General Press Observation

There has been a tremendous amount of press about Project Better Place over the last few days. In particular in Israel these last few weeks the voices for and against the project have been sounding off their opinions. I will set a list tomorrow so that people can follow the arguments, but I chose to put one piece which is not very flattering up here...I think it is an accurate description of what we face and although there have been others that are a lot more friendly (THANK YOU FOR THE TRUST) - I wanted to highlight this short one...

Analysis / The state is betting on Agassi
By Yoav Kaveh

The cabinet's announcement to back the electric car project will be phrased in general terms and will include only principles, but it will be clear to everyone that they really mean to support Shai Agassi's project directly. Or perhaps better to call it Agassi's dream.

Agassi has a vision of ending our dependency on oil, of non-polluting transport, of solar energy. He is dreaming of a revolution on a global scale.

But will his dream actually take to the road?

The wunderkind of the high-tech world certainly succeeded in electrifying the government and achieving state support in less than two weeks. "Agassi presented us with his ambitious plan. If another person had presented us with a similar plan, we would have thought he was crazy and thrown him out," said a senior government official. "But this was Agassi. He is a young man with an impressive record who knows how to reach the highest people directly and convince them."

The Ofers and their Israel Corporation are also involved in the project, and they also know how to open government officials' doors.

This will be Agassi's last project: If it succeeds he will never need to raise money again, and if it fails he will never be able to raise money again. If within a decade we can stop breathing exhaust fumes then we should give him a couple of Nobel Prizes. If he fails - and remember there are a huge number of technological, bureaucratic and other problems - he will have to eat his hat. And so will the Israeli government.

So, as I always do, I parsed the article a bit too much, and here is my take.

1. The government of Israel has not and will not given us any money, so all the risk falls on my reputation and on my investors money. we simply didn't ask for money, since I do not believe in trying my ideas at the expense of the general public of a country.
2. On the other hand, if the plan works, we will save people's lives, save the country a lot of money which is now spent on importing oil, and create a whole new industry and jobs for Israel.Not a bad deal for the first movers.
3. By the way - if we do succeed, we will be heavily taxed, so while we don't get money from the government we definitely enjoy having them as a senior partner with us (and we are not even complaining about it...we think it is good).
4. I find it amazing that we always know how to blame large corporate even when they are doing something that is good for people...why can't we say for a change that a company (Israel Corp) has taken a risky initative which may be good for the country and is still doing it in great faith (and I have to tell you Idan Ofer is one of the most amazing people I have met during these last 6 months, he truly gets the problem with climate change, and its affect on humanity).
5. I am willing to lose my wunderkind status, not looking for nobels, and am even willing never to raise money again - if we can get this plan to work. The race is bigger than one person, and all people who are ready to sign up can only help. It is not an exclusive game when one is right and the others are wrong, it is a journey where we will all learn, make mistakes early and fix them quickly - to make sure we reach our goal, or dream if you want to call it that way - I have been called worse names in the past...

In the new version of this article that was published this morning there is a comment by one of the Israeli car importers (and some engineering expert called Nameri, as the article states) regarding our electricity cost calculation - The translation goes roughly like this

"...A car in Israel drives roughly 15,000 km a year which requires 5,000 kWh costing 2,500 Shekels...which will cost an enourmous amount. Making the electricity through sustainable means will cost even more money which is just ridiculous to think about"

Let's run the real math for a minute

car goes for 15,000 km - requiring on the average 150 wH per km - making the required energy 2,500 kWh per year [that's half the amount mentioned in the article] - which costs roughly 1,000 shekels per year (that's about $250 for you gys without Shekel calculators handy)

Now, if you wonder how many gas station stops you can make in Israel with $250 - the answer will become pretty apperant when you realize that gas at the pump costs roughly $6.5 per gallon or $1.65 per liter. If your tank is the average 20 gallon (80 liter tank) then you could fill up the car about twice for those same $250 (or 1,000 shekels). I wonder how many people would drive for a whole year on two gas tanks. By the way, if I was wrong and the aticle's calculation is right - it is still 4 full gas tanks - which most people in Israel consume in less than a month. I suggest next time using a calculator for checking the data before publishing.

The real interesting question though was whether we can generate the electricity in a clean way without harming the environment at all. So let's see how much it would cost to create 2,500 kWh in a year from clean sources, like solar thermal - which enjoys an abundance in Israel (if there is somehitng that is abundant in Israel it is the sun).

To generate 2,500 kWh over a year we need about 1 kW of solr thermal capacity which in volume costs roughly $3,000 - but works for 25 years or more (ask Solel for the data...). In other words for about $150 a year we can generate enough electrons to drive a car. That's even cheaper than dirty electrons...oh, and by the way if we did install those solar plants, got our electric cars, and converted a country we would get the first ever "artificial oil field" which goes for ever and does not emit a single C02 molecule...for less money!

