Electric Cars for All! (No, Really This Time)
By DAVID POGUE
Last Sunday, "CBS News Sunday Morning" broadcast my report about Better Place, a radical, overarching plan to replace the world's gas cars with electric ones--really, really quickly.
The nutty thing is, it just might work; the streetside charging outlets for these cars are already under construction in six countries and two U.S. states. (You can watch the story here.)
As always, there wasn't enough time on TV for the whole interview. So here's a longer, edited excerpt of my chat with Better Place chief executive Shai Agassi, former SAP executive.
DP: Explain how this is different from all the failed electric car programs that have come before.
SA: Most of the car efforts were done from within the car, and assuming that there is no infrastructure change at all. It's as if people were trying to build cars, but skipping over the gas station.
We started from the infrastructure. We came up with an electric car that would have two features that nobody had before. 1) The battery is removable. So if you wanted to go a long distance,
you could switch your battery instead of waiting for it to charge for a very long time.
And 2) It was cheaper than gasoline car, not more expensive. Because you didn't buy the battery. You paid just for the miles and for the car.
DP: So what will you guys make? What will you do?
SA: We sell miles, the way that AT&T sells you minutes. They buy bandwidth and they translate into minutes. We buy batteries and clean electrons--we only buy electrons that come from
renewable sources--and we translate that into miles.
DP: What are we talking about here? What's the infrastructure you're building?
SA: We have two pieces of infrastructure. 1) Charge spots. And they will be everywhere, like parking meters, only instead of taking money from you when you park, they give you electrons.
And they will be at home, they'll be at work, they'll be at downtown and retail centers. As if you have a magic contract with Chevron or Exxon that every time you stop your car and go away,
they fill it up. Now, that gives us the ability to drive most of our drives, sort of a 100-mile radius. And that's most of the drives we do. But we also take care of the exceptional drive. You want
to go from Boston to New York. And so on the way, we have what we call switch stations: lanes inside gas stations. You go into the switch station, your depleted battery comes out, a full
battery comes in, and you keep driving. It takes you about two, three minutes--less than filling with gasoline--and you can keep on going.
DP: But it sounds like you're talking about a parallel universe, where there are hundreds of thousands of charging spots and switch stations. There aren't any.
SA: Well, that's what we're building. If you think of our first location in Israel, we will have about a quarter of a million charge spots before the first car shows up. Just like you wouldn't
buy a cell phone on a network that wasn't built yet. You have to first build the network. And then let the cars come in. And so we put a massive investment in big infrastructure projects:
Green jobs. A new electric infrastructure for cars.
DP: And has nobody said, "By the way, this is crazy?"
SA: Oh-- about nine out of ten people say it's crazy. But the other ones are actually saying "Where can I put my money?" We raised $200 million in a seed round, the largest seed round
of any startup in history. We raised a $135 million a week ago in Denmark to put the same network in Denmark. We're raising $700 million in Australia to build this network on the biggest
island you can find. So this is actually getting a lot of support and a lot of funding.
DP: Which governments are actually signing up?
SA: Israel was first. Denmark signed up next. Denmark is the host of the next climate change conference, and the prime minister really backed this up: They put a huge tax on gasoline cars,
180 percent tax, and zero tax on electric vehicles. Australia signed up after. Then we went to the U.S. Gavin Newsom, mayor of San Francisco, coordinated an effort of all the mayors in the
Bay area to create the next transportation island, the San Francisco Bay area. Even though it's not an island. Governor Lingle of Hawaii was really the driving force behind getting us to Hawaii.
And then the Premier of Ontario announced about a month ago that we're gonna go to Ontario. And Ontario, most people don't know, is the capital of cars in North America. They make more
cars than Michigan these days. And there's a lot of interest beyond these first six networks that we've announced. We're talking about 25 countries around the world, and various different
governors and mayors in the U.S.
DP: Hawaii's an island. Australia's a big island. Why islands?
SA: Contained islands are easier to work with, because you have sort of an ecosystem of cars that don't go in and out.
DP: Now so far, these electric cars that are coming to market: Tesla, $100,000. Volt, $40,000. How much will one of these cars cost?
SA: If you take the battery component out of our car--which is what we do; we don't let you buy the battery, we buy the battery--then our cars are on par with
gasoline cars. So an SU will cost roughly the same as an equivalent gas SUV, roughly in the $20,000 range. A sedan will cost roughly the same range. About $20,000.
What we also do is, if you're committing to driving a long distance--for example, if you're committing to 20,000 miles a year--we give you a discount. And a discount can
be sometimes $50 a month, sometimes $100 a month, towards the car. In other words, we pay for your financing of the car. And so you get a car that's actually cheaper
than its gasoline equivalent, depending on how many miles you commit. You can go all the way down-- and in the case of people who drive a lot, like taxis--all the way down to zero.
