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.

Comments

[benny]

Zalman,

With all the respect, I've read your remarks over and over, and frankly, you got your word out time and time again, much more than the average reader needs to know. You have a good passion to your REEV or any new acronym you want to call it, but this is Shai Agassi's blog, get a life, or get a blog or yourself.

[Cristian Laverde Koenig]

Dear Mr. Shai Agassi,

Please accept my humble congratulations on all the achievements till this day. I am pleased to find out about Project Better Place and see that there are people out there taking action. Maybe you would consider joining forces with Mr. Al Gore??
I humbly want to contribute with some information I came across with and I think, if we are serious about "going green", can not ignore. I am talking about: "Surge Electric Motors". This is a motor that actually generates energy as suppose to using it. It is powered only by permanent magnets which have a magnetic live of about 400 years. They can power a house or a building and of course an Electric Car. This would eliminate completely the old problem of recharging, which eliminates of course the problem of range and charging stations availability. So, there are many ideas that come to mind when you think about that: You can use these as generators at home where they can run all the electric needs of a house, even charging your electric car's batteries; they can be the generators at a charging station (if you can not use solar or even if you can); or you can get rid of the battery on an electric car and power it with one of this generators, or recharged the batteries as you go; but the ultimate idea would be, they can be the actual propulsion of a car if combined with a transmission system and, for all that matters, these cars could be your electric generator while parking at home.
I think that there is a lot of focus put into cars as the pollution problem but the truth is that they are the cause of only 21% of it (as estimated on Project Better Place’s video). The other 79% is what we really should focus on if we want to be true on "going green". If we start putting electric cars out there, what we really need to think is how are we going to produce the energy to powered them.
I’ve got a few links with information about some companies and people whom already work with “Surge Electrical Motors”, I invite you to have a look: www.gammamanager.com ; www.kbmorgan.com/marsmission/marsbull/bull326.htm ; www.cycclone.com ; www.youtube.com/watch?v=jt5z8L4LBJE&NR=1 ; www.youtube.com/watch?v=vDeXTXYFKAY&feature=related ; www.youtube.com/watch?v=zu8LaVH-pn0&feature=related
Thank you for your amazing contribution to solving these problem, I hope things keep escalating for Project Better Place. Best of luck.

[Tsvi Bisk]

Dear Shai and other readers,

I invite you to access the below link. It is complementary to the Agassi initiative and both are part of a new gestalt being born (mine being a much more modest part).

http://thenewjew.wordpress.com/2007/10/30/guest-author-tsvi-bisk-asks-what-if-one-billion-dollars-a-year-were-used-to-buy-israeli-alternative-energy-technology%e2%80%9d/

Tsvi Bisk

[Jakob Trøjmer]

I hope Denmark is one og those 5 countries.

[scott nolan]

Shai,

My name is Scott Nolan. I'm a Tooling Manager at a Tool and Die Manufacturing Plant in Southern Ohio. I read the article in BusinessWeek regarding Better Place this morning with great interest.
The reason that I'm writing is simply to tell you that I'd be interested in helping you with your project. I've never written to anyone like this before...to busy building high-volume tooling for the likes of your soon to be competitors.
If you need any help with Form Tooling, Progressive dies, Laser or Mig Weld fixtures, etcetera, please let me know.
My team would help simply because its the right thing to do for our kids and their futures. Thanks for your time.

[EV Rider]

A team of scientists under the direction of Dr. Doron Aurbach of Bar-Ilan University has developed a rechargeable magnesium battery which can be recycled thousands of times with extremely low capacity fading. The battery, which is environmentally non-toxic and non-explosive, has a 60Wh/Kg energy density and demonstrates virtually no self-discharge. It has an operating temperature of -20[degrees]C to 60[degrees]C and possesses a stable, almost constant voltage of ca. 1.1V (OCP 1.3V). Dr. Aurbach said he feels confident that with additional research, the battery's energy density can be increased to rival or surpass that of lithium-ion. Dr. Aurbach's magnesium battery technology, detailed in a summary published in The Chemical Record (January 2003), will be marketed to battery manufacturers by Idea One of Clearwater, Florida.