I think that critisicm is fair in general, the duty of proof is on us. At the same time, the duty of responsibility is on those who want to publish information. I hope we can get help from people along the way and that the nations who sign up will act with the same vision as Israel just demonstrated this morning. Shai doesn't matter in this entire story - it is our kids who do - so let's worry about how we make their world a better place.

Comments

[Oded Roth]

In the last few days Better Place project evoked some interesting discussions at the environment quality forum of “TheMarker Cafe”, including pro and con arguments. Unfortunately for the English readers they set on Hebrew.

http://cafe.themarker.com/view.php?t=209458&p=0
http://cafe.themarker.com/view.php?t=211681
http://cafe.themarker.com/view.php?t=196421

These are grassroots opinions of people with high awareness to environmental problems and others.

[T. M. from Japan]

When I was working at Japanese venture company dealing with Lithium-ion battery, we have been discussing about the feasiblility of the similar project in Japan with other companies. When we discussed about this project we concluded that it would be very hard for Japanese business environment to accept this kind of buiness model. However, I believe it must work well since this kind of model is very much reasonable since lithium-ion battery is still very much expensive although the world is moving rather "plag-in" style. I left the company already so I am not sure about current situation. I really hope this business model works very well for our future!

[Dmitry]

While speaking about the solar thermal, are there plans to deploy solar batteries within the general public, to allow people to cut down on their electricity bills somewhat?

[kent beuchert]

I was wondering whether I should remove this comment - as I don't like the tone of being called a "con" but I decided to leave it on and edit it a bit...
So here is the original - my comment on the next post...
" A Better Place is a really silly idea and mostly a con. No one can reduce the exorbitant price of batteries by leasing them and setting up a monopoly to exchange them and charge them. That will only drive the already tooo high cost of electrics even higher. There is also no valid reason to prefer all-electrics when plug-ins can accomplish 95% of the goals of EVs without the need for a second mortgage. And should advanced batteries appear that can be recharged quickly, a Better Place will become a very Deserted Place. Ths whole scheme shows a complete lack of foresight, reality and cost effectiveness. "

[Shai Agassi]

1) Price of battery is roughly $10,000 for a good 100 mile battery. That battery can recharge at least 1,500 times if not more with good battery management. In other words - for $10,000 in battery and $2,000 in electricity one can get 150,000 mile. If you compare to the 7,500 gallons of gasoline you need for the same distance, even at US price of $3.5 a gallon you find out that gasoline is the exorbitantly priced energy source at - $20,000+. If you compare it in London, the price gets to be the same only in pounds - can you say an arm and a leg with a british accent?

2) Plug-Ins are great - and by the way they need a place to plug in. We will let everyone (other than Kent) plug into our network as well. WE will not descriminate against any car that needs to plug in instead of burn up.

3) Kent already assumed we will be a monopoly, which is a nice thought about us given we have not set a single car in place yet. I wonder who got him onto that school of thought...we are actually proposing a completely open system

4) Given we were a monopoly before, we had just become a deserted place, which is a very interesting twist in the post...all through the appearance of a magical battery that goes for long and charges fast. I wonder how come it is us who have lack of foresight and reality.

5) For calling us cons - you don't get to post from now on. be nice, this is not a press talkback. you can criticise, just don't call us names when we try to do a good thing for this world.

[Simon Porter]

A quote from Martin Eberhard sums my thoughts up nicely.

"A world of 100% hybrids is still 100% addicted to oil"

[Ananth]

Shai, I think you are doing something for the betterment of Mankind. I wish you all the very best.

[Ben Bakhshi]

Another barrier that most people have not brought up is the cost to create an infrastructure to recharge batteries at homes and at work places. The video that was released shows a car parked in a special spot that magically charged the battery. A system like that has got to cost upwards of $5,000, probably $10k if you are going wireless. But with our current technology it might be the only device that can take out enough energy from the grid at a rapid rate, and bill the consumer for the usage. Public chargers is more complicated because it is decentralized, and more costly. It sounds like you would be running close to 2 charge locations per driver, plus a battery swapping location.

You made a point about managing the utilities' electricity with software, is it possible to have a device built into the car itself that interacts with the grid-software and use a standard 3-hole plug withdraw the needed energy. Thus a car could plug in anywhere in the state/country, and withdraw energy and PLP can charge them for that consumption.

[Jens Buehrmann]

Allow me to give some more information to this:

eoN, one of the big energy providers in Europe, is developing on a solution, to manage consumer batteries through their electrical grid. They desperately need the storage.