DP: Free car? If you sign up for the maximum minutes plan?
SA: This is Oprah for everybody. Right? (LAUGH) It's, "You all got a free car!"
DP: Now, you don't strike me as a guy with a lot of car experience. Why is everybody buying into this vision that you, a software guy, are bringing them?
SA: Well, I'm more of an integration guy. So if you think about it, even though I was at SAP, SAP is about understanding the art of technology, the software
part, but also understanding the processes of business. And if you look at what I did in the past, I managed teams who brought about a 100 products a year.
We had labs in 25 countries around the world. Very, very complex solutions that drove the largest companies on earth, including car companies. What I bring in
is that understanding of complexity of both the technology and the economy. When you look at the problem mobility with a fresh set of eyes, sometimes you find
solutions that the guys who are sort of locked in the inertia of day-to-day business--have missed.
DP: What do you think about hybrid cars?
SA: Well, the most successful hybrid car in the world, Prius, is roughly around 1 or 2 million cars. Out of about 750 million cars. In other words, we're having 0.0 percent
effect on oil consumption. During those 12 years, we added 200 million gas cars. We're moving really slowly if we're gonna go to hybrid! What you need to do is you go
to zero: zero emissions, zero oil. And you have to scale it to infinity, if we really want to make a difference.
DP: I hear a lot that the battery technology just is not here for electric cars. It has to work in the Arizona summer. It has to work in Fairbanks, Alaska. Short battery life, l
ethal to throw into the junkyard when it's done. Have you thought about this stuff?
SA: Yeah, so let's demystify batteries for a second. As a consumable, the batteries we're getting today are roughly in the range of about $.06 to $.08 a mile.
If you try and find gasoline, in the U.S. you're roughly at about $.10 to $.12 a mile. So the first thing is it's cheap. Second thing is, the batteries we're using are
not lead-acid batteries. They're lithium iron phosphate. All within the 35 most common elements in nature. So they're not dangerous to the environment.
Three: They're consumed for a very, very long time. These batteries will last multiple generations. 20, 25 years.
The fourth element is that there's always a better battery around the corner. Now in the past, that was a negative thing. Because you were afraid to buy a car
and get stuck with a car that has a battery that's an older generation. And then not be able to sell it. It was a very, very negative thing.
What we've done by decoupling the car and the battery is, we took away that fear. You may buy a car with generation 1 battery today, and then three years,
five years, ten years from now, you may get a different battery that's designed with backwards compatibility into your car, but gives you longer range.
DP: How will it work for a subscriber? Specifically?
SA: Most of what we've done is try to make it convenient. We don't want you to pass a credit card when you charge the car. We don't want you to pay every time
you switch the battery. We looked at it from the angle of convenience. And so we're probably gonna see three different pricing models. In some places, you'll see
it sort of as pay-as-you-go, very much like a gas tank. I mean, if you think about it, a gas tank is sort of the prepaid phone-card model of cars. You come, you buy
400 miles, you drive 'em. You buy another 400 miles. So they'll be something like that in the base package. There'll be a fixed number of miles, plus a surcharge if
you go more than that--1,500 miles a month or something in that range. And then there'll be the all-you-can-drive model. You pay one-time fee, you and your family
can drive as much as you want on that car. And we like those guys the most. Because effectively, what they do is they take the drivers who consume the most oil, and
spew out the most pollution and CO2 emissions, off the road first. 'Cause if you come and tell people there's a flat fee, then the guys who drive the most, the extremes
of the extremes, think you're crazy, and they're the first ones who come in and jump. So it's a self-selection process of the guys who we want to get off the road first.
DP: Oh. And-- do you have any idea how much that might cost?
SA: It depends on the price of gasoline in the market that we're coming in, because we're replacing gasoline miles. So if you're in a country where gasoline is at $7, $8 a
gallon, which is what Europe is right now, the cost of a mile is much higher. If you're in the Bay Area or in Hawaii, you're paying a lot less per mile. So we need to be competitive
with the price of gasoline in the location. That's why Europe has a significant advantage over the U.S. in getting these kinds of solutions in place.
DP: Your critics have had their potshots. What are the realistic obstacles?
SA: This is a massive integration project. And everything needs to happen roughly at the same time. In other words, the cars need to show up at the same time as batteries
need to produce in scale. At the same time as the infrastructure's in the ground. All of that needs to be synchronized with beautiful software that runs inside the car. And then
back-end software. And then all this has to happen at a scale that is scary, to a certain degree. We need to be at 100,000 cars in 2011. About 100 million cars by 2016 to 2020.
A thousand-times growth in production capacity and in installation capacity. There's never been a project of this magnitude in history.
SA: But if we don't get a hundred million cars, by the end of the next decade, [the world will have] a billion gasoline cars on the road--and we're done. We don't know how to
produce enough oil for a billion cars. So humanity needs to switch before we run out of natural resources: air and oil.