It is my suggestion and advice that you contact Professor Aurbach and/or Idea One (Ezra Meir) for possible implementation of his battery chemistry into the Project Better Place proposals.

By strange coincidence, apparently one third of the world's magnesium comes from the Dead Sea area of Israel, -- and is perhaps the resultant waste debris of ancient Sodom and Gommorrah, destroyed by fire and brimstone.

Ironic isn't it, that it could be used now to make batteries for electric cars that might help address climate change in today's perilous times?

Don't look back.

http://findarticles.com/p/articles/mi_qa3864/is_200310/ai_n9308755

http://www.ch.biu.ac.il/php/general/people.php?todo=display_user&user_id=85&l_id=people_bar

EV Rider
Drive-electric.com
Carlsbad, CA

[Aaron BAHAR from RAANANA]

Hello Shai,
I've been in Israel for 4.5 years, coming from Paris and living now in Raanana. I worked for the company McAfee during more than 9 years as an international financial director. I have also created, with some friends, a French network for business in Israel to help the new French immigrants to be succesfull in their integration. One of the "key" being job and businesS. I would really want to get in touch with you to share some ideas. Is it possible ?
Toda méroche.
Aaron BAHAR

[Amit Nisenbaum]

Part of the smart grid supporting rationale is the argument that consumers will be able to buy energy at off-peak (cheap) times while (at the long term) feeding back energy to the grid at high-demand times. This reduces TCO (lower cost of energy “downloading”) and potentially could serve as an alternative source of income (high price of energy “uploading”).

But is this feasible from the supply perspective? Is there enough off-peak electricity flowing to the ground to fuel all of these cars? According to the US Department of Energy “"off-peak" electricity production and transmission capacity could fuel 84 percent of the country's 220 million vehicles if they were plug-in hybrid electrics”. This is an amazing number!

See this article for this and some more interesting findings - http://newswire.ascribe.org/cgi-bin/behold.pl?ascribeid=20061211.105149&time=11%2005%20PST&year=2006&public=0

[JImmy villalon]

hello Shai Agassi
I am extremely glad with your iniciative of building the first electric car. I strongly support you. I have my own invention for this tyope of vehicle.
The future car will float over an electric current such as the bullet trains in japan. The difference between the two would be that these would turn on streets and stop like regular cars. All of these over an electric current. If you need any help or of any assistance please contact me at this email. I am an entrepeneur in the United States.
Sincerly,
Jimmy Villalon

[Eric]

I tend to agree with Zalman. The all electric might work for a small country like Israel but for the US, battery changing on a mass scale isn't really feasible. Plus Tesla Motors, the people who put the all-electric car on the map, are planning to introduce a gas-electric version on their next model, the Whitestar.

http://www.news.com/8301-11128_3-9863202-54.html

They call it REV (range extended vehicle) while GM call their Volt concept "E-flex" - to differentiate from hybrids.

Regarding the cost of REV's this is what Tesla's CEO had to say. "The gas-electric version of Whitestar will cost a little less than the all-electric version, but the difference will be fairly minimal." - Elon Musk CEO of Tesla

It does seem GM is looking to put up the price of the Volt though. At the moment they are estimating ~ $30,000.

http://www.detnews.com/apps/pbcs.dll/article?AID=/20080131/BIZ/801310505

[Amit Nisenbaum]

Ever since the Israeli government announced its support of PBP many criticized it for preferring this solution (for reducing GHG) over others such as encouraging usage of public transportation. I always thought that this criticism is one-dimensional and suggests that there is a silver bullet for solving such a big problem. Obviously such a magic pill does not exist and the right way to tackle the problem is with a portfolio approach that supports a set of collectively exhaustive initiatives. Today Israel took another step in that direction where its legislative branch (the kneset) passed a law authorizing (and sometimes mandating) municipalities to forbidden cars from entering certain regions within their jurisdiction. This is one more step at the right direction and one that I don’t see contradicting PBP though I am sure others will take an issue with this view. For those who want to read more and can read Hebrew this is the link - http://www.haaretz.co.il/hasite/spages/955522.html

[Amit Nisenbaum]

Interesting to see that people are thinking about converting other vehicles than the Prius. Here is another example of a different car being converted. It is a Hyundai Getz (http://www.theage.com.au/articles/2008/02/14/1202760494735.html ) that has been converted by an Australian company (http://www.bev.com.au/)

