The Long Tailpipe - Shai Agassi's Blog

Denmark Launch

I wanted to share with you my speech from our launch of Project Better Place in Denmark. I will have another post on why and how we got to choose Denmark as the second country, but in the mean time - this should be fairly self explanatory. You can actually see the launch itself as we archived the webcast on the ProjectBetterPlace.com site. The launch was part of the closing event for the Copenhagen Climate council and included the deputy prime minister of Denmark, DONG's CEO Anders Eldrup, and others.

Mike Granoff and I wrote different parts of this speech. Mike figured out my "voice" better than I have myself. Joe Paluska put it together an hour before the event...

"How do you run all cars in Denmark without gasoline? How do you build a virtual oil field big enough to drive an entire country?

Some people say about me that I dream big. well, as much as I would like to be called a dreamer, I will share with you today a very pragmatic, down to earth solution to one of our biggest challenges in the global fight to stop climate change - moving our transportation systems to zero emissions.

Cars are a way of living - we are emotional about them, we don’t like to share them, and we like them to go fast and far, even though these days we can’t go too fast and can’t afford to go too far. Yet, while we would not let our kids burn fuel in their bedrooms, we collectively burn up their living room - our planet. The price of driving cars in our cities comes in the form of smog leading to deaths and respiratory problems. The price of extracting fossil fuels from deep in our planet and burning up the carbon into the atmosphere is a change to the planet’s delicate atmosphere which regulates life on our planet. We may be able to afford 2 Euro per liter of gasoline, but we cannot afford to kill people or lose our only planet.

Project Better Place declared only 2 months ago in Israel a groundbreaking new framework for electric transportation at country scale. In a simple way of describing our model, we are a new mobile company. Applying the same model as mobile phones to electric vehicles, we set a ubiquitous infrastructure that makes electric vehicles convenient, affordable, having long-range and appealing to consumers. We connect clean generation sources, through the grid, with car batteries - providing drivers with a better alternative to burning gasoline. Zero emission vehicles all the way from generation to drive at a scale that can move an entire country is the creation of a virtual oil field - one that will never run dry, and will not kill us in the process. We always said that this solution framework is not confined to Israel alone, and Denmark was a perfect country to bring .

Denmark has always led the way in environmental policy, demonstrating the commitment of the people to lead the world in well designed solutions. The current policy set by the Danish government demonstrates a true commitment to pushing the country away from gasoline consumption. I want to thank the Danish government for appealing to Project Better Place, through the ongoing work of Invest in Denmark and multiple ministries across government. Eliminating car emissions alone will reduce carbon emissions at the level of our Kyoto commitments. Yet, on the eve of COP15, it might be time for leadership on policy and solutions that can answer the big questions of our time - stop using percentages reduction in 2050 and start using the number zero more often - such as how can we run an entire country with zero car emissions; How do generate all of our electricity needs while having zero carbon footprint.

Denmark is also a world leader in clean electricity generation. Wind, which accounts for 20% of installed capacity, is strong at night - a time when most cars are parked and charging. Utilizing wind capacity for electric vehicles can drive every car without any emissions not only in Denmark but across all of Scandinavia. Leveraging the batteries as a distributed storage device for electricity can make wind and other intermittent electricity sources a convenient source of energy for other needs as well.

We have found a great partner here in Denmark to work with us on launching Better Place Denmark - in DONG energy. Throughout the last months we have shared our framework and exchanged information with DONG’s teams in a detailed due diligence process. I am glad to share with you that Anders and I signed a memorandum of understanding today which will lead to DONG becoming a founding partner in Better Place Denmark. I believe that DONG is demonstrating true leadership in what will become the model for the next generation energy company across Europe. Anders, I am looking forward to a great partnership together.

Over the next 100 days we will finalize our agreements and provide details for the way Better Place Denmark will be formed and managed. The local company will enjoy the benefits of our global research and development program, and connect Danish companies into our supply chain network around the world. Denmark will enjoy the cars our partner Renault - Nissan is developing - a great electric car which in the words of Carlos Ghosn -”will be fun to drive”. We will bring capital from our investment partners into Denmark and generate jobs in the country. We will set up a Danish company that will be part of a bigger idea - Doing the right thing for the environment can be the best thing for business.

In closing, I Want to thank Erik for his great vision and leadership with the climate council. He was instrumental in getting all parties together from my first meeting here in Copenhagen 6 months ago. I want to thank Anders and his team for trusting Better Place in setting this partnership. and I want to thank the Danish Government and invest in Denmark for the support we got so far.

Thank you all."

Virtual Oil Field

We are in Denmark today for the Copenhagen Climate Council - at the invitation of Erik from Monday Morning.  We are working on a path to set some agenda items for the UN conference on climate change next year with a brilliant group of people. At some time I will get back to writing (I am overwhelmed with work these days, and it is getting harder to keep my breath).

today I wanted to share an amazing picture that Quin Garcia from our team took here in Denmark. It shows what a virtual oil field looks like

Electric cars and windmills are the most complementary products in the green world. Windmills generate a lot more energy at night, as wind picks up when the air cools down. Unfortunately, when you get a lot of wind most people are asleep and the electricity needs to be rerouted elsewhere. Cars are parked at night waiting to get electricity into the batteries - which is a perfect match to the electricity profile of wind generation.

