sense to consumers and also has a tremendous improvement on the way that things are done from the perspective of the planet.”