Christopher Griffiths
The Case for Electric Vehicles 03/26/2011
I just watched a tremendous TED talk by Shai Agassi, all about his new company "Better Place." It's a battery company with fantastic prospects. Suprisingly, its key innovation is non-technical.
The big problem with electric cars is that they're expensive. Stupidly expensive, because the batteries are stupidly expensive. Once you've got an electric car on the road, the cost to operate it is much lower than a gasoline powered one for two reasons. The first is reduced maintenance costs, since electric motors are fundamentally much simpler and have fewer moving parts than gasoline engines. The second is that, on a per-mile basis, gasoline costs about 10 times more than electricity... but the initial capital outlay for batteries effectively doubles the cost of a car... enter Better Place.
The company makes money by charging the operators of electric vehicles on a per-mile basis. By taking ownership of the battery, and responsibility for swapping and re-charging that battery, they reduce the customer's initial capital outlay significantly. In this way, they normalize the cost of an EV with the cost of a traditional car - they make money by recapturing the savings on fuel.
The infrastructure required to support an electric vehicle fleet is significant, but I'm optimistic that this model could work. Once you factor in the possibilities for electricity arbitrage, and the economies of scale available if you're operating a whole fleet's worth of electric cars, maybe he's finally hit on a way to move us away from our global oil addiction.
The big problem with electric cars is that they're expensive. Stupidly expensive, because the batteries are stupidly expensive. Once you've got an electric car on the road, the cost to operate it is much lower than a gasoline powered one for two reasons. The first is reduced maintenance costs, since electric motors are fundamentally much simpler and have fewer moving parts than gasoline engines. The second is that, on a per-mile basis, gasoline costs about 10 times more than electricity... but the initial capital outlay for batteries effectively doubles the cost of a car... enter Better Place.
The company makes money by charging the operators of electric vehicles on a per-mile basis. By taking ownership of the battery, and responsibility for swapping and re-charging that battery, they reduce the customer's initial capital outlay significantly. In this way, they normalize the cost of an EV with the cost of a traditional car - they make money by recapturing the savings on fuel.
The infrastructure required to support an electric vehicle fleet is significant, but I'm optimistic that this model could work. Once you factor in the possibilities for electricity arbitrage, and the economies of scale available if you're operating a whole fleet's worth of electric cars, maybe he's finally hit on a way to move us away from our global oil addiction.