Denmark has 20% of its generation capacity coming from wind. I learned that only 13% of the electrons though are wind electrons, the rest are sold to Norway and Germany - practically for free some times. Those 7% can drive every car in Denmark if you converted the fleet to Electric Vehicles. Clean, Cheap and Abundant - Electric Gasoline...

Davos 2008

I usually come back from WEF events with lots of stories to share and a great new view of the world. This year however I had no time to get to a single session (well, other than 20 minutes in a Gordon Brown impressive presentation on the state of the world - the man is the most cerebral leader I have ever seen).

The general conversation around us buzzed regarding the announcement in Israel, with many participants from around the world asking us how to get the project replicated to their own country. There is a tremendous amount of good will towards project Better Place, and all people wished us the best of success and offered help with whatever we needed. The articles from around the world, in particular the New York Times article (or as most Europeans called it the IHT article, which is the same only under a different name) set the tone for all car, environment and oil discussions at the conference. Towards the end of the event we started getting feedback regarding the amazing BusinessWeek article, written by Steve Hamm, who was at Davos with us this year.

We had a very interesting panel moderated by Peter Schwartz of GBN where he brought together the entire supply chain for a virtual oil field. We started with Mike Splinter, Applied Material's CEO, who talked about solar panels and their very interesting business model of building the tools for the makers, much like they did with silicon used for consumer electronics. He predicted a cost of $0.70/W pre-installation, which in my opinion will tip the power generation market. (I probably need to run a post on that side of our solution framework - the clean generation side). He was followed by Prof. Yet-Ming Chiang, who is the founder of A123 Systems - the leader in LiFePO4 batteries. Prof Chiang is a great inventor who has worked on a number of material science issues - including one that will be key in the future - super conductivity. I followed up with a presentation that tied the generation and batteries together on "how to build a virtual oil field", which got me a few friendly jests from Peter, but I brought some support from my friend Geoff Moore, all members of the great secret tradition of Davos - the Geek dinner.

Interesting twist to the discussion was provided by Craig Venter - of Human Genome sequencing fame. Craig is sequencing thousands of living organisms around the planet which he finds in the oceans, looking for the best energy conversion mechanism. His hope is to find the most optimized way nature converts CO2 and sunlight into chemical bonds, make those chemical leftovers float to the surface as a collectable gas and generate a living refinery that can make liquid/gas energy by use of "living solar collectors". The question that was left unanswered was posed by Peter - whether the physicists or the biologists will solve the energy problem for all of us. I believe the problem is so large that all scientists will have their place in he sun (pun-intended).

Apart from that, I had the most amazing time to be together with my fellow YGLs. What an impressive group of people, so focused on making the world a better place. More important though is the spirit of friendship that this group created and maintains over the years. Whenever two YGLs crossed paths in Davos you could hear the greetings miles away, and if you saw two grown up people hug each other, it must be a couple of YGL men greeting after a few months of not seeing each other. Definitely a very different crew than the usual, serious and business like behavior around Davos. For all of you wanting to learn more about the YGLs and their amazing life stories, there is a bit of good news - one of my friends in the forum, John Hope Bryant is writing a book which will have a lot of these stories in it, but I will not give up the spoiler too early!

5th graders - continued

As you may have seen on this blog, when we announced the launch of Project Better Place in NY back in October, my son told me that I really need to explain the story so that a 5th grader can understand it. That led to a presentation I gave at Hillbrook School in our hometown of Los Gatos, in front of the 4th-8th graders (and another one with the 2nd graders). While, explaining to kids is a challenge for us adults, I find it amazing that kids can explain complex issues to adults in a very simple way...

So, when Google issued a World Economic Forum challenged called "what can you do to make the world a Better Place?" we figured out that we should use kids to explain it the way it is...and thus, from the creative minds of Steven and Michael Addis comes the following 3 minute submission to the "Davos Challenge" on YouTube.

We figured out that if we don't win a competition called Better Place with a project called Better Place, something must be rigged in the voting algorithm...

Synthesizing Transformation

On January 21st 2008 we set the first step towards getting an entire country off its addiction to gasoline. Why is the Israeli announcement so meaningful? Almost a year in the making, and three years in thinking, the transformative power of yesterday’s announcement is not immediately obvious to people. Sure, most people feel in their gut that something big happened but very few could put their finger on the real transformative news of the day. So let’s run a Monday morning quarterback session (for those who are not into football, the reference is to the analysis run by commentator the morning after a football game is over…for those of you from the UK, football is a game played using a strangely shaped ball, using your hands, covered in protection, with lots of TV oriented stoppage time).

