Electric Vehicles: Is a “Better Place” Now in a Better Place?

by Marlo Lewis on May 30, 2013

in Blog, Features

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Three factors limit the market penetration of electric vehicles. One is purchase price. For example, the average price paid for a gasoline-powered 2013 Ford Focus ranges from $16,500 to $24,176. In contrast, the average price paid for a 2013 Ford Focus Electric is $39,020.

Another drawback is range. Except for the Tesla Model S, with an EPA-estimated range of 265 miles, most battery-electric vehicles (BEVs) have EPA-estimated ranges of 62 to 99.8 miles — although motorists may go farther under actual driving conditions, Edmunds.Com reports. These range limitations diminish the utility and, thus, value of BEVs for many consumers, and may induce “range anxiety” — fear of being stranded between where you are and where you have to go. The Tesla Model S has an impressive range but, with a manufacturer’s recommended sale price of $69,900, most households cannot afford to buy one even with generous federal and state tax rebates.

A third and related barrier to consumer acceptance is recharging time. Of a dozen BEVs tested by Edmunds.Com, some recharged in ‘as little as’ 4 hours (2013 Fiat 500e, Ford Focus Electric, Honda Fit EV). But for some, the recharging time was as long as 5 hours (Tesla Model S), 6 hours (Volkswagon E-Golf), and 7 hours (Chevrolet Spark EV, Mitsubishi i MiEv). Buying a BEV means paying for the inconvenience of not being able to gas up and go in 5 minutes at the nearest service station the way ordinary folks do.

To overcome these battery-related inconveniences, an Israeli company called “Better Place” developed networks of battery-charging and -swapping stations in Israel and Denmark. Better Place hoped the stations would spark consumer interest in electric vehicles and spread globally. But on Sunday the firm announced “that it is shutting down, less than six years after unveiling an ambitious plan that promised to revolutionize the auto industry by reducing the world’s dependency on oil,” reports the Detroit Free Press.

Better Place had considerable political and financial capital behind it. From the article:

The project won the support of Israeli President Shimon Peres, received generous financial incentives from the Israeli government and made [founder Shai] Agassi a dynamic celebrity CEO. The company’s vision of drastically reducing oil dependence, cutting carbon emissions and blazing a trail for more environmentally friendly means of transportation won it worldwide praise and high-profile endorsements from people such as former President Bill Clinton. . . .

Better Place raised some $850 million from investors like General Electric Co. and HSBC Holdings PLC and the European Investment Bank. Israel Corp., controlled by billionaire Idan Ofer, was the largest shareholder in the venture. In Israel and Denmark, the networks are almost complete, while the company also has operations in Australia, the Netherlands, China, Hawaii and Japan.

The article also suggests that if the company’s business plan could work anywhere, Israel was the most likely market:

Israel was a particularly ideal laboratory, thanks to high fuel prices, a supportive government and its dense population centers. In Israel, 90 percent of car owners drive less than 45 miles, or about 70 kilometers, per day and all major urban centers are less than 100 miles apart, making the use of battery operated cars more feasible than in countries with longer average commutes.

For people making longer trips, the country was dotted with several dozen mechanized battery-swapping stations, where a new battery could be placed in the vehicle in just a few minutes. Green cars were also particularly attractive to Israel, which hopes to weaken the political clout of its oil-rich enemies.

So what was the hitch? Fewer than 1,000 electric vehicles “made it on to the road and the company’s distinctive charging stations remained largely empty.” It’s not always true that if you build it, they will come.

Let’s say a prayer for these green entrepreneurs and take comfort in the faith that their business plan has gone to a better place.

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