By BRIAN BLUMelectric car 521(photo credit: Reuters)
When I was growing up in the 1960s, like many of my pseudo-hippie peers, I had a typically utopian vision of how the future would play out. There would be world peace, of course. We’d be able to instantaneously zip from one location to another by stepping into street corner teleportation devices that would take the place of the then-ubiquitous telephone booth. And we would all drive 100 percent electric cars, transforming our inner city air into a pleasing wash of oxygenated perfume.Well, world peace seems farther away than ever. Scientists in Australia have been able to “teleport” a tiny beam of light. But electric cars have indeed arrived. They have funky names like Tesla, Leaf and Volt. But a whole host of factors have clouded the electric dream, most importantly what’s known as “range anxiety” (that’s the fear that if you go past your car’s charge limit, you could wind up stranded on a dark road in the middle of a bad neighborhood).In 2005, Israeli entrepreneur Shai Agassi has his own vision for a zero emission future: he’d address the range anxiety roadblock by creating an electric car with a switchable battery. His solution was to sell not just the car, and not just the battery, but to build a country-wide infrastructure of battery “swap stations.” This would enable the driver to travel beyond the car’s 140-kilometer limit by pulling into a station and, within five minutes, driving off with a brand new, fully-charged battery – all handled robotically with no need to even get out of the car (think of it as driving through an “electric carwash”).Agassi established his company, Better Place, raised over $750 million, and began building the infrastructure in three countries: Israel, Denmark and Australia. Agassi got his biggest boost, perhaps, when Better Place was featured in the first chapter of Saul Singer’s best-selling book Start-Up Nation. That’s when I first learned about the company. I knew right away I had to have one.Once it became possible to drive the length of the country, from Metulla to Eilat, all by swapping batteries, Better Place began selling their first vehicles in Israel. That was in July. At the end of the summer, dropped in to Better Place’s shiny visitor center in Herzliya, which offers free tours in Hebrew and English – not really planning to make a purchase, just to try it out. A week later, we were signing paperwork and taking out a bank loan.Better Place sells only one model so far, in two versions: regular and deluxe. Some might see that as genius (when Steve Jobs returned to Apple, he cut a bloated consumer product line down to just a desktop and a laptop, in basic and advanced versions) while others might argue that the lack of choice is an unfortunate marketing flaw.We didn’t care: Better Place’s Renault Fluence is equivalent in price to an ordinary four-door sedan in Israel (NIS 121,000-NIS 128,000) and sports a number of more luxurious touches (the speaker phone automatically pairs with your cell phone via Bluetooth; there are built-in sun shades in the back seats). There’s an almost toogood- to-be-true financing deal with Bank Igud for a loan at only 2.75% interest.Before we could finalize the purchase, though, Better Place had to send a technician to our home; you can only buy a Better Place car if you have your own dedicated parking place so they can install a home charging point. Most of the charging is done overnight (it takes 6-7 hours to entirely top off the “tank”) rather than by swapping. The charging spot even has its own cellular connection to communicate with Better Place headquarters.Once we’d passed that hurdle, all we had to do was wait for our car. And then all hell broke loose.In a move that took everyone outside Better Place’s board of directors by surprise, founder Agassi, the public face and irrepressible company cheerleader, was ousted as chairman. A week later, he quit the board entirely. Suddenly the entire Israeli press started to dump on Better Place, dishing out more than generous helpings of vitriol on the company and its business model.