We had a country, Israel, announcing its intent and actions towards a strategic shift from oil as the main source of transportation energy towards clean electricity (mostly solar) as the source of energy powering cars. The announcement was made at the visionary leadership level – by President Shimon Peres – who has been one of the driving forces behind Project Better Place for the last year. The Prime Minister, Ehud Olmert – who promised and delivered relentless backing across all government branches, and executive power through his own PM office General Manager, Ra’anan Dinur, drove the vision into policy.  The Ministry of Finance, converted the policy into green taxation law, in the making for more than 2 years, by a team in the finance ministry, which made sure there is a great starting run for zero-emission vehicles, but more importantly – long term visibility for the law. It will now convert into working regulatory bodies headed by ministry of energy and infrastructure, with minister Ben-Eliezer present and speaking yesterday; other efforts led by ministry of transportation and of course ministry of environment are all working through a coordinated effort across the entire government. Finally, to convert this transformation into an economic growth The ministry of Trace, headed by minister Eli Ishai, commerce and labor which owns the chief scientist of Israel will start creating economic growth packages, R&D programs and trade incentives that will attract the emerging EV supply chain into Israel. This was demonstrated by a signing ceremony of the first umbrella agreement between Renault and the Chief Scientist of Israel at the President’s house.  That is the kind of comprehensive plan that is required for a country to convert itself off fossil fuels – strong coordinated force that can provide enough momentum to turn away 100+ years of inertia in this industry.

We had a car-maker, the forth largest one in the world, that committed to Pure Electric Vehicles (EV) as a mass-market product. Not only are they committed, they have allocated the funds required to develop such vehicle, for the needs of the country where we will start. In their alliance with Nissan, they are developing the next generation of batteries that can drive the vehicle, and provide significant economics advantage for EV over gasoline, diesel or hybrids. Carlos Ghosn, the legendary CEO, who runs two car companies headquartered in two different continents (who is the only man I personally know that flies more miles than I do), is known for being conservative and always delivers more than he promises. He promised us a great car, a fun car to drive, a good performance full three-box sedan, a better car TCO than internal combustion engine, and he promised it will be delivered in volume within approximately three years. Ghosn, Patrick Pelata and Renault-Nissan alliance do not promise lightly, and when he looked me in the eye, I knew he will deliver.

The third ingredient we had yesterday was funding, as we had some of our investment group present in person - Idan Ofer braved the day with high fever and I was really glad to have his father Sami share the event with us; we also had Mike Granoff, representing our angels (some of them like Sass Somekh were there in person), while others like Alan and Bill and the rest of the VantagePoint team and Morgan Stanley were with us through the webcast. For the first time, a company raises the money required not to make the sexy electric car – for that we have Renault-Nissan committing more Development resources than any startup could in the EV industry. This capital is the money that will be leverage to build the infrastructure so much missing from all the previous attempts at this EV market - $200M in equity, goes a very long way when matched with project financing for long term infrastructure investment. I am glad to share with you that we not only signed the funding agreement, we also passed all due diligence on our plans and closed our financing by all parties (which proves to some people that we did have financial plans after all…not a pipe dream).

As the integrators, Project Better Place were the fourth ingredient. Our job starts now (although I must admit we did play some part in bringing all the other parties together to see this tremendous opportunity). We are building the infrastructure framework; we are sourcing the grid elements; we work with the electric company to connect a virtual grid across the country (think of VPN for electrons, instead of bits); we are securing the installation across the country’s parking lots, homes and curbside parking in every major and minor city in Israel; we are educating the drivers and fleet managers as to how EVs work and feel; we design and redesign the EV experience – in our definition of what a car means to us;  we work with the car makers to define the car requirements and how they work with the grid; we integrate and build the software that manages everything for charging the cars to charging the credit cards; in short – we put it all together – and we turn this concept into a replicable business for Israel and other countries.

What happened yesterday was much like photosynthesis – one of the most intriguing processes in nature, where four electrons make it to the same spot in the leaf at the same time, and convert energy from photons to molecules bonded by chemical bonds. Before photosynthesis happens, all you have is energy. After photosynthesis happens what you get is a physical molecule which can be stored for ever. By putting all four elements together in PBP, we will convert vision (neurons firing in one crazy brain) into reality - physical manifestation of the energy of the entire Project Better Place team manifesting itself forever hopefully.

January 21st changes the balance in this industry – if we are right about the business model of PBP, and given the cars will be insanely great (as Renault promised us), there is a possibility of market tipping first in the test markets but very rapidly in the entire car industry worldwide. The industry, and other countries can no longer sit on the fence and wait to see what happens – the first mover advantage here is just too big to overcome – see what happened to Toyota with the Prius. Countries that depend on oil today are hurting at $100/bbl (and $88/bbl is not helping much…but let’s hope the price stays lower as long as possible). Waiting for the economy to break before investing in an alternative is like running a “Thelma and Louise” on your economy – you all know the scene, where you see a canyon approaching and you don’t stop, just pres the gas peddle harder and fly off the cliff. While a memorable ending to a movie, it is an unpleasant jump when 6 billion people are in the car with you.

Let me make a bold prediction – Israel will not be alone on the road to electric transportation. By the end of this year there will be at least 5 countries supporting the same policies and on the same framework. As to the car industry – In the words of Lee Iaccoca - It is time to lead, follow or get out of the way.