[Jay Rosenberg]

Hi: I have an ultralight, multifuel superior diesel (MFSD) which will achieve, 150 MPG in a sedan; Also next generation (NG) Solar Thermal, Geothermal, and Wind. Their economics will become the tipping point, e.g., 5 year ROI on the NG systems, $.05-$.04/kWh for carbon free electricity. Hi efficiency MFSD cars as 150MPG diesels/ hybrids, will cost less than 1/2 that of current EV's. ISO serious stakeholders, advisors, JRIAM1945@aol.com. Solutions exist, but unfortunately so do egos, and the realization, cutting dependency on fossil fuel is a huge sweepstake.

[Amit Nisenbaum]

Here is an update on Mayor Bloomberg’s plan to reduce GHG emissions - http://www.nytimes.com/2008/02/28/nyregion/28limos.html?_r=1&oref=slogin . On February 26 he announced a plan to require all of the car service operators (black cars) to double their fuel efficiency from around 13 miles/gallon to 25 miles/gallon by 2009. The sentiments are that this will lead these companies to switch to hybrids which is the only way to achieve the goal in such a short timeframe.

Hopefully PBP has some discussions with the Mayor’s office and the Taxi and Limousine Commission to consider the PBP framework. Once the car service operators start to switch to hybrids it will be difficult to make the case to switch yet again to plug-ins or EVs.

[shawn Kelly]

Mr. Agassi, please visit our website www.activegridtech.com and take a look at what we are trying to achieve. We have made several developmental steps and are in need of a champion to bring the technology to fruiation. This seems to be consistent with some of your current efforts in the EV industry. If there is any interest in gathering additional information please contact me at shawnkel@gmail.com. Thanks,
Shawn Kelly

[Amit Nisenbaum]

More news about Nissan’s EV plans. They are planning on launching an electric car in the US in 2010. I wonder if it is the same model that will be launched in Israel. http://afp.google.com/article/ALeqM5iwvG0bNJzNg8zpDKQpvAbubB0cSg

[Hela Lahar]

Shai,
My name is Hela Lahar and I am the Israel Program Director for Hillel of Greater Philadelphia. We had just brought Michael Granoff, to speak about "How to end the age of oil.." at the university of Pennsylvania. It made me think about the fact that there is not nearly enough awareness in Israel to the subject. Because of your high-tech background, I think that we could possibly do the same type speech at Israeli universities.
What say you?
Regards,
Hela.

[Christian]

Dear Shai

Please accept a huge round of applause - this concept is amazing! As a Danish citizen - and an ex-SAP employee by the way - I am as always proud of what you have developed!

Looking very much forward to supporting by buying one of the first cars that hit the market in Denmark.

Well done. Next time in Copenhagen cold beer will be ready, just let me know!

Good luck, all the best!

/Christian

[Kate Little]

Hello

At my school there is a huge project that we do every year that we term the "senior project." My friend has decided to do his thesis on why electric cars are the answer to the energy/carbon emission crisis. If there would be any chance of being pointed towards people as knowledgeable as yourself in this to continue this research, that would be incredible. Your blog itself has been very useful. If you have the time and would be willing to point us towards some sources, my email is kai.jenski (at) gmail.com

Oh, and one more thing--the final product of this project is creating an electric car, built out of a go-cart frame and pieced together with things that he finds. Thank you,
--Kate

[E-MS]

Shai:

PBP is an exciting project. You have a great event on May 11, 2008 in Jerusalem.

You are making a difference in solving large scale social and environmental issues. You are making all of us proud. A very clever strategy indeed. Use the technology and the capital markets to bring about a much needed change.

Let us make a difference.

Rakesh
Dulles, Virginia, USA

[Belinda]

It is time that we band together as individuals and create a major movement to create massive change. Let's stop being dependent on foreign oil by becoming self-sufficient with energy. IT IS TIME TO STOP LETTING GOVERNMENT AND SPECIAL INTERESTS DRAIN US DRY!

[Ron U.]

I'm a big fan of PBP and I look forward to the day electric cars will be available to the Israeli public. Good luck with your effort to make our world a Better Place.