Not enough people had bought cars (only 350 people in the entire country when we made our purchase, according to the press), a rate that would put it far below the 4,000 Better Place predicted in its first 12 months. The company had “lost” close to $500 million. (That wasn’t fair: it costs a lot to build up infrastructure, so it’s not really lost, now is it?)The company had only two months of cash left, the press lamented. Half the staff would be laid off (this one has turned out to be true). A plea for additional financing had fallen on deaf ears.Moreover, as one article put it, the business model was unsound from the beginning. Each car needs the equivalent of three batteries – one in the car, one ready at the swap station and one charging up. At $20,000 each, that’s a $60,000 battery investment per vehicle. And the whole concept of swap stations was akin to a national network of tire repair shops, another writer commented. When you get a puncture in your tire, you repair it; ditto with the battery, so to speak.The model was 19th century, not forward-looking. As soon as battery length increased, Better Place would be as antiquated as the horse and buggy.I’d like to say I stayed strong. Nothing had changed: the business model and financial condition of the company were known before Agassi’s ouster. Indeed, change can be good. If Agassi was a visionary, the new CEO was a salesperson who had cut promising deals in Australia. Isn’t that what the company needed right now?It didn’t matter. I panicked. I called Assaf, our sales rep: What would it cost me to cancel? Assaf tried to assure me it was business as usual at Better Place. He was getting new orders every day. Deals with Israeli corporations were in the works, as were new leasing arrangements. “We’re not going anywhere,” he purred.I knew he was right. It would be foolish for investors to put so much money in, then get spooked and shut the entire operation down just a couple of months after it actually started selling cars. I spent a sleepless weekend, made countless pro and con lists, talked off the ear of every friend who would listen. We decided to stay the course. If we backed out, the company would definitely crash and burn.Being an early adopter has its perks – when we walked into Better Place’s showroom the next day to pick up our car, the entire staff stood up and applauded. There was a big screen reading “Mazel Tov” with our names on it. And the cookies and juice weren’t bad either.The electric Renault Fluence is as much a computer as a vehicle, which necessitated a nearly two-hour training session. The centerpiece is called OSCAR (Operating System for Cars), which controls everything from the entertainment system to the GPS navigation and location of the next battery swap station.The latter is particularly important: If you input your route (and you’re strongly advised to), OSCAR will calculate how long your battery will last and if and when you’ll need to stop to get a fresh one. For example, if you enter a trip from Jerusalem to Karmiel, then to Tiberias and back home again, OSCAR will automatically insert the closest swap stops at various points during the trip and even modify your route to make sure there’s a station along the way. It’s really quite ingenious.The car “learns” your driving behaviors, too, to adjust when it thinks you’ll need to swap. Speed demons will drain the battery faster, as will climbing hills, while going down recharges the battery. There’s cruise control (steady driving improves battery life) and a speed limiter. Every driver gets his or her own “log in” so that OSCAR will know the difference between my driving habits and my wife’s.After training, photos and more cookies, we headed back to Jerusalem from Better Place with 97 percent battery left. OSCAR told us which way to go, and if we followed his instructions, we’d arrive home with 29% battery left. A nice, comfortable journey.Except that we didn’t follow OSCAR’s instructions exactly. First we took a slight detour to visit a sporting goods store nearby. Then, although OSCAR wanted us to drive home via Ayalon, I knew from experience that going via Highway 6 would be faster. Same with the entrance to Jerusalem; I always take Highway 9 and loop around the Begin Highway, while OSCAR insisted on going through the traffic-thick main entrance to town.All good decisions as far as travel time goes. But each option added a few kilometers. And I didn’t always stick to 100 kilometers per hour. Plus, there’s a really big hill coming into Jerusalem, which OSCAR apparently hadn’t “learned” yet. Our percent of battery remaining was dropping faster than we expected. And the swap station in Jerusalem wasn’t open yet (since that first ride, a station at the Hemed interchange has gone online).As we were rounding Har Hotzvim, already in the city limits, OSCAR started beeping frantically. Red warning lights splashed across his digital face. We had just passed the 10% threshold. And, according to OSCAR, we didn’t have enough juice to make it home.And then the phone rang. It was Better Place Customer Service. They had received an alert that we were getting too low on power. Where were we, the Better Place representative asked?The rep began relaying instructions. “Drive slower. And watch the charge indicator.” If I kept it slow and steady, the car would recharge ever so slightly and we might just make it.“Would you like us to monitor you on the rest of your ride home,” the Better Place lady asked? Yes please!The next 10 minutes were far more nerve-wracking than I’d expected on our first day out. The battery monitor continued to drop. Four percent, 3%, 1%, and then 0.The “battery empty” icon flashed, just like it would on your laptop. Except this was a very heavy laptop. We were opposite the gas station at Oranim Junction, no more than a minute from our apartment. How ironic if we were to run out of energy directly opposite a gas station which would do us no good.Our hearts were racing. But OSCAR nudged us a bit further and we made it into our parking spot, plugged in the charging cable and finally exhaled.The truth is, Better Place’s rep had told us that, even on empty, the car can usually drive another seven kilometers. But that didn’t particularly calm us. Red flashing lights will do that.Better Place’s customer service was uniformly excellent. They “know” me already (“the nervous guy?”) and address me by my first name, in English, when I call. I asked Ophir about this; she told me that our language preferences are recorded in the computer, but at this point, with so few