Due to this work on flexible Ceramic Seperators in large Litium Batteries ( sorry it's German ):
http://www.deutscher-zukunftspreis.de/newsite/2007/hintergrund_02.shtml
lifespans up to 10,000 cycles, will soon be there.

This interview (also German ):
http://ondemand-mp3.dradio.de/file/dradio/2007/05/29/dlf_200705291645.mp3, I heard on Deutschlandfunk. At the end, some chief at SiemensVDO prospects serial production of modular e-vehicles by 2015. Toyota is developing on s.th. similar.

For those, who still need to be convienced that ProjectBetterPlace is far away from freaky.

[Boaz Ogen]

1 A question

Shai, the Nov. 11th post – "The state is betting on Agassi", speaks about the real interesting question: Can we generate the electricity in a clean way without harming the environment at all. I have read in another article of the writer you mention (Yoav Kaveh) a quotes saying that the battery charge grid will get its power input from the current, oil based electricity companies, shifting the CO2 omission from the internal combustion cars to the electricity plants. So, actually there will no real difference in the polluting factor.
Is this claim true? If so, is the proposed grid solution concept dependent on the existence of a clean energy source as a pre-requisite?

2 A personal note

As for all of you opposition population, I must point you all to the story and lesson behind the movie: Shawshank Redemption. The movie ventures down a less-traveled road, concentrating on the personal cost of adapting to prison life and how some convicts, once they conform, lose the ability to survive beyond the iron bars. As one of the characters puts it: "These [prison] walls are funny. First you hate them, then you get used to them, then you start to depend on them.
Actor Tim Robbins, as Andrew Dufresne, plays the wrongly convicted man with quiet dignity. Andy's ire is internal; he doesn't rant about his situation or the corruptness of the system that has imprisoned him. His unwillingness to surrender hope wins him the admiration of some and the contempt of others.

"Salvation lies within" advises Warden Norton, the prison's warden. The Warden suggests believing in the bible and abiding its rules. Salvation (for those who abide) lies within (the bible). Andy takes this to a completely different direction – his salvation (freedom) lies within him. He is digging a tunnel to freedom for over 20 years motivated only on his will power to be free and succeed.

I am sorry for this being a bit long, but I believe Better Place Project is our salvation which lies within each and every one of us. This initiative ventures down a less-traveled road, demands a personal commitment and is a clear anti climax for those who conformed and lost the ability to innovate and get out of their current state of mind. These individuals, sadly enough, start to depend on the current oil based energy forms and lack the will to make this much desired change.

Andy ignores the system that interrupts him from reaching his targets. His unwillingness to surrender hope wins him the admiration of some and the contempt of others.

"Salvation Lies within". I am not sure about others, but as the ABBA song "Thank you for the music" say: "So I often wonder how did it all start…..well, who ever it was, I'm a fan!"

[Niv]

You wrote: "1) Price of battery is roughly $10,000 for a good 100 mile battery. That battery can recharge at least 1,500 times if not more with good battery management"

Can you write: which battery chemistry is it?
Who produces the battery?

What about "Altair Nanotechnologies" ( www.altairnano.com ) who has a battery that can recharge in less than 10 minutes?
That will make the heavy investment in your idea of automated battery switching stations to be a waste of money in 1-3 years since the switching stations will not be needed anymore due to the less than 10 minutes recharge time (with a special high current charging station). The recharge stations will still be needed of course.

Their battery costs now about $70000 for 35KWH battery ($2 per 1WH) and they expect to reduce it to $1 per 1WH in 18 months, and in the longer run make its costs equal to other lithium ion batteries. ($7000 to $20000 for a battery of 35KWH)

In addition they can use their battery now before the cost reduction with Hybrid vehicles. (Less energy storage needed and less cost than with pure electrice vehicle). It again solves the long trip/range problem that you mentioned as the reason for the need for battery switching stations.

They will not need to wait for 3 hours, nor use the switching stations solution that you gave for the long wait. They will simply recharge in several minutes and continue, or instead continue with the gasoline of the hybrid.

[cb]

In response to Niv's comment above:

It has to be obvious to everyone, with an IT background, that Moores Law is going to apply to battery developement, performance and cost.

I think Moores Law will also apply in the near future to the developement, cost and performance of the electric Car components in a general way. The key is to provide an enriched developement environment (IT-Newspeak: Incubator) to promote innovation in this area.

Many Critics say that the established Automobile industry has totally failed on this account. (Just compare the price/performance curve of Microchips to that of Cars in the last 15 Years) The upside is: that this is potential yet to be realized.

Down the road there is something coming at us called "Technological Singularity". Bill Joy of Sun Microsystems has talked extensively about it, also has voiced some concerns on the unpredictability of nanotechnology.