DP: But aren't you just shifting all the energy producing pollution from the individual tailpipes to the power plants?
SA: Well, we have committed to only buying clean electrons. So we've made a decision that if we put a car on the road, we put a renewable source on the grid at the same time.
DP: Aren't the gas and oil industries going to want to squash you? They'll have lobbyists and PR
SA: So, something fascinating happened over the last 12 months. The price of oil fluctuated up and down, from a $100 to $150 to $50 a barrel. And it drove everybody in the i
ndustry crazy. We know what to do with oil: We drill, baby, drill. Right? But at $50, we can't drill. It's so expensive to drill, that the price of the oil doesn't pay for the cost of drilling.
The fluctuation is worse to the car companies and the oil companies than any stable price, high or low. And so what all these car and oil companies are asking for right now is some s
ort of a stabilizer. They need a company that would give an alternative that would be fixed in price. And they want it to be stabilized roughly around $75 to $100 a barrel. That's what t
hey tell us. "$75 to $100 a barrel allows us to find marginal oil." And so they're actually liking us now. They want us to succeed because we're viewed as a sort of a stabilizing buoy.
DP: But you're also viewed as someone who's trying to end the oil industry.
SA: Well, they don't think it's gonna happen that fast. (laughs)
DP: It seems like you're the gatekeeper of all this. You could become Bill Gates. You could become the guy who changed it all and became fantastically wealthy and successful. Have
you crunched the numbers at all, and said, like, "Yeah, I'm glad I quit SAP"?
SA: First of all, I'm already glad I quit SAP. Not because SAP isn't a fantastic company--I love SAP--but because there's a purpose in life. And that higher purpose is much more important
than making money. I've been extremely blessed and successful. I sold my first start up at 30. I sold it again at 33. I made enough money in both cases that my kids don't need to worry
about money. So I've never done anything for money that point, at age 30. But when you find a great purpose in life, you gotta pursue it. It's when your big question finds you. You can't
let it go. One of the things that we've done that is very interesting, unique for a first mover, is, every government we go in to, we ask for one thing: "Make sure that you build an open,
standards-based network." So that we can't lock any competitor out, and competitors can't lock us out when they show up. We want to make it so that the networks are so open, that I can
roam from my network to their network and back. We believe that if we align all the vectors together, we'll get adoption much faster. We had to opt for either speed or greed, and we picked speed.
DP: So speaking of these networks. When I plug into one, how does it know who I am?
SA: We have a protocol that goes between the car and the charge spot that says, "I'm car number 41, I'm seeing charge spot number 72." And the charge spot says to the central
computer, "I'm charge spot 72, I'm seeing car 41." And the central computer says, "Okay, relax, I know you're there. And I'll tell you when you can start taking power."
And it tells them to take power when the utility, the supplier of electrons, says "I got power for you, for that many cars." Utilities tell us every three seconds how many cars can charge.
And based on that, we moderate. The cars that need it the most importantly right now. So we sort the priority of the cars, based on how much they've got and how far they can go, and
what's the probability the driver will show up again. If you came into work, and you're usually ten hours at work, you won't charge immediately in the morning. If you just came home,
it's 5:00 and you don't leave, usually, you won't get charged. But right as you park your car, you can press a button that says, "I need juice now." We put you in the top of the line.
So there's a lot of software, very simple. Mostly it's one click. But we do a lot of management behind the scenes.
DP: Do I need to install a charging spot in my garage?
SA: Yes. It's about $250 to $300.
DP: So I can't just use a regular power cord?
SA: You could, but what we're trying to do is make it so that when you plug in, YOU don't pay for the electricity. WE pay for the electricity; you only pay for the miles.
DP: What's the best hope of when we'll start to see these cars in America?
SA: Our stated goal is that mid-2011, we'll be in mass consumption. And the fist sites are Israel, Denmark and Hawaii. The second half of 2010, we'll be running a
massive test: tens of thousands, hundred thousand spots in Israel. And right after that in Denmark with. Testing our software, testing our hardware, testing the switching,
the entire network. We've just installed the first charge spots in the U.S., in about 50 parking lots, tested the equipment for installation. In a couple months, we're installing
the first switch station in Japan. It's about 2 and a half years of testing, from now till the mass release.
DP: Wow, that's really fast.
SA: For a transformation of this magnitude, it's immensely fast. Yes.
DP: By the way, how do you stop teenagers from just walking by and unplugging everybody?
SA: Oh, it's a secret. And they shouldn't try it. (LAUGH) No, you can't just plug it out. You need your keychain.
DP: Oh, so the outlet locks onto to the socket?
SA: It has a mechanism in there to avoid vandalism.
DP: Oh. You've thought of everything.
SA: No. But we've thought of some of the things. (LAUGH)