drivers on the road, everyone in the service center (six or seven people in the morning, two or three at night) knows who I am.Still, there is something eerie about the fact that Big Brother/Better Place is tracking you. You can turn it off in OSCAR’s preferences, but I found it rather comforting to know that you have a caring partner watching out for you. Our biggest take-away so far: listen to OSCAR when he tells you which way to go. Big Brother sometimes does know best.It’s been a couple of weeks since our first-day “experience,” and the car has been a joy. It’s unbelievably quiet – the only indication you have that it’s even on is a lit green icon reading “Go.” It’s roomy and you can adjust the seat to sit high up, not quite as high as in an SUV, but better than the average sedan. Our range prediction is steadily increasing, although with that hill, we’re still only getting 115 kilometers to the charge on the way back from Tel Aviv.But most of all, we have become “brand ambassadors.” I can’t tell you how many times I have caught heads turning as they pass by the words “100% electric” written large across the side of the vehicle, or the frequency at which strangers on the street stop to ask questions. When we took the car with our used bottles and cans to the recycling center in Givat Shaul, I spent more time fielding queries from the workers than stuffing the bins. I have become a walking, talking Better Place FAQ.But that’s OK. I truly want Better Place to succeed, and not just to protect my own investment. I believe in Agassi’s vision of a world without dependence on petrol and the nations that sell it (whose interests are not always aligned with Israel’s).Ultimately, I feel a bit like the biblical Nachshon ben Aminadav, who was the first to stick his toes into the Red Sea, precipitating the final stage of the Exodus from Egypt. An exodus from oil? Let the waters part and the electric cars drive through.Why people aren't buyingAs much as the Better Place solution seems to make sense, it has not yet caught on with consumers. There are a number of reasons.The first is cost: it isn’t cheaper to drive an all-electric vehicle – yet.Here’s why: Better Place treats your car like a cell phone. Instead of paying for each swap, you are billed a monthly amount which covers your “fillups” whether at a charging spot at your home or work or at a switching station.Better Place charges a per-kilometer fee with a monthly minimum. There are two plans: a pay-as-you- go option of 65 agorot per kilometer and a pre-pay package that brings the price down to 55 agorot per kilometer but locks up your savings for a minimum of three years. (You could probably make more by investing that money in the stock market.) The pay-as-you-go option has a monthly minimum of 1,000 kilometers. We’re not big drivers so we chose that one for NIS 650 a month. But the gas bill on our old Toyota Corolla was only an average of NIS 575 a month, so ostensibly we are losing money every month compared with what we spent on a serious gas-guzzler. Hybrids like the Toyota Prius would be even cheaper to run (although considerably more expensive to buy).Better Place tries to soothe those concerns by pointing out that maintenance costs are much lower; there’s no need for a lube or oil change since there’s no lube or oil. The company estimates a NIS 500 checkup once a year will do the job. And of course – and this is the company’s biggest trump card – as the price of gas goes up (and it inevitably will) – the savings increase. Plus, since you don’t actually own the battery, you automatically receive any improvements to the technology. Better Place says range will increase by seven percent to 10% a year.Beyond price, there is also inconvenience. To drive from the center of Israel (Tel Aviv or Jerusalem) to its northern and southern fringes – Eilat or Metulla – will require two to three swaps along the way, each taking four to five minutes plus the extra time to pull off the road and drive to the station. Better Place hasn’t been able to secure the best real estate; some of their locations are pretty far away from the highway. Plan on 15 minutes per swap, and that’s if there is no line of other cars.The system also requires a larger degree of pre-planning; if you’ve driven near your limit for the day and are home and then decide spontaneously that you want to go out at night before your charge is complete, you may not have enough battery left to do it. So, if you’re not saving money – at least not yet – it becomes a harder sell to go electric.You have to be really committed to the environment to put up with hassle. But this should be put into perspective: Better Place estimates that 85% of drivers travel no more than 35 kilometers a day. So for most people, this will only occasionally be an issue.There are also those who complain that electric cars are on balance no better for the planet; that the electricity is generated, in Israel at least, almost entirely from burning toxic fossil fuels like coal. True, but electricity also has the future potential to increasingly be generated by renewable energy sources. The same can’t be said of gas-powered transportation.Finally, there’s the uncertainty factor. Will Better Place be around in another five years? The company has announced plans to lay off 150 to 200 of its 400-person Israeli staff. That doesn’t bode well.What happens if the company goes out of business? Does Better Place repossess your battery, leaving you with a large, unusable brick in your garage? Even if you do get to keep the car and charge it at home on your own, you won’t be able to travel far outside of town without the swap stations.Will such a vehicle have any resale value? It all comes down to getting more cars on the road and increasing consumer confidence. Better Place recently cut a leasing deal with Albar in Israel: for NIS 2,000 per month, you get the car (not including insurance, which you have to provide privately) and 1,000 kilometers a month. While leasing is never as good a deal as buying, it will probably go a long way toward assuaging customer fears, as will the growing number of corporate leasing deals the company has been announcing.To wit, at the height of the bad news about Better Place’s financial woes, a “buying group” emerged on Facebook to negotiate a deal for leased vehicles. Twenty people have already said they want in.Still, if worse comes to worse, maybe the Better Place cars will become collectors’ items. You know, like a Delorean. Which could be really cool, ’cause those things can travel back to the future!