[cb]

In response to Niv's comment above:

It has to be obvious to everyone, with an IT background, that Moores Law is going to apply to battery developement, performance and cost.

I think Moores Law will also apply in the near future to the developement, cost and performance of the electric Car components in a general way. The key is to provide an enriched developement environment (IT-Newspeak: Incubator) to promote innovation in this area.

Many Critics say that the established Automobile industry has totally failed on this account. (Just compare the price/performance curve of Microchips to that of Cars in the last 15 Years) The upside is: that this is potential yet to be realized.

Down the road there is something coming at us called "Technological Singularity". Bill Joy of Sun Microsystems has talked extensively about it, also has voiced some concerns on the unpredictability of nanotechnology.

[Zeev Gavish]

Nov 20th, in a meeting with the Israeli government, Mr. Agassi refused to let the press attend the meeting. Does anybody can explain why the public is not allowd to be informed about Israel and the electric car ?

[Tzvi]

Shai Check your calculation. You say that 1kW of solar power will be sufficient to drive the Car. Average cars are about 200 Horse power which is about 150kW so you should multiply all your numbers by 150

[smiles]

When can you sign up for a car in Israel?
When do they start selling or leasing?
I am ready to put up money today.
do you have a waiting list?
I know the assistant major of a town in Israel. Can we get a charging station put up here ? A lot of communters in this town.

thank you

[Amit Nisenbaum]

My coming comment/s might evoke a topic that was already much discussed but it is one that is important and I feel that it is still hanging there in this thread as well as in newer ones and in the adjacent blogs listed above. The question is the merit of governmental support of PBP.

First of all the fuss is well understood. It is clear to people that it takes much more than $200M to bring to life such a project globally. People ask themselves where the rest is coming from, is the government (Israeli first and then others) expected to invest in the project? As far as I was able to understand from all of the press releases, articles, presentations, etc. this is not the case. The only government intervention requested is in the form of tax credits on the car itself. Start-up funds will come in the form of venture’s equity plus leverage (debt). Shai, you have been open so far about the project details so at this spirit can you confirm/deny/elaborate?

Some of the calculations provided above by Shai seem to confirm this assumption as they leave much margin for the infrastructure provider (PBP) to regain its investment without governmental investment in the infrastructure. But this is really a back of the envelope analysis from what is available.

Assuming that the above is true then it leaves the challengers only one counter argument – why should a government subsidize the car? Isn’t it an indirect form of investment? For me the answer is three-pronged:
• Yes it is a form of investment but it is a variable investment, meaning it is per car and once such an EV has been purchased the benefits of it to the country are immediate
• It is also a late-stage investment, it is provided (in large scale) only after the infrastructure has been established and hence the risk is low. More importantly, it is provided after the entrepreneur and early investors “bootstrapped” and risked their own money which is always a good success driver
• Finally, as in any intervention its merit should be assessed along the risk-return axis. The risk was discussed above and it is low. The return could be huge. It is not only in the form of releasing the oil dependency shackles, or in the form of reducing GHGs (both of which are the most important however the most qualitative in nature). It is in the very quantifiable form of improving the national trade balance due to decreased oil import. Even more so, with the emergence of CO2 credits and the exchanges to trade their derivatives a country could financially gain from the decrease of its CO2 footprint

So maybe the counter argument is “is it the role of the government to support such projects at all and are taxes the best lever to use?” Well, for the first question it is for sure the role of a government to support infrastructure creation. In the past it was the government that did it itself (and then privatized the operations), here we have a private entity that is willing to take the risk (for an expected return, for sure, but what is wrong with that?) so why not to support it?

In addition, I think that a perfect analogue is the Yozma project. Many marvel at the success of the Israeli Tech industry. One of the drivers for the success of this industry is the Israeli VC community which is third in its size only to the Silicon Valley and Boston ones. However, only few know that this VC community started from a visionary investment of the Israeli government in around 10 VCs in the mid 90s (scroll to the middle of this article for more details - http://www.tamas.gov.il/NR/exeres/BE47CF42-6BEF-42C1-9236-550D491B87DE.htm). Without the Israeli government becoming a limited partner in a VC (can you believe that? Much more risky than tax credits) the Israeli Tech industry would have stayed a dream. This should serve as an inspiration in the PBP case as well (in Israel and for other countries as well).

As for taxes being the best way for government intervention, well the argument goes backs about a century to the debate between the classic economists and Keynes so this is (maybe) for another posting (which could also include some counter arguments to the ones asking if this is the BEST green project for the government to invest in).

So to conclude, Shai, this is a very positive initiative (in my mind). At the spirit of openness it will be great to hear more from you on the topics discussed above. The “open source” approach which is reflected from many of your speeches/postings about PBP is exciting so can the community